Jul. 10, 2009--ESCONDIDO -- Prospects for a proposed downtown Marriott have improved because city officials have nearly forged a settlement involving redevelopment money that would yield several million dollars in subsidies needed for the project, City Councilman Sam Abed said Thursday.

But council members Dick Daniels and Olga Diaz called Abed's comments premature. They stressed that a settlement had not officially been reached, and that it was unclear what restrictions the city might face regarding use of the redevelopment windfall, which Abed estimated at $15 million.

The hotel has been hailed for many years as something that would bolster downtown restaurants and the city's performing arts center, but Daniels, Diaz and Councilwoman Marie Waldron voted to put the $60 million project on hold three weeks ago.

They argued that the city's extremely shaky finances made it too risky to grant the developer $12 million in subsidies he was demanding. They said the city needed to protect its roughly $25 million in reserves to fund police, fire and other vital services if the recession continues to sharply reduce city revenue.

But Abed said Thursday that the redevelopment money would turn that equation upside down, because it could not be used to cover ordinary city expenses. It would have to be used for a development project such as the hotel, he said, predicting that the change would help him and Mayor Lori Holt Pfeiler secure a crucial third vote for the project.

Diaz said she might support using the redevelopment money to subsidize the hotel, but she suggested the council should create a "wish list" of projects for the redevelopment money before making any decisions.

Daniels said he would "give serious consideration" to using the redevelopment money for the hotel, explaining that his opposition to the hotel has been about protecting capital the city already has, not protecting a new windfall.

But Diaz and Daniels said they were reluctant to comment further on the subject because Abed had revealed information from a council session Wednesday night that had been closed to the public.

Waldron, who missed the closed session because she is out of town, could not be reached Thursday.

City Attorney Jeff Epp could not be reached to answer questions about Abed's possible violation of closed-session rules and for an update on the redevelopment negotiations.

The redevelopment money has been unavailable to Escondido for many years because city officials have been unable to agree on key issues about sharing the money with officials from local school districts and the County Office of Education.

The division of the funds was outlined in an agreement made when the redevelopment district was formed in 1984 and clarified in a lawsuit filed in 1990, but a settlement has still been elusive.

Abed made his comments about the improving prospects for a settlement during a lunchtime meeting Thursday of the Escondido Chamber of Commerce economic development committee.

The remarks came during a presentation from the development team behind the proposed 196-room Marriott, which would be built on a parking lot between City Hall and the performing arts center. The developer was lobbying chamber officials to pressure the City Council into reviving the project.

The developers said it was urgent that city officials move forward on the project in the next 45 days or risk the financing package. They also said the project would provide the city about $1.3 million in revenue in the first few years after it would be slated to open in 2012, and roughly $10 million per year when the developer begins making lease payments to the city.

Steve Falciani, regional vice president for Dow Hotel, said his company was confident the project would attract enough guests to be successful.

"The studies have been done and the demand has already been established," he said.

Robert Behan, president of Transcan, a Bay Area venture capital group providing the money for the hotel, said his company would seek other opportunities if the council does not quickly change course.

"Capital always finds the quickest route to profit," he said.

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