Financing Set for New Hotel at Horton Plaza
After several years of sputtering starts, financing has finally been secured for a new $58-million, 15-story hotel to be built next to Horton Plaza, a development firm announced.
Construction of the Omni International Hotel is set to begin late next month, with an opening date scheduled for mid-1987, said Thomas Vavra, senior vice president of Py-Vavra Development Inc., the Milwaukee-based company that will own the 452-room hotel.
Vavra, who made his announcement at a meeting of the Centre City Development Corp., said “all basic parts (of the loan) are together” and final documents are being prepared by attorneys.
The developer took out a building permit with the city Wednesday that allows for about $5 million in excavation and foundation work. Vavra said it is essential that his company begin construction this year to take advantage of tax breaks.
The hotel was originally proposed in 1981, but several other developers were never able to bring the project to fruition.
The financing package described by Vavra includes a $48-million construction loan from the Bank of New York, and two separate $5-million outlays from BNP International Financial Services Corp., a subsidiary of Banque de Nationale Paris, and Lyons Savings and Loan of Hinsdale, Ill., in return for ownership shares in the project.
After it is constructed, permanent financing of $48 million will be provided by Teachers Insurance and Annuity Assn., the same permanent lender for the $140-million Horton Plaza.
The hotel will be built on a 1.5-acre site next to Mervyn’s department store, between 1st Avenue and the new Broadway Circle. CCDC bought the property, which is behind the Spreckels Building, and made some initial improvements, such as providing modernized utility connections, at a cost of $1.9 million.
Py-Vavra will buy the property for $1.57 million. CCDC officials said the resulting $344,000 subsidy will be recouped in the first year of the hotel’s operation by the generation of $543,000 in property taxes earmarked for redevelopment.
Gerald Trimble, CCDC executive vice president, said the final loan documents will be presented to the CCDC board of directors on Nov. 26. If approved by the board, as is expected, Py-Vavra will take possession of the property on Dec. 17.
In other CCDC action Friday, the board of directors, without taking a formal vote, said it favored in concept the new design proposed for the San Diego Art Center. The art center, which will be housed in the historic Balboa Theater, wants to build three, instead of four, levels of exhibit, retail and restaurant space.
But the proposal for fewer floors may cost the city more money to subsidize the reconstruction because there is substantially less retail space in a three-level structure. In the original four-level plan, part of the city’s financing costs would be recouped through retail sales and rents.
Proponents of the new design say it is better because it offers more exhibit space for a modern-art museum, while at the same time keeping intact the theater’s ornate ceiling. Even opponents who want to save the Balboa for stage plays told the CCDC board that the new design is superior to the old one, which essentially called for the gutting of the theater’s interior.
A formal vote on the new design was put off for 60 days to allow the art center’s developers time to analyze the costs involved in the new design and identify the amount, if any, of a new subsidy.
In a related matter, the CCDC board rescinded its decision of two weeks ago and now will hire a new engineering firm to study the earthquake safety of the 1,500-seat theater.
On Nov. 2, the board approved a $12,500 contract with Englekirk & Hart Consulting Engineers Inc. to do a structural analysis of the Balboa. But the selection came under fire by some City Council members because the engineering firm had done work at the theater for the art center’s developer and questions were raised about the company’s objectivity.
Trimble, who called such questions “absurd,” nonetheless decided to solicit new bids. Two other firms, Blaylock-Willis & Associates of San Diego and Kariotis & Associates of Los Angeles, are now in the running for the new contract, which was set at $37,500.
Trimble said he and the city’s building inspection department will select one of the two firms. The scope of work will include both a study of the building’s earthquake safety and the cost of strengthening the structure if it is kept as a theater, as some preservationists have proposed.
