NCC files lawsuit against former Hope Center operators

HHM, the owner of the Sheraton Wilmington South, has scheduled the hotel for auction in October. | PHOTO COURTESY OF JLL

WILMINGTON — New Castle County has filed a lawsuit against a hotel management company that had managed the Hope Center homeless shelter until last spring, citing that the company’s neglect of the property had already cost thousands of dollars in damage.

New Castle County had taken over operations of the homeless shelter, a converted Sheraton hotel not far from the Christiana River, in April after an audit had shown the previous manager, Hersha Hospitality Trust, did not properly report what its funding had paid for. But New Castle County officials uncovered what is described in its complaint as an “unsettling reality” of ongoing water and moisture issues that may cost the county millions of dollars to repair.

New Castle County is seeking compensation from the damage caused by Hersha Hospitality’s alleged neglect, as well as reimbursement for attorney fees and litigation expenses.

“New Castle County is fully committed to ensuring the health, safety, and well-being of the Hope Center’s residents and staff,” New Castle County Executive Matt Meyer said in a prepared statement. “This lawsuit is not only fighting for the residents of the Hope Center, who deserve better, but also for the money of our taxpayers.”

In December 2020, New Castle County bought the former Sheraton Wilmington South Hotel in an auction for $19.5 million. The hotel has 192 rooms and has been managed by Hersha Hospitality Trust since 2011. Today, the Hope Center serves as short-term housing and offers limited medical care for those in need of shelter.

As the Meyer administration launched efforts to open one of the largest homeless shelters with wraparound services on the East Coast, the county government contracted with Hersha Hospitality Trust to manage and operate the property for five years.

Under the agreement signed, Hersha Hospitality was responsible for damages and expenses that come from willful “misconduct or gross negligence.”  But as the COVID-19 pandemic’s impact on the national and local economy waned, Hersha Hospitality no longer saw its relationship to the county as a valuable one, according to the complaint.

By May 2023, New Castle County notified Hersha Hospitality it had not invoiced federal and state agencies for Hope Center services. A letter sent by the county also outlined that Hersha was employing unqualified employees to work on the Hope Center, racking up multiple complaints about the staff.

Hersha did not address those concerns, according to the county. By December 2023 a boiler leak caused hundreds of gallons of water to be pumped on the Hope Center’s first floor. Another maintenance worker failed to fix a toilet that later overflowed in a room – and that employee reportedly put towels on the floor and left.

That same employee failed to replace another toilet in a separate room, causing yet another flood that impacted six rooms on the second floor.  New Castle County hired a contractor to address the water damage and to make other repairs.

By February, the county demanded Hersha to pay for the costs incurred by repairing the damage from the flooring. However, Hersha had denied liability and indicated it would hold a specific amount of funds for a termination fee.

By the time New Castle County and Hersha were negotiating an end of the agreement, another leak was discovered — this time from the roof — that caused “hundreds of thousands” of dollars in damage. Two residents reported that their bathroom ceilings were leaking in a single night.

Hours later when county and Hersha staff were made aware, 12 rooms, a hallway, a conference room wall and many bathrooms were significantly damaged. Five families staying at the Hope Center had to be moved to other spaces.

When New Castle County eventually took over the Hope Center, it found mold issues throughout the facility. A closer inspection found that the Hope Center had defective window sealants, damage to the roof, HVAC system, among others, according to the complaint.

New Castle County had contracted with an industrial hygienist from Pennoni Associates Inc. to rest the facility, which reportedly showed that the building “poses no threat” to occupants. The Meyer administration has also contracted with cleaning services to address any concerns.

While the legal proceedings are ongoing, the Hope Center will continue its operations without interruption.