|By David Garrick, North County Times,
Escondido, Calif.McClatchy-Tribune Regional News
Oct. 1, 2008 --ESCONDIDO -- City officials said Tuesday that the developer of a seven-story Marriott hotel planned for downtown Escondido has not secured enough loans for the $67 million project by a city-imposed Sept. 30 deadline, but City Council members said they would probably grant an extension.
Council members said the recent banking crisis may have made securing large loans nearly impossible, which would make an extension appropriate. But they also stressed the need to determine whether the project is financially feasible as soon as possible.
The developer did not return several phone calls Monday and Tuesday seeking an update on efforts to secure somewhere between $2 million and $3 million in additional loans needed for the project.
But Assistant City Manager Charlie Grimm said Tuesday morning that the developer, C.W. Clark of La Jolla, had fallen short.
"They've submitted a letter asking for 60 more days," said Grimm. "They said things still look as good as possible, but that they do not have the money yet."
The council imposed the Sept. 30 deadline in April after agreeing to increase the city's cash contribution to the project from $16.8 million to $18.9 million. The city has also agreed to complete some infrastructure work that would cost a few million dollars more.
City officials and merchants have predicted that the hotel will attract restaurants to Grand Avenue and persuade more tourists to visit Escondido. It would be built on a 75-space parking lot between City Hall and the California Center for the Arts, Escondido.
But critics have complained that taxpayer money should not be used to persuade developers to build projects that would not be profitable without a city contribution.
Grimm said the council will discuss the possible financing extension and some related issues during a session closed to the public Oct. 22. He said the council could decide to abandon the project, grant the request for 60 extra days or close the gap by increasing the city contribution.
Mayor Lori Holt Pfeiler, Councilman Dick Daniels and Councilman Sam Abed said an extension would be the most likely outcome of their Oct. 22 meeting. The council members said they were not ready to give up unless the developer has no prospects of securing the extra money, but they also balked at the idea of increasing the city's contribution.
"It would not be fair to the taxpayers to increase the city's contribution," said Abed. "But I'm willing to give the developer another month or two. We wanted to make sure it was either a 'yes' or 'no," but the financial crisis has changed things."
Daniels said the deadline was somewhat arbitrary, which makes it less crucial for the city to adhere to it.
"This was not a stopwatch kind of deadline," said Daniels. "If we think he's got some money in the pipeline, we've come too far to kill the project because of a deadline."
Abed and Daniels also stressed that an outside analysis completed this spring predicted that the city would receive more than a 10 percent return on its $18.9 million investment. The money will come from hotel taxes, lease payments from the developer and other economic activity generated by the hotel.
Pfeiler said the city's goal is still to make sure the hotel gets built. But she also said the city must stop spending staff time and other resources if it becomes clear that the project won't happen anytime soon.
"If he's had problems because of the financial crisis, then we need to give him more time," said Pfeiler. "But if he's just up against a wall, then maybe that will be it. In some ways, we need to just do it or not do it."
Tom Crowley, a prominent downtown leasing agent, said the project falling through would be a major blow to downtown Escondido.
"If they decide this isn't going to happen, it will be a really sad day," said Crowley. "That hotel has been the wind and sail for downtown."
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Copyright (c) 2008, North County Times, Escondido, Calif.
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