ESCONDIDO: City will pay extra $2 million for downtown Marriott
By DAVID GARRICK - Staff Writer | ∞
ESCONDIDO ---- Determined to bolster downtown Escondido with a seven-story Marriott hotel, the City Council has agreed to give an extra $2.1 million to a developer to ensure he moves forward with the project this year.
The city's contribution to the $67 million project, which was approved in 2006, will increase from $16.8 million to $18.9 million, said Assistant City Manager Charlie Grimm. The extra money will cover a portion of some recent cost increases for the project, including higher prices for steel, concrete and other materials, he said.
Critics have complained that taxpayer money should not be used to persuade developers to move forward with projects that would not be profitable without a city contribution. They contend that developers should pay the full cost of their projects.
The 196-room hotel has been hailed as a catalyst for downtown by city officials and local merchants, who have predicted that it will attract new restaurants to Grand Avenue and persuade more tourists to visit Escondido. It would be built on a 75-space parking lot between City Hall and the California Center for the Arts, Escondido.
"So much of our economic prosperity depends on this project," said Councilman Dick Daniels. "It will be the first hotel in downtown. And when something is the first of its kind, it typically needs a stimulus."
Tom Crowley, a real estate agent who has handled downtown Escondido leases for many years, said the hotel would be a major boost for downtown merchants.
"On any given night, 100 or more people from the hotel will be within walking distance of downtown Escondido and Grand Avenue, where they could shop and eat," said Crowley. "I never thought we'd see something like this happen."
The extra $2.1 million will not come from the city's general fund, where city officials are predicting a deficit of about $7 million for the fiscal year that begins July 1.
It will come instead from an "economic investment" fund the city created in 2005 to help pay for property acquisitions, appraisals and other expenses related to development, said Grimm. The fund began with $2 million, but has increased to $2.45 million because proceeds from sales of city property are placed in the fund, he said.
While there is no guarantee that the developer will not ask for even more money in the future, Grimm said the new agreement would only allow for incidental cost increases, such as relocating old electric lines or utility boxes.
"It is doubtful it would reach any significant proportion," said Grimm.
Mayor Lori Holt Pfeiler said the council stressed that it did not want further requests for money when it met last week with the developer to discuss increasing the city's contribution.
"We talked extensively about the fact that this would mean that everything was ready to go," said Pfeiler. "This new development agreement should put us hot on the trail."
Larry Kimball, director of hotel development for C.W. Clark, did not immediately return phone calls Monday morning. But in early April, Kimball said the developer hopes to break ground in August. The La Jolla company built the Barnes & Noble plaza on Valley Parkway, just east of Interstate 15.
Pfeiler said the council was partly persuaded by estimates that city revenue generated by the project would be higher than predicted when it was initially approved.
According to a study by outside consultants Keyser Marston, the city expects to receive nearly an 11 percent return on its investment, said Grimm. That return would include lease revenue, hotel taxes, property taxes and sales taxes.
"So much has changed that we really had to re-evaluate the whole project again," said Pfeiler.
The $18.9 million city contribution includes $11.3 million for an underground parking garage, $6 million to help with property acquisition and $1.6 million for infrastructure. The extra $2.1 million is part of the parking garage portion.
Contact staff writer David Garrick at (760) 740-5468 or dgarrick@nctimes.com.
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Herb wrote on Apr 28, 2008 12:55 PM: Someone should look into how much money has been spent on that hotel project since its inception. it will be very costly and will never, let me repeat, never show a profit. Look at the hotels and motels about town now that are depending on other means to stay in business. What are people going to do, come to Escondido to see the hotel? What does down town Escondido have to offer visitors? I guess the county could put some of the homeless in there. I understand demographics, and I am sure that somebody has worked up a plan, but I would advise the City Council to take a very close look at it. I hope the city isn't planning on subsidizing the hotel - if so - up go the taxes and the council will have to put up more Auto Park signs along I-15. lol
Jax wrote on Apr 28, 2008 1:06 PM:This is a total, miserable farce. Does anyone actually believe that the attraction of overpriced frogs' legs and quiche is going to cause "tourists" to book a room at the Marriott to begin with? That $2m could have been much better spent on graffiti removal and good old fashiond law enforcement.
Escondeeter wrote on Apr 28, 2008 1:21 PM:While this 'critic' is aware that a city subsidy is necessary to get any developer to go near a money-losing project like this, he'd like to see any developer the city deals with live up to the deals he makes.
