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City Council Support Declining for $67 million
Downtown Escondido, California Marriott Hotel Project

By Angela Lau, The San Diego Union-TribuneMcClatchy-Tribune Regional News

Jun. 5, 2009--ESCONDIDO -- Just as the developer of a proposed downtown Marriott Hotel has scraped together financing, the City Council is losing interest because of ongoing budget deficits.

Councilman Dick Daniels, who had been one of the staunchest supporters of the project, said this week he cannot vote to commit millions of dollars in city money to a hotel when Escondido is planning to lay off employees, cut benefits and use reserves to close a $6.7 million budget gap.

The deficit in the city's $75 million general fund budget for the coming fiscal year, which begins July 1, is caused mainly by plummeting sales and property tax revenue.

Daniels changed his mind about the hotel despite a sweetened deal proposed by the developer, La Jolla-based C.W. Clark, which has been negotiating on and off with the city since 2006. Clark wants to build the $67 million hotel in a parking lot of the city-owned California Center for the Arts, Escondido.

Originally, the city had pledged to invest $19 million, and would let Marriott lease and manage the art center's convention center. But the proposal angered some residents and city unions, who criticized the city's contribution as a developer subsidy.

Last week, the developer told Escondido officials it found a Texas investment firm to finance most of the project, and would need only about $13 million from the city.

In good economic times, the new deal would have been music to the ears of a council majority: Daniels, Mayor Lori Holt Pfeiler and Councilman Sam Abed. They have backed the hotel despite the criticism, arguing that Escondido must invest in a new source of revenue -- hotel room taxes -- to offset declines in sales taxes.

The recession, however, has changed the equation. Councilwomen Olga Diaz and Marie Waldron have said they favor a hotel downtown -- just not now. This week, Daniels joined them.

"This is the right idea, but the wrong time," Daniels said. "At this point, I don't think I can support taking revenue that is earning us $600,000 a year.

"I take no pleasure in this. The first moment we are able to, I'm going to pursue that deal to the extent it is available. I think we should pause, take a deep breath, and wait one year."

Daniels said the tipping point for him was a recent proposal by the state to borrow $2.3 million of Escondido's share of property taxes and take $1.2 million in gas taxes to help cover the state's massive deficits.

Diaz said she will support a hotel only if it is fully funded by the developer.

"I'm still opposed to writing the developer a check," Diaz said. "The only contribution we should make is to allow the use of the convention center and maybe negotiate a better lease (of city land) for them."

Waldron urged the council not to jump at Clark's new offer.

"We need to be very cautious," she said. "We need to be good stewards of taxpayers' money. I'm not eager to step forward on a large investment like that."

Craig Clark and his representative did not return telephone calls seeking comment.

Whatever happens to the hotel, the council still has to balance its budget.

Abed suggested that the city save $2.5 million by:

Closing the East Valley branch library, but restoring operating hours at the main library

Reducing public works over time

Reducing funding to community organizations

Cutting the recreation fund

Laying off non-public-safety employees

Closing some city warehouses where equipment and supplies are stored

Laying off administrative staff and managers

His proposal was in addition to proposed benefits cuts for city employees and using money from a reserve fund to help close the budget shortfall.


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