|By Rhonda Bodfield, The Arizona Daily
Star, TucsonMcClatchy-Tribune Regional News
Dec. 31, 2012--The owner of Hotel Arizona just secured a vast footprint in downtown Tucson.
An affiliate of HSL Properties on Friday acquired the sprawling and colorful La Placita Village complex next to the Tucson Convention Center from its previous owner, an offshoot of Bourn Cos.
The move has been brewing for several months. In August, BP La Placita Village Investors, which is managed in part by developer Don Bourn, was in default on a $2 million second deed of trust on the property, which was taken out in 2004. The beneficiary of the loan is Lopez Family-Transamerica Holdings, managed in part by Humberto S. Lopez, who owns the Hotel Arizona next door.
Bourn had until the end of December to secure financing. When that didn't come through, Lopez's HSL took over the property.
"Clearly, this was not necessarily a planned situation, but now we can make lemonade out of lemons," said Omar Mireles, executive vice president of HSL.
The proximity of Lopez's hotel, and the fact it will lie on the route of the future streetcar, already makes him a big player in downtown renovation efforts. Lopez, who has owned the hotel since 1984, made a pitch to the city in November to grant him substantial tax incentives to fix up the hotel, which by all accounts is struggling under the weight of millions in outstanding debt and ongoing maintenance problems. In early 2011, Lopez reported 70 of the hotel's 200 rooms were uninhabitable.
The addition of La Placita, however, now gives the company control over yet another key piece of downtown real estate.
Mireles said the move helps revive possibilities for the west end of downtown. "HSL is excited to be in a position to bring together the whole block as an integral part of this TCC area," Mireles said in a written statement.
In a brief interview, Mireles said it's too soon to know what those opportunities will look like, saying the company will take a fresh look at the complex. "There's nothing concrete at this point," he said.
The company announced that the change in ownership will not displace any of the current La Placita tenants, which include the Arizona Daily Star's downtown bureau. All current leases will remain in place and the company will address any outstanding maintenance concerns as soon as possible, Mireles said.
Michael Keith, head of the Downtown Tucson Partnership, said the move sets up an interesting dynamic.
"The cherry on the sundae for downtown Tucson is the Convention Center," Keith said, adding the facility has been begging for a master developer to make it the hub it should be. "Now that entire area, including La Placita and the hotel along with the Convention Center, could be reimagined in ways that would really set Tucson on a very unique path."
The City Council is poised next week to huddle with its attorneys to discuss Lopez's hotel proposition.
Since the city isn't allowed to just give away public resources, such as allowing a single property owner to retain sales taxes generated on site, Lopez had offered the city use of the hotel garage in exchange.
Mayor Jonathan Rothschild said when the news of La Placita's ownership change came across his desk, his immediate thought was that it provides Lopez with more assets to use if the city were to consider creating a business-improvement district downtown.
But Rothschild said while he wants to have a larger discussion about how other cities have successfully prompted renovations of blighted areas, he's not interested in working out deals with single development entities.
"The general concept for me is to create a structure and a set of rules that apply to everybody and that everybody can be eligible for," he said. "Maybe Humberto will qualify under those rules, maybe he won't. But this does appear to give him an additional asset he could utilize, assuming the city were to go forward."
City Councilman Steve Kozachik agreed that while he's willing to consider the use of incentives to spur development, he also wants a uniform tool kit that would apply to all applicants.
Kozachik said he remains skeptical of Lopez's hotel pitch as it stands currently. "There are too many questions that the taxpayers would have -- legitimate questions -- about one person benefiting at the taxpayers' expense, with questionable returns on investment."
Kozachik said Lopez should just donate the hotel to the city and then enter into negotiations with the city to develop La Placita and the garage.
At a minimum, though, he suggested La Placita should be part of a package in any agreement Lopez attempts to work out with the city on the hotel.
"It's an interesting piece of the puzzle with respect to development opportunities, but not if the piece includes Bert Lopez asking for help with the hotel and then trying to make money off of La Placita," Kozachik said.
Contact reporter Rhonda Bodfield at email@example.com or 573-4243.
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