ESCONDIDO - A developer has agreed to build a 105-room Marriott hotel near Valley Parkway and Interstate 15 in exchange for hotel tax benefits from the city that could amount to $1.45 million over 10 years.

The Escondido City Council was slated to approve the agreement Wednesday night, but the item was delayed until the council's Dec. 12 meeting because of a problem with properly notifying the public.

City officials have been trying for two decades to bring a hotel geared for business travelers to La Terraza Boulevard, which is high above I-15 on the eastern side of the freeway. The primary stumbling block has been creating a package of financial incentives large enough to make the project profitable for a developer, but small enough that city officials could support the deal.

"This deal strikes a very fair balance," Councilman Dick Daniels said Wednesday afternoon. "It gives the developer the profit they need, and it allows the city to fulfill a vision it has had for two decades."

The agreement stipulates that the city will return to the developer 55 percent of hotel taxes generated during the first 10 years, but the total amount of kickbacks is capped at $1.45 million. Projections indicate the hotel will generate about $340,000 per year in hotel taxes, so city officials said the cap is likely to be invoked.

Terry Jackson, a Burnham Real Estate vice president who represents the developer, said the agreement is a solid deal because the city is not making any initial financial contributions to the project.

"There are no fee waivers and no up-front costs to the city," Jackson said Wednesday. "The developer has to operate the hotel and the developer has to make it work."

Councilman Sam Abed said cities frequently provide such financial incentives to attract businesses, especially hotels and auto dealers.

"If we didn't give incentives like this, all these good businesses would go somewhere else," said Abed. "Giving $1.4 million for a Marriott business class hotel is money well-invested."

City Attorney Jeff Epp agreed that such incentive packages are common, but he said no other deals were used as a model for the Escondido pact. He said his role was making sure the project benefitted the city.

"The city gets a new source of general fund revenue, and there is little or no risk to the deal," said Epp.

Abed said this hotel is moving forward after so many failed attempts because of improvement in the city's economy and the emergence of the La Terraza Boulevard business corridor, which runs parallel to the freeway between Valley Parkway and Ninth Avenue.

"You have six or seven high-end office buildings over there now," said Abed. "Having a business class hotel means we can stop sending people down to Rancho Bernardo for good accommodations."

Escondido has 16 hotels and 967 hotel rooms, according to the San Diego North Convention and Visitors Bureau. The 600-room Welk Resort is just north of the city.

Abed acknowledged that the city has plenty of "small" hotels, but he said a business class hotel is an important amenity that the city lacks.

The city forged a separate deal last year for a 196-room downtown luxury hotel that will also carry the Marriott name. Abed and Daniels said there is no conflict between the deals, because the hotels will serve different clients.

They said the La Terraza hotel will serve clients staying for several days on business trips, while the downtown hotel will be primarily for tourists and people attending performances at the nearby California Center for the Arts, Escondido.

Jackson said the developer is eager to move forward on the project after many delays and changes. The agreement requires the hotel to open by April 2010.

The hotel will feature, stucco, stone and glass on a 1.7-acre site just north of 24 Hour Fitness. It will be 58 feet tall at its northern and southern ends, but the majority of the building will be 53 feet tall. The council approved design plans in 2005 for a slightly smaller hotel on the same site, but that project never moved forward.

- Contact staff writer David Garrick at (760) 740-5468 or dgarrick@nctimes.com.