Since the decision to cough up an extra two million was made in secret, the public has no way to evaluate the legitimacy of the developer's claims that his costs have increased, which is of particular concern because the estimated cost for the city's public safety buildings has actually decreased over the same period. In many cases, materials have decreased in price and subcontractors are dropping their bids because of increased competition.
Hopefully, any additional attempt to 'jack-up the price' of this project will trigger a new RFP and a search for a new developer.
Break Even wrote on Apr 28, 2008 1:47 PM:When does the city break even on this outlay? When does it start collecting the 11% return? Please NCT more info. This is important to the story. Is there a guarantee that it will stay a Marriot? If it doesn't do well they will sell it and we will have another white elephant like the Arts Center and more rooms like those already on Center City Parkway.
Dont do it right now wrote on Apr 28, 2008 2:28 PM:or you will end up with another Blue Goose on your hands. You have been warned.
Resident wrote on Apr 28, 2008 2:30 PM:Why is the city spending that kind of money, when the police dept has to cut back????? We have hotels in the city that are gross, with homeless people living in them>>> This will be like the Arts center!!!!!!
Huh wrote on Apr 28, 2008 2:50 PM:$6 millon in land acquisition? Isn't that parking lot on/in the middle of city hall? This needs to be explained!!
Great wrote on Apr 28, 2008 4:02 PM:This will be a nice addition to the city. Now I don't have to send visitors to Rancho Bernardo anymore because we will have a decent hotel in town. This is the kind of thing that needs to be done to move forward and make Escondido a better place to live. Slowly but surely we can take this city back.
david wrote on Apr 28, 2008 4:37 PM:Good-There should be more of this--so much revenue will come in for the escondido--Cities should be much more giving to developers
Rick wrote on Apr 28, 2008 4:45 PM:What a joke. In my book developers pay for everything including new roads they don't use, and any all CFD's, taxes, etc. Trust me these developers are fat cats with deep pockets. It doesn't even matter if its legal or not. Who would even think of defending a "greedy" developer. Poor Escondido - how low will you stoop.
Marie-Anne wrote on Apr 28, 2008 4:57 PM:The PD cut back? Didn't they just get a new HQ on CCity parkway? Fun days ahead when there is a place to stay in downtown excondido. Who needs to drive after drinking?
Karl wrote on Apr 28, 2008 5:31 PM:Huh @ 2:50 PM: I agree, what heck is that. I don't think the lot could have cost that much.
How about it EDITOR. Explanation?
By the way. Where do I park now to get to the Credit Union?
Beverly wrote on Apr 28, 2008 6:52 PM:Is the Animal Park the reason the developers and politicans think people would stay in a hotel in Escondido? I love it here but don't consider it a tourist destination, and that is a good thing.
JJ wrote on Apr 28, 2008 7:50 PM:Lets see, how much money does the city dump into the arts center anually? Now its dumping another 19mil to try and help is succeed? Escondido is NOT a tourist destination. What a waste of money. Let cut police and fire budgets but throw money at a failed arts center
Esco Boy wrote on Apr 28, 2008 9:00 PM:The NC Times needs to do a real investigation into this matter to answer several questions:
1) How does $6 million in land acquisition fees come into city owned land?
2) How have prices gone up for this projects when construction prices have decreased dramatically in every other part of Escondido.
3) If "original estimates of city revenue generated by the project" were substantially flawed, as official state in the article, what other portions of the initial report were also flawed?
4) Why has the City left open "further future incentives." A reputable, serious developer is able to determine costs accurately, and deal with cost overruns if they bid low.
5) Why was there no extensive public discussion on this matter? This is a very key point.
These and many other questions need to be answered.
Elvin wrote on Apr 28, 2008 11:48 PM:There will be "more than 100 people on any given night within walking distance of the hotel."
The city NOR the downtown association can't do enough to get 100 people WHO LIVE near downtown to visit. So the city has to spend MILLIONS of dollars on 100 people who just MIGHT be staying in the hotel?
This city seems to do everything and anything backwards.
There are so many unanswered questions regarding this project because this newspaper refuses to do any substantial reporting. This story was in last week's UT and is just now hitting the NCT.
SCOOP.
Escondodo wrote on Apr 29, 2008 3:30 AM:There are two incumbent councilmembers who did themselves a disservice with this behind-the scenes decision. As of now they have lost my vote.
