Work on Hotel Tower Starts Unexpectedly : Developer Surprises Port Commissioners With Announcement on Financing Pact
Developer Doug Manchester appeared unexpectedly before San Diego Unified Port District commissioners Tuesday to announce that he had secured financing and broken ground on a second tower for the Hotel Inter-Continental, situated next to the planned waterfront convention center.
Home Savings and Loan Assn. of America has signed a commitment letter for financing the new tower, said Manchester, who faced an Oct. 1 deadline to obtain funds and begin construction on the 700-room tower. If he had failed to meet the deadline, he risked losing his option to build a Hyatt hotel on a third site nearby. The deadline had already been extended in May, after a financing package for the tower collapsed when the lender, Beverly Hills Savings & Loan, became insolvent and was subsequently seized by federal regulators.
The San Diego Unified Port District is eager for construction on the hotels to begin because it hopes to recoup some of the $125 million it is spending to build the convention center through a tax on the rents from the planned 2,220 hotel rooms. Work on the convention center began this summer, with a targeted completion date of late 1987 or early 1988, and the district has been concerned that a delay in the construction of the hotels could keep conventioneers away and cost the city millions of dollars.
Kip Howard, vice president of Manchester’s Torrey Enterprises development company, said the Inter-Continental tower could be completed “in the latter part of 1987.”
“We sincerely hope that the convention center will be completed in the time frame that they have committed to,” Howard said. “We made our deal, and we hope that they can respond accordingly.”
Manchester made his dramatic announcement after a presentation by his architects on landscaping and construction details for the proposed tower. Departing from the port commission’s agenda, Manchester read a prepared statement telling of Home Savings’ agreement to finance construction of the second tower and to refinance the first tower with a $208-million line of credit.
Grading of the site, Manchester said, was going on as he spoke.
In his statement, Manchester also criticized former--and unnamed--members of the Port District commission and City Council who he said opposed his efforts “for reasons which border on serious conflicts of interest.” Manchester declined to elaborate on that statement.
“I count on you, however, not to be swayed and tempted by others who would for selfish reasons try to undermine our joint efforts,” Manchester said.
“You are a constant source of delightful amazement,” responded Port Commissioner Bill Rick, to which Manchester responded, “Thank you.”
Neither Manchester nor his attorney, Christopher Neils, would pubicly reveal the terms of the loan until after the port commissioners have approved it. Howard said that the loan covers the entire financing needs for construction of the second tower, “with an equity contribution on our part.”
Total costs for the second tower are estimated at $90 million, Howard said. Torrey’s contract with HuntCor, the general contractor on the project, is for $45 million.
Spokesmen for Home Savings could not be reached for comment by late Tuesday.
Port Director Don Nay said he did not foresee any problems with approving the financing package.
“I haven’t had a chance to read the documents yet, but it sounds like he’s trying to go ahead with the project,” Nay said after the meeting. “I don’t think we have a lot of strings on how he finances it.”