Despite advice from its own consultant, the city is conducting exclusive negotiations for a $10-million hotel project with a group headed by a Glendale architect.
Negotiations between the city and the Montebello Golden Tee Hotel development group began last month and are expected to reach a crucial stage in September when the developer must submit architectural plans and show that it has the financial backing to build and operate the hotel. The group is headed by architect Edmond Babayan and includes three unnamed partners.
The city's economic consultant, Keyser Marston Associates of Los Angeles, recommended denial of the negotiating agreement in June. In an interview Wednesday, Cal Hollis, a spokesman for Marston Associates, said that Babayan has no experience as a developer and that the group's lack of hotel-chain affiliation makes its financial projections "unachievable."
Defending the approval in a series of recent interviews, city officials said the discussions with Golden Tee are exploratory and do not signify a commitment.
They said that the city must take advantage of a "window of opportunity" presented by favorable economic conditions as well as the availability of an interested developer. Only one other group, which later withdrew, expressed interest in the proposal.
The negotiating agreement was endorsed by four of the five councilmen in July.
Mayor Art Payan, the council's only opponent, echoed one of the consultant's concerns Tuesday, saying that the proposal had not convinced him the hotel would be "first class."
Golden Tee's proposal calls for a nine-story, 175-room tower on less than two acres of land next to the city-owned golf course at the Pomona Freeway and the Garfield Avenue off-ramp.
If the hotel is built within a year, as expected, Montebello would receive at least $250,000 in annual revenues from the lease agreement, bed tax and increased volume at area businesses, according to Al King, director of parks and recreation and the coordinator of the project for the city.
Montebello began seeking hotel proposals from developers, investors and hotel owners a year ago and received two responses. One was an inquiry from the La Quinta Hotel chain, which did not pursue the project, the other from Golden Tee.
A city report that summarized a project analysis conducted by Marston Associates said the consultant recommended against the negotiation agreement with Golden Tee because of Babayan's lack of experience in hotel ownership and development.
Hollis, of Marston Associates, said Babayan has experience as an architect for hotel and office projects, but that design is only one part of the development process, which also requires knowledge of financing, construction and hotel management.
Babayan is identified in city documents as a developer, but neither Hollis nor city officials would name the other members of the group. Babayan's partners include a financial backer and hotel operator who has 12 to 15 years experience in hotel management, Hollis said.
Babayan, through a spokesman, refused to comment on the project or his development group Wednesday.
According to the Marston analysis, affiliation with a national chain would be crucial to the project because it could provide the hotel with national or regional reservation and marketing systems, said Hollis.
Golden Tee's income projections are "aggressive," he said, and without affiliation they will be "unachievable."
But, the consultant said, "we're not saying it's not feasible" to operate a hotel there.
The consultant also categorized as "motels or low-end hotels" the projects that Babayan listed as similar to the one he wants to build in Montebello, the city report said.
Payan said he also objects to the project because the hotel--which would be next to the 125-acre Montebello Golf Course--would create traffic congestion.
Despite the consultant's recommendation and Payan's opposition, city staff members recommended awarding the exclusive negotiating agreement to Golden Tee because of Babayan's experience in designing hotels for chains such as Hilton, King said.
In addition, he said, the architect was willing to build a hotel that would not reduce the size of the golf course while hotel chains insist on their own designs.
"We feel comfortable with his experience and qualifications," King said.
Councilman Phillip Ramos said the project is still in the preliminary stages and conducting "negotiations is not a commitment. It is only a process that allows the parties to decide whether to agree on an acceptable project."
In the city report, King said the city would use the negotiating period to iron out details about the project's quality and Golden Tee's ability to finance it.
King said the city is pushing for the project because economic conditions, such as lower interest rates, are favorable.
"There's a window of opportunity and you need to get it done while the window is open," he said.
Under the proposal, Golden Tee would pay the construction costs and the city would offer the company an advantageous land lease as an incentive, King said.
In other parts of the Southeast area, hotel construction is under way in Whittier and Downey, while the cities of Norwalk, Pico Rivera and Huntington Park are pursuing similar projects.