City Consultant wrote on Apr 29, 2008 4:16 AM:I remember the name Keyser Marston from the past. They did a lot of the "consulting work" on the Center for the Arts. I hope their "numbers" are more accurate on this project than on the Center.
To sad to be funny wrote on Apr 29, 2008 7:56 AM:HHHHHHHHHHAAAAAAAAAAAAAAAA!!!! What is left to say about this town?
ObsERVER wrote on Apr 29, 2008 8:44 AM:Any decision of the council made in closed session will be confirmed in open public session before any agreements are signed. That is the law. In addition, if Escondido doesn't boost its local economy and business center, it will collapse. It needs to balance the low demographics and this council is working to clean up the city and increase the income levels.
Obviously the hotel would not come in if they were not expecting to make money. The city is INVESTING in the construction of a parking structure in downtown to replace public parking lost due to development and will receive almost 11% return on this investment over time, which will help keep Escondido viable for years to come. The hotel will pay the city a lease on the city land and will pay for all its construction costs.
The benefits to the downtown will be amazing and the redevelopment efforts will continue even during this economic downturn. We cannot risk regressing backward.
Concerned wrote on Apr 29, 2008 8:54 AM:Well since we're going to have a nice hotel lets kick the flea bag hotels to the curb. City Council, you know exactly which hotels are full of tweekers and trouble makers.
palomar wrote on Apr 29, 2008 9:02 AM:I tend not to believe city hall spin doctors, or real estate agents, residential or commercial, who are trying to justify some poorly conceived deveopment. If you think that this stupid hotel concept is going to bring downtown Escondido out of the doldrums, I've got some nice swamp land to sell you. The city tried to show that parking was not a problem for downtown Escondido by using a parking study area with boundaries that were far from the heart of the downtown. That city council doesn't know which end is up. The bottom line is that Escondido desperately needs a better job base. Look at master-planned Rancho Bernardo and all of its high paying jobs in the business parks. Escondido would be much better off using that $2 million to use as tax incentives to locate business in town.
Athena wrote on Apr 29, 2008 9:32 AM:The hotel MIGHT make a profit IF the Arts Center marketing folks brought in major, big-name acts that would attract visitors from all over southern California. It's obvious the locals do not have either the money or the desire to spend $100 or so on NYC-caliber acts, and cheaper "local" acts don't bring in enough dough or desire to see them for the center to make money. It's really sad because the structure is built for big-name acts. Escondido is stuck on a fence: sleepy, quiet town that will surely sink the hotel with the Arts Center, or a major tourist draw that would bring in richer folks to sustain both and pay the bills
School wrote on Apr 29, 2008 9:47 AM:It funny how as sson as they cut backs for the schools, police, and fire depo. the city has millions to spend on a hotal that we do not need. Maybe the teachers and school works that got fired can get jobs there. what are these people thinking!!!
dazed wrote on Apr 29, 2008 9:49 AM:I feel it has to do with the Casinos. They have their hands in everything going on East of I-15 along Valley Pkwy/Bear Valley. Whatever. I agree. Everything is SPIN pure and simple.
Chubton wrote on Apr 29, 2008 11:16 AM:But we keep reelecting these turkeys...
Who is the more foolish?
Head in Sand wrote on Apr 29, 2008 11:21 AM:I thought all you guys wanted Escondido to succeed. Or would you rather it stay the way it is? A Marriott will definitely change the character of your downtown. Some for the worse, but most for the better. The reason the Arts can't book a good act is because there's no place to stay, and no place to eat. A Marriott will greatly improve the utility of the Arts Center. Once that gets going, businesses will come in to cater to those guests - and will push out the more seedier bsuinesses, as well as displace some pretty good ones - but hey, that's progress! You'll also find that alot more people from the surrounding communites will come to visit for dinner or a show. I see what has happened in Hillcrest, and what is happening in Normal Heights, and look at the transformation of Cardiff and coastal Encinitas - they all have their unique style and flavor, and there's no reason Escondido can't do the same thing. Look, you guys don't seem to be verry happy with the current Escondido, so just get your collective heads out of the sand and get this project done! Bite the bullet - take a risk - look to the future for a change!
