April 29, 2010 - --LODI -- Officials are trying to make it easier for an ailing Lodi hotel battered by the down economy.

City leaders are likely to approve an agreement with the owners and builders of the Holiday Inn Express on East Kettleman Lane that delays payment of the fees the city charges all developments for the effects of growth.

Under the proposed agreement, which the City Council is expected to approve Wednesday, the city would also sharply cut the interest rate charged to future payment installments.

Such an agreement is uncommon in Lodi. But officials say at stake are jobs, tens of thousands in tourism tax money -- and the possibility of another vacant building in a pocket east of Highway 99 mired by abandoned auto dealerships.

"That just scares the bejeezus out of me," Councilman Bob Johnson said at a meeting earlier this month.

Hotel owners Beth and Daniel Kim, who have been big tourism boosters in Lodi since they opened their first hotel on Cherokee Lane in 1994, didn't respond to requests for comment.

But at an April 7 City Council meeting, Beth Kim said the hotel has been losing money since it opened in 2009, one of the worst years on record for hotels across the country, she said. She and her husband have used their personal savings to pay the mortgage, she said.

"We have sunk everything," Kim said. "If we can't make it, we will lose all of our personal assets at the end of the day."

As an economic development incentive, sometimes Lodi will allow builders, such as the Kims, to pay those fees in installments.

Already, the Kims have paid $84,014 in impact fees and are not past due, officials said. Their remaining balance is $371,683.

In their proposed revised agreement, the Kims are asking that their payments be suspended until January 1, 2012, and that the remaining balance be paid off in 20 installments over 10 years.

Also, their interest rate would be cut from its current 5.8 percent to an initial 1.6 percent rate. That rate could increase in future years but never rise higher than 4 percent under the proposed deal.

At the recent council meeting, Kim said she is hopeful the spring and summer will see an increase in hotel stays. She also said she expects to have a small business loan in place to help stay afloat.

City Manager Blair King said officials don't believe deferring the impact fee payments will hurt the city's ability to finance future infrastructure projects.

"It is a business decision," he said Wednesday. "We just think it's in our best financial interest to provide more latitude here."

Contact reporter Daniel Thigpen at (209) 546-8254 or [email protected].

Visit his blog at recordnet.com/ lodiblog.

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