|By Andrea Moss, North County Times,
Escondido, Calif.McClatchy-Tribune Regional News
January 13, 2009 --SAN MARCOS -- Construction of a Marriott Residence Inn off Highway 78 has ground to a halt, with its developer saying Monday that he has run into a financing problem.
OTO Development of Spartanburg, S.C., broke ground on the 112-room hotel in September on the southeast corner of Los Vallecitos Boulevard and Las Posas Road. After that, workers installed underground utilities, poured the hotel's concrete foundation and started framing the building.
Construction stopped at the site in recent weeks, and city officials said they did not know why.
On Monday, OTO chief executive Corry Oakes said in a telephone interview that his company was forced to temporarily suspend the $22 million project because its original construction loan fell through.
The company is working to secure a new loan from a different financial institution, he said.
"We had a verbal commitment that evaporated," Oakes said. "With the credit markets in the shape they are in, the original bank is no longer making any real estate loans of any kind. So we're working through that."
He also said OTO remains committed to the project.
"We're still moving forward, and we have every intent of completing the project as soon as possible," Oakes said.
City officials had welcomed the four-story project, saying that having a Marriott hotel would boost San Marcos' image.
Scheduled to open this fall, the hotel also was expected to generate about $375,000 in hotel tax revenue for the city each year.
The hotel project is not alone in experiencing financing problems.
Last week, the Escondido City Council declared a long-awaited downtown Marriott hotel project dead after La Jolla developer C.W. Clark failed to meet a financing deadline. He was trying to line up about $40 million worth of loans to cover his portion of the project; the city had already set aside $19 million for the project.
San Marcos promised no money for the Marriott Residence Inn, but more than a year ago the city sold OTO a key piece of property for $3.9 million for the project. Once home to industrial buildings, the 2.3-acre lot was part of a larger property San Marcos acquired because the land was needed as a right of way for the Las Posas-Highway 78 interchange.
The city did not need the lot once the interchange opened in 2006.
Last week, before OTO confirmed the hotel project's suspension, Mayor Jim Desmond said he would not be surprised if the bad economy had something to do with it. But he also expressed concern.
"I do not want to see that (kind of project) sitting there stagnant anywhere in town," Desmond said. "But this one's right off the freeway there."
City spokeswoman Jenny Peterson said city officials nonetheless are confident OTO will follow through with the project.
"They're a reputable company, and I'm sure they're just experiencing the same credit problems that everyone else is experiencing right now," she said.
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Copyright (c) 2009, North County Times, Escondido, Calif.
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