Oil City Days Inn Purchase Delayed by $2.4MM Insurance Claim

OIL CITY, Pa. (EYT) – The purchase by the City of Oil City of the former Days Inn has been delayed due to an insurance claim on the dilapidating hotel, exploreVenango has learned.

The Shah family inserted language into the contract asking Oil City to verify that there was $2.4MM worth of damage to the structure because their insurance company is resisting a payout of the claim, something the city has been unwilling or unable to do, according to a reliable source.

The city is working on changing the language of the contract to satisfy both parties.

The city reached a verbal agreement with the Shah family to purchase the five-story, 106-room structure in June with a planned closing date of August 31. The city’s plan was to raze the building and develop the property.

The primary objective behind the purchase, said City Manager Mark Schroyer last June, is to eliminate the longstanding eyesore in the community and alleviate the burden faced by the police and fire departments.

The hotel has been a target of break-ins, vandalism, and maintenance issues such as broken water mains since it closed in 2019.

Restoration And Painting Company of Virginia Beach, VA, told the council in June that they had a mechanic’s lien on the hotel for $175,000 for “roofing, floors, walls, windows, ceilings, carpets, tiles, concrete, drain in concrete, insulation and dispose of all insulation.”

The mechanic’s lien provided to the council indicated that it was filed on August 25, 2020, against the previous owners of the property. A mechanics lien is valid for a period of two years in the Commonwealth unless an extension is filed. No extension has been recorded, according to the source.

City officials continue to insist that there are no deals that have been made to sell the property once the city has closed on the purchase, though Schroyer has said publicly that his office has fielded multiple inquiries from “several developers” regarding the property.

The purchase of the hotel is a joint effort between the City of Oil City and the Oil Region Alliance (ORA). According to a resolution passed last month, the ORA is a silent partner under a Memorandum of Understanding. The Alliance contributed $200,000 of the $499,000 purchase price.

Last month, the city passed a resolution to secure funding from the Department of Community and Economic Development in order to raze the hotel at an estimated cost of $500,000.

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