|By Alicia Robinson, The Press-Enterprise,
Riverside, Calif.McClatchy-Tribune Regional News
March 3, 2010 --Riverside City Council members Tuesday chose to forge ahead with ambitious plans for downtown, starting with a $20.6 million loan to a developer who will build a 125-room Hyatt Place hotel.
Council members in a 6-0 vote approved the loan, funded with tax-exempt bonds offered through a federal stimulus bill. They also approved changes to an existing deal with MetroRiverside LLC, the developer who will build the hotel and adjacent residential and retail projects. Councilman Andy Melendrez did not vote because he owns property near the hotel site.
The council approved the loan over the objections of the Mission Inn and Marriott hotel proprietors, who said they don't oppose the new hotel per se, but they questioned the financing method of the project and its timing in one of the worst-ever downturns for the hotel industry.
"I'm all for competition but 101 Economics is, first of all you create demand, then you create supply," Mission Inn owner Duane Roberts said. "We're doing the reverse."
But city officials have said the Hyatt hotel is key to an expansion of the convention center, which the council agreed Tuesday to explore further. All together, the hotel, convention center and MetroRiverside's mixed-use Fox Plaza project will add momentum to the revitalization the city has started downtown, council members said.
"It really is a chicken and an egg. You build the hotel, it justifies the convention center. You build the convention center, it justifies the hotel," Councilman Mike Gardner said. "We've been handed an egg."
Several speakers and council members said the hotel and Fox Plaza would bring badly needed jobs. A city consultant projected the hotel would create about 96 temporary construction jobs and 75 permanent full-time jobs, and that it would generate $525,000 in tax and other revenues the first year of operation.
MetroRiverside is expected to break ground for the hotel at Fifth and Market streets this summer and open it in 2012.
City Chief Finance Officer Paul Sundeen has said the loan is structured to protect the city, including two separate cushions of reserve funds to cover debt service for two years if the developer cannot pay. In case of a default, the city could foreclose and own the hotel.
The terms require the city to put up two fire stations and the libraries in Arlington and Casa Blanca as collateral, but Sundeen told the council that because the loan is funneled through the city's Redevelopment Agency, which is capable of repaying the bond debt, "Those facilities are in no threat whatsoever."
Sundeen also said the city would not have to spend Riverside residents' money or raise taxes to fund the loan.
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Copyright (c) 2010, The Press-Enterprise, Riverside, Calif.
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