Athena wrote on Apr 29, 2008 11:56 AM:.....Create a "tourist corridor" with Sprinter and shuttles to bring visitors to the hotel, Arts Center, and galleries and gourmet dining places along Grand Avenue. Esondido--the "Hidden Inland Jewel" that folks from La Jolla, Rancho Santa Fe, Santa Barbara, and even Las Vegas and Tuscon will travel to see. Nashville and Branson, MO have managed to retain much of their "small town character"; the tradeoff is that the cultural draws are funded and governed by large (but wealthy) conglomerates. Escondido has no legendary beaches like Encinitas-Carlsbad, but it can be its own unique tourist draw, if those in charge exerted some imagination. The alternative is to turn the hotel and Arts Center into schools, jogging tracks, avocado storage units, community centers or shelters, with the fungus-overgrown Grand Auditorium wimpering "Don't Cry for Me Esondido" beneath its crumbling stage.
Mike the Marine wrote on Apr 29, 2008 12:09 PM:Gee, I wounder why the city was not as generous when they pounded out the deal for the new hospital. Oh, I now remember, never mind. The hospital was to benefit all of the people of Econdido, not just the businesses and city hall. I don't remember authorizing my tax dollars to be spent, subsidizing a private business, does anyone else?
To ObServer wrote on Apr 29, 2008 2:40 PM:"The benefits to the downtown will be amazing and the redevelopment efforts will continue even during this economic downturn. We cannot risk regressing backward." This is the exact same thing they said about the CCAE in 92. We're still waiting! When this misguided boondoggle flops I'll be sure to hold you to your prediction.
To the three stooges wrote on Apr 29, 2008 3:25 PM:Abed,Gallo and Waldron should tell the true and tell everybody that a lot of this contractors will give money back to their campaings.
To ObServer wrote on Apr 29, 2008 5:05 PM:"Regressing backwards"??
As distinguised from what? Regressing forward?
Let's just stop calling this an 'investment', correctly label it a 'gamble', and get on with it.
Karl wrote on Apr 29, 2008 5:09 PM:How many bloggers here have ever attended a council meeting? Didn't think so. It's really easy to throw shot's on this blog. Step up to the podium my friends and complain before something is passed not after the fact.
Not a negative person wrote on Apr 29, 2008 6:40 PM:There is no doubt about it, the Center for the Arts AND the City (including the taxpayers) will benefit from a major, "up scale" hotel downtown.
The problem here is that once again, EVERY PROJECT near the Center for the Arts has needed taxpayer help in one form or another.... We all thought the Center would stimulate redevelopment which should not require more government money. Wasn't $100,000,000.00 on the Center enough?
Nick wrote on Apr 29, 2008 7:21 PM:Wow a big $67 million dollar 7 story hotel in Escondido. That's going to be so great for... (crickets chirping) (crickets still chirping) Well, it's going to be great for somebody I suppose. Just think of all the people who will come stay in a 7 story $67 million dollar hotel in Escondido so they can visit all of the 99 cent stores, taco shops, liqour stores and don't forget they have what 3 Home Depots now? I know if I were coming to Southern California I would much prefer to stay in Escondido with all of it's "Glory" (patch word for slum) than to stay 20 minutes west where I could go to upscale shops, nice resaurants and even see the ocean. No I'd much perefer to stay in Escondido to get a great view of ... (crickets again) (yep you guessed it crickets again). What could anyone possibly come to Escondido to see that would warrant a $67 million dollar hotel? The Art Center? Nope... FAILING!!! Hasn't seen a profit since it was built. Wild Animal Park? Sure but you can stay in RB and enjoy the view from you hotel room. Has the City Council and the Mayor poked their heads outside of City Hall lately and looked around? It's pretty sad. I'd say screw the hotel and spend $67 million dollars on giving the entire city a face lift instead of just that little corner where the politicians spend all day.
Elvin wrote on Apr 29, 2008 9:45 PM:The reason the arts center can't bring in "big name" acts isn't because of the lack of a place to stay or the last of places to eat, it's because the people responsible for the programming don't know their jobs, they don't know what the audiences want, and they don't market.
And the story spins on wrote on Apr 30, 2008 8:20 PM:Just want to point out that the city would receive "hotel taxes" (aka Transient Occupany Tax) regardless of whether the city "contributed" $18.9 million. Also, just want to point out that the city would receive "property taxes" and "sales tax" revenues, regardless of whether they "contributed" $18.9 million. So the claim that "the city expects to receive nearly an 11 percent return on its investment. That return would include lease revenue, hotel taxes, property taxes and sales taxes" is nothing more than political spin in an attempt to justify this disaster in the making. P.S. I hope the downtown business owners that sued the city previously are still watching...I can't imagine the "increased contribution" for the parking garage sits well with them.
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