OK Given to Build 2nd Radisson Hotel Tower

Insisting that expansion of the Radisson Hotel would “significantly upgrade” the property, a bankruptcy trustee in charge of the Radisson received court approval on Thursday to begin construction of a 13-story twin tower next to the existing 264-room hotel in Mission Valley.

U.S. Bankruptcy Judge James M. Meyers authorized Trustee C. Hugh Friedman to spend $200,000 of the hotel’s operating funds to begin erecting the second tower’s steel-frame structure by month’s end.

The process of clearing land is expected to start today, according to hotel officials.

“The development of the second tower makes this a more economical and attractive property,” Friedman said. “Some of the facilities in the first and existing tower were designed for a second tower.”

Friedman’s position seems to vindicate the original business plan of developer Carroll Davis, whose San Diego Diversified Properties built the Radisson. Unlike Davis’ original proposal, however, Friedman’s does not yet include plans for an adjacent parking garage.

San Diego Diversified filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code on Aug. 6--one week before a scheduled foreclosure sale of the hotel and one day before a City of San Diego deadline for permits to be filed on new developments in Mission Valley.

Davis’ bankruptcy filing may have exempted him from the master-plan filing deadline, attorneys close to the case believe.

The permits that were activated Thursday do not fall under the new city regulations and had been previously filed as part of Davis’ original construction procedure, according to Friedman.

Attorneys representing the Federal Savings & Loan Insurance Corp. (FSLIC), which is owed $27.5 million in defaulted loans used to build the first Radisson tower, opposed Meyers’ decision. They argued that Radisson money should instead be used to pay FSLIC back.

Davis on Thursday reacted favorably to the court action. “We’re very excited about starting Phase 2,” he said, “and we’re looking forward to working out a plan with FSLIC.”

Meanwhile, would-be buyers are showing a great deal of interest in the Radisson according to industry sources. And Friedman acknowledged that he is in “constant contact” with several prospective buyers. He declined to identify them, however.

Financially, the hotel is “holding its own and better, given the difficult circumstances,” said Friedman. Occupancy for the year averages about 74%, he said.