A hotel company’s plans to build a new hotel in downtown Hartsville are apparently dead, and the City of Hartsville plans to take legal action to regain title to the downtown property in the Vista area where the hotel and a restaurant were to have been built.

A lawsuit against D.J. Desai and Balaji II LLC, the company of which Desai is president, will be filed next week, according to city officials.

The suit will seek recovery of property - just over 2.9 acres - monetary damages and injunctive relief related to the defendants’ breach of promises made to the city under a contract between the city and the defendants, including a promise to build a Hampton Inn & Suites on the site by mid 2010, according to a notice of pending litigation filed by the city with the Fourth Circuit Common Pleas Court in Darlington.

City officials say that once the city has regained ownership of the property the city can properly maintain it and pursue other avenues for development of a suitable hotel on the site.

Hartsville City Manager Natalie Ziegler issued a press release stating that a formal notice of pending legal action by the city was filed on Jan. 6 and that a lawsuit will be filed later this month.

“After initial site preparation was started, no activity has occurred at the site for many months and the site experienced erosion deterioration in 2010,” the city’s press release states.

Desai said Thursday that because of the pending litigation he could not comment on the issue. “Once this is all wrapped up, I will definitely want to discuss it,” he said.

Hartsville Mayor Mel Pennington also said he was prevented from commenting on the matter because of the pending litigation.

The city’s press release states that although the developer promised to meet with city officials to discuss future options regarding development of a hotel on the site, he failed to do so.

The city’s press release says Hartsville City Council instructed the city attorney to proceed with legal proceedings against Desai and Balaji.

City officials, including Zeigler and Mayor Mel Pennington, are referring questions about the case to City Attorney Marty Driggers. Driggers said Thursday that he hopes to file the suit as early as Monday.

He said he plans to brief Hartsville City Council on the status of the case during Tuesday’s council meeting. That briefing will likely take place in an executive session.

Balaji had said it would build an $8 million to $12 million, four-story hotel on the site that would include 51,000 square feet of space, 73 rooms, including 13 two-room executive suites, and 2,500 square feet of meeting and banquet space.

Last August, Desai told The Messenger in an interview that construction on the hotel, which had halted just before Christmas of 2009 after some initial site work was done, would resume within 30 to 60 days of that date.

Some additional site work was done on the property during the first three months of 2010 in response to S.C. Department of Health and Environmental Control directives to correct storm water runoff issues, including sediment flowing into the street and onto adjacent properties.

“It’s definitely going to happen,” Desai said in that interview, given the amount of money the company had already invested in the project.

But in an e-mail message from Desai to then-Interim City Manager Vern Myers sent on Nov. 11, 2010, Desai wrote that Balaji’s Board of Directors had directed that no additional funds be allocated for the project and that the company had “no real hope that the project will come to fruition.”

The message pointed to difficulties in obtaining the necessary financing for the project.

“I regret to inform you that we will be putting the hotel project in Hartsville on indefinite hold and possibly canceling the project,” Desai wrote in the message. “As you know we have battled numerous obstacles with this project, with the latest lender pulling out because they couldn’t get comfortable with the environmental reports and contamination. I have been instructed by our board not to allocate any further funds to this project as we have significant cash outlays and no real hope that the project will come to fruition.

“I know this news comes with great disappointment for Hartsville, as well as myself. We have all put a tremendous amount of hard work and efforts behind this project, at the same time there is no need to avoid the inevitable at this point.”

Last July, the city agreed to subdivide the property, separating a 0.81-acre tract on the corner of South Fourth Street and East Carolina Avenue where plans called for a restaurant compatible with the hotel to be built. City officials said at the time that the developer had indicated subdividing the property would expedite obtaining financing.

Desai said in the August interview that the project had been a challenge from the outset because of environmental issues. The site was once the location of the S.C. Central Railroad rail yard. “It took a long time to get through that red tape,” Desai said in the interview.

“This has been one of the most challenging sites, the environmental, the railroad, the arsenic in the ground,” he said. The early site work was complicated further as work crews unearthed buried concrete that had to be broken down and removed.

Balaji acquired the Vista property in a land swap deal with the city and closed on the acquisition on July 9, 2009.