|By John Cox, The Bakersfield
CalifornianMcClatchy-Tribune Regional News
May 26, 2009--Financial complications have again delayed the reopening of downtown's landmark Padre Hotel.
Unable to get an acceptable loan for the hotel's furniture, fixtures and equipment, the Padre's owners have asked the city of Bakersfield to borrow $1.8 million in federal money to cover some of their costs. The property's owners -- and not the city -- would be expected to repay the sum.
The Padre is considered key to downtown's tourism and entertainment future. It was to reopen as a boutique hotel by late June, following multiple delays under former and current ownership.
The hotel's owners wouldn't get the money they need to finish outfitting the 112-room hotel until August at the soonest, said Donna Kunz, the city's economic development director, who is helping with the loan application.
There's no guarantee the loan will come through. City staff plan to host a public hearing on the matter, followed by a month-long public comment period, Kunz said. The City Council would take up the proposal in early July.
One of the Padre's San Diego investors, Brett Miller, said Tuesday that his team was "very reliant" on the city-backed loan. He declined to elaborate.
According to a memo written by Kunz, Miller and his team need $4.6 million to outfit the hotel. They are able to contribute $1 million cash and can borrow $1.8 million. That leaves a $1.8 million gap.
The hotel is outside the city's downtown redevelopment project area, and therefore ineligible for certain kinds of financial support. But Kunz said its location may qualify the Padre project for a Section 108 loan within the federal Department of Housing and Urban Development's Community Development Block Grant program. Such loans are intended to help poor people or to prevent slums or blight.
The loan would need to be repaid within seven years and would carry an interest rate of 5.5 percent or lower, Kunz said, adding that private financing would be as high as 7 percent. Kunz also said Miller's team has "excellent credit" but that the Padre building would have to be put up as collateral to the loan.
In August Miller said his team had secured a construction loan that would allow the hotel to reopen by late June. A few months before, the group was denied a $16 million construction loan by Bakersfield's San Joaquin Bank. It paid $4 million for the hotel in February 2008.
Kunz said the team's renovation work is almost done.
"He (Miller) will be done with everything probably in about three weeks, as far as completion of the shell," she said.
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