Arrears in Rent to Port Cited : Revised Plan to Expand Hilton Hotel Is Rejected
The Harbor Commission has rejected a revised plan to expand the Queensway Bay Hilton after learning that the hotel is behind on its rent to the port.
Commissioners said Monday that they could not approve a new plan to eventually expand the existing 200-room Hilton by 355 rooms until the hotel’s owners pay $43,560 rent due a month ago and $36,900 due Nov. 30. Another $18,600 due Sept. 30 was paid Monday, port officials said.”
The commission directed the city attorney to prepare a notice of default to be served against the Hilton’s lease.
J. Jay Feinberg, co-owner of the family-run Hilton, said through a spokesman that all overdue rents would be paid by the end of the week. Feinberg still intends to expand the hotel, the spokesman said.
Late Payment Unexplained
Feinberg would not say why his rent payments have been late. And harbor commissioners said they could not explain why the Hilton, which for years has had high occupancy rates, is behind on rent.
"(The Hilton’s) gross revenue is down less than 1/2% from last year, and I am attempting to contact Mr. Feinberg to get an explanation of the delinquency,” said Paul Brown, port finance director, in a memo last week to the commissioners. No explanation was forthcoming, Brown said Monday. Feinberg has had no other rent problems in recent years, Brown said.
Monday’s commission rejection follows by 2 1/2 months Feinberg’s announcement that he had been unable to line up financing and had dropped a three-year-old plan to build a Hilton hotel in Carson. Feinberg forfeited $170,000 to the city on that project.
Several Plans Submitted
Since he opened the Queensway Bay Hilton just north of the Queen Mary in 1975, Feinberg has submitted and withdrawn several expansion proposals for an adjacent seven-acre parcel.
In January of this year, the Harbor Commission approved construction of a 37-story, 355-room Hilton tower, but Feinberg now says a glut of new hotel rooms makes a less-ambitious, two-phased project more sensible.
The Harbor Commission rejected that new plan Monday “without prejudice,” so it can be brought back for consideration.
But two commissioners, Robert Langslet and George Talin, said in interviews that they are beginning to wonder whether Feinberg can break ground by Jan. 17, when the commission approval of the original plan expires.
Must Move Fast
“We certainly hope it’s going to be started, but because of the change in plans and the (deadline), it seems