Pueblo hotel sues city and mayor for over $5 million following closure
PUEBLO, Colo. (KRDO) -- A Pueblo hotel forced to close in 2024 is suing the city, along with Mayor Heather Graham and the Pueblo Regional Building Department (PRBD), for over $5 million.
Val-U-Stay Inn was closed in April of 2024 after being deemed a "public health crisis" by the city.
According to Pueblo Hospitality LLC, which owned Val-U-Stay Inn in the 2000 block of N. Hudson Ave., all three made it impossible for the owners to renew their business license by "imposing unprecedented and burdensome requirements," failing to provide proper notice, and turning off the hotel's utility services.
The lawsuit claims that Mayor Graham targeted the hotel for her own political agenda to "score points with voters" by reducing crime and homelessness in the city. They claim the hotel was chosen as a "scapegoat" by the Mayor, which led to the closure, even though crime and homelessness were never tied to their customers.
According to the lawsuit, starting in 2023, inspectors began demanding changes to previously acceptable hotel conditions, while continually altering requirements and delaying approvals for license renewals.
The owners claim that in June 2024, without proper notice, PRBD, the city, and Mayor Graham shut off the hotels' electricity, making the security system inoperable. By October 2024, the owners claimed the hotel had been stripped of pumping fixtures, copper wiring, and other essentials during break-ins, making the property valueless.
According to the owners, given the circumstances and the impossibility of renewing their license or complying with short notice, they closed in April 2025.
The lawsuit now seeks to recover approximately $5 million in damages that reduced the hotel's value, resulting in a lower sale price. The lawsuit also seeks compensation for lost business revenue, tax audit payments, and economic losses.
KRDO13 reached out to the City of Pueblo, which says that due to pending litigation, it does not have a comment on the lawsuit.
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