Dec. 16, 2003 - Developer Robin Brown yesterday turned down a $15 million loan the city offered to help finance his luxury Mandarin Oriental Hotel on Boylston Street. 

Brown, a partner in the company developing the 150-room, $230 million hotel and condo project, initially said the loan made the difference between a continuing struggle for financing in a difficult market and getting the Mandarin underway. 

But yesterday, after publicity over the use of public funds for such a swank development, his company, CWB Boylston LLC, said it was declining the loan because the terms were unacceptable and the financing market had improved. 

"We have decided not to avail ourselves of this opportunity," the company said a statement. "As a result of the increasing stability of the economic climate . . . we are most hopeful that we will be able to proceed with financing without the assistance of the program." 

CWB Boylston said there has been strong buyer interest in the condominiums, which will cost $2 million each or more. The condominiums will be built alongside the hotel at the Prudential Center. The Mandarin already has deposits on condos from two of the city's wealthiest men: car dealer Herb Chambers and philanthropist David Mugar. 

The city last month decided to offer Mandarin $15 million from a Department of Housing and Urban Development loan fund to help get construction started by summer. 

The city awarded loans from a $40 million pot to two other developers, Joseph F. Fallon and Harold Theran, both of whom have signed documents outlining the terms of the loans, which carry interest at about 12 percent. Fallon and Theran have given the city required payments to initiate the loan process. 

City officials have defended using the HUD funding, saying the loans are consistent with the federal agency's goal of jump-starting projects that can renew entire neighborhoods. The hotels would provide municipal tax revenue, as well as jobs for those with lower incomes, city officials said. But some activists thought the money should be used in poorer parts of Boston. 

Mark Maloney, director of the Boston Redevelopment Authority, said he did not think that recent Globe stories raising questions about wealthy developers receiving federal loan money that could have been used in needy neighborhoods had played a part in the company's decision. 

"They can get better terms in that they're able to maximize their interest in market-rate condominiums to leverage their money," Maloney said. 

Brown would not comment beyond the company statement. 

Theran said last week he plans to have financing wrapped up for his Battery Wharf hotel and condominiums in the North End within a week or two. The city approved a $10 million loan for his project, which includes a Regent Boston Hotel. 

Fallon is part of a team including Starwood Hotels & Resorts Worldwide Inc. that is planning to build the official hotel at the site of the new Boston Convention & Exhibition Center in South Boston. That project got a loan for $15 million. 

Maloney said the unused money from the Mandarin Oriental project may be employed in another project. Richard Friedman, who is planning a hotel on the site of the old Charles Street Jail, said in November his $80 million project is about $8 million short of being completely financed. 

"We'll go back and look at the other three hotels we were going to put aside," said Maloney. "We might get four hotels out of this." 

Others applications for a loan were for a Grand Hyatt Hotel to be built at Fan Pier, managed by Spaulding & Slye Colliers, and a hotel at One Court Square, near Government Center. 

One issue that might have been difficult for Brown was whether the Mandarin Oriental will employ union or nonunion workers. 

That had not been determined, but city officials said they were requiring that any operator of a hotel that had made use of its loan program would have to use union workers. 

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