TRACE INN: How to kill a motel in 10 years

By Emily Le Coz/NEMS Daily Journal

TUPELO – Bad decisions, mounting debt and misunderstanding between business partners led to the untimely demise of the iconic Trace Inn.
In the past decade, the sprawling west Tupelo complex that hugs the Natchez Trace Parkway has been neglected, abandoned, looted and boarded-up. The city now plans to demolish it.
It’s a far cry from the tidy, family-friendly lodging built by the Hancock family in the 1960s and nurtured through the years by a handful of different owners.
“It was once a booming thing,” said Vernel Hancock, who started the venture with her husband, the late Junior Hancock, in 1961. They grew it from a small dairy bar to a full-fledged operation with a restaurant, swimming pool, convention hall, three-story motel and several one-story motels.
“We had articles in the New South magazine and in a couple of the national motel journals,” Hancock said. “We were practically full every weekend.”
The family owned it for 12 years before selling it to a Minnesota-based company called Griffin Inns, which in turn sold it to the late Clyde Whitaker.
“It was a vital part of the economy for a long time,” Whitaker told the Daily Journal earlier this year. “At one time, all your civic clubs ate there. It was an integral part of the community.”
Whitaker, Tupelo’s mayor at the time, kept it until 1981, then sold it to Tupelo businessman Everett Kinsey, whose family ran the establishment eight years before selling it to a man named Visanji T. Gala. According to records at the Lee County Courthouse, Gala failed to make payments on the property, and Kinsey regained it in 1991 during an auction.
In 2001, Kinsey sold the complex to JSK Hospitality, a Tupelo-based company headed by India native Dinesh Choksi.
Trouble soon followed.
Choksi reportedly failed to pay taxes to the Mississippi Department of Employment Security, which began slapping liens on the property in August 2004, according to courthouse records.
Less than two years later, Choksi and his company lost a lawsuit filed by U.S. Foodservice for $20,500, plus court costs. He apparently never paid it, and a lien for that amount appeared on the property, too.
Others soon followed, filed by the MDES, the State Tax Commission and the Lee County tax collector.
By the time Choksi found an investor to take over JSK Hospitality and the Trace Inn in November 2007, he had amassed 15 liens totaling nearly $310,000 against the property. Of these, Choksi paid six – about $16,800 worth.
Choksi denied having any outstanding liens when contacted by the Daily Journal this week. He said the U.S. Foodservice case was settled and paid and that the courthouse records are wrong. He now works at The Days Inn Southwest in Jackson.
“There were no liens,” Choksi said. “I had cleared everything. My accountant cleared everything before I went to India in November, probably 2007.”
The investor who stepped in around that time was Miteshkumar Patel, an Alabama businessman whose uncle knew Choksi and knew he wanted to sell the Trace Inn. He introduced the two.
Patel saw immediate potential in the property and thought he could turn it into a profitable venture, he said. Although he knew Choksi had racked up some debt, Patel said he never was told about the liens, even though they are public record. It wasn’t until after he had already purchased 85 percent of JSK Hospitality’s stock that he discovered them, he said.
But by then, it was too late. Other problems were quickly mounting, and Patel couldn’t handle them fast enough: In mid-2008, the city’s code enforcement division forced him to close one of his buildings due to code violations; he couldn’t borrow money to fix it because of the liens; and then the state revoked his business license, again because of the liens.
Not all those liens were Choksi’s fault, though. During Patel’s brief tenure at the helm of JSK, an additional 50 liens totaling nearly $66,000 appeared on the property, almost all from the State Tax Commission.
Patel said he tried to sell the property at that point for about $1.5 million, but the liens interfered with that plan.
In March 2009, Patel filed for Chapter 7 bankruptcy. Three months later, Choksi, who still is listed on the Mississippi Secretary of State’s website as JSK’ s president, also filed Chapter 7. They left behind dozens of creditors, including Atmos Energy, Tupelo Water & Light, AT&T and the Daily Journal.
But the biggest unpaid debts were owed to Renasant Bank for $482,139 and the Small Business Administration – through Three Rivers Planning and Development District – for $336,700.
None of the creditors have taken action on their liens or claimed an interest in the property, which has been abandoned and repeatedly looted of its possessions since March 2009. The city this year slated it for demolition, but a date for the wrecking ball hasn’t been set.
Part of the demolition delay comes from payment; the city would incur the cost of tearing down the structures, and its only recourse for recouping that expense is assessing a lien against the property. It’s unlikely to be paid.
“I thought it had a lot of potential,” said Patel, who had spent $50,000 to renovate the lobby and signed a franchise agreement with Country Hearth Inns & Suites. “It was running very good.”
He blames the city for not giving him more time to fix the property before forcing its closure. But mostly he blames Choksi for failing to disclose the true nature of his debts.
Tupelo attorney Jay Weir, who represented Choksi during his business dealings, said Patel was fully aware of the company’s financial woes.
“They sat in my conference room and discussed it at great length,” Weir recalled. “Mr. Patel knew what he was getting into.”
But Weir said the Trace Inn had started deteriorating long before Choksi and Patel got involved. As Tupelo’s commercial business increasingly moved northward – taking most of the hotels and restaurants with it – the Trace Inn got left behind.
By the time Choksi took over, most of the establishment’s business came from long-term motel guests who rented by the week or the month, not the night. And years of neglect to the grounds and the structure resulted in scathing reviews by guests and complaints to the city.
“The structure was dilapidated, the grounds were really messy,” said city code enforcement officer Lynda Ford. “That’s when it became a real problem for us.”
The buildings now sit boarded up, vacant and devoid of the life and memories they once held. Hancock said the situation saddens her.
“I’d rather see them torn down than in the shape they’re in now,” she said. “Oh, it’s terrible. My husband passed away in 2005, and I said, oh he would just be devastated if he had seen this before he died, because we worked so hard and built it all and kept it going and had good crowds and everything. But I guess that’s how life goes.”
Contact Emily Le Coz at (662) 678-1588 or emily.lecoz@djournal.com.

Several businesses and families have owned the Trace Inn since its debut:
* Junior and Vernel Hancock (1961- 1973)
* Griffin Inns Inc. (1973-78)
* Clyde Whitaker (1978-1981)
* Everett Kinsey (1981-1989)
* Visanji T. Gala (1989-1991)
* Everett Kinsey (1991-2001)
* JSK Hospitality under Dinesh Choksi (2001-2007)
* JSK Hospitality under Miteshkumar Patel (2007-2009)