Nov. 12, 2009--City officials say they have shut down all planning and analysis for the proposed downtown Marriott because the developer and an investor missed an Oct. 30 deadline to provide what the city has characterized as "routine" financial documents.

But a majority of the council said Wednesday that the hotel project could be revived quickly if the developer provided the requested documents.

Councilwoman Olga Diaz said that the developer's failure to comply has prompted city staff members to declare the seven-story hotel a "dead" project. And City Manager Clay Phillips told the council in an e-mail last week that all work on the project had been halted.

But Mayor Lori Holt Pfeiler and Councilmen Dick Daniels and Sam Abed said the project could easily be revived. They said the only major sticking point is the council's request for the developer to place $4.75 million in an escrow account to cover any unforeseen circumstances on the roughly $65 million project.

Council members said they have been insistent on a contingency fund because they do not want to be forced to provide anything beyond a $10.7 million subsidy they have promised and $2 million of infrastructure work on the site, which is a parking lot between City Hall and the California Center for the Arts, Escondido.

"We want to make sure the risk to the city is minimal," Abed said.

The developer and a financial partner did not return phone calls Wednesday.

City officials have consistently hailed the hotel as a crucial catalyst for downtown, but opponents have questioned why tourists would want to stay in Escondido and why the city needs to subsidize a private development with millions in taxpayer dollars.

After months without progress, momentum for the project seemed to build this summer and fall when the developer, Craig Clark of La Jolla, secured financing from Transcan, a Bay Area venture capital group.

At roughly the same time, city officials learned they could use redevelopment money to fund the hotel subsidy instead of money from the city's cash-strapped general fund.

But shortly after an Oct. 7 public hearing was scheduled for the project, council members hit the brakes. They said they wanted to study the track record of Transcan, negotiate the contingency fund and discuss when Clark will be paid back roughly $2 million he has spent since work began on the project six years ago.

Council members said Wednesday that the only significant remaining hurdle was Clark and Transcan showing the city proof that they have deposited into an escrow account all the necessary funds, which total about $50 million with the contingency money.

"If we see the money, I think it will go forward," said Pfeiler. "They have their financing and they are getting their equity piece together. They are very close."

Daniels, who has previously been the council's swing vote on the hotel project, was slightly less optimistic than Pfeiler, who has been a staunch supporter of the hotel along with Abed.

"I wouldn't characterize it as dead, but I don't know if it's going to happen," Daniels said Wednesday. "We thought the things we requested were relatively routine."

Daniels said he expects Clark and Transcan to comply with the council's demands within the next "couple weeks." But he declined to set any kind of deadline, contending that the city should not limit its options.

Abed agreed.

"The timing is irrelevant when you're talking about a project that makes sense for the city," he said.

But Diaz said it's time for the city to move on from the hotel, which she's never supported.

"It's totally dead," she said. "We made a pretty standard and minor request for tax returns and other simple stuff, and we just got a few spreadsheets that made no sense."

Diaz said another problem was verifying the source of the venture capital funds, explaining that the city can't spend money unless it knows the source because the funds could be the result of organized crime or something else unsavory.

"We were very clear that if they did not comply, we were done with them," said Diaz. "We can't continue to keep spinning our wheels and spending money on consultants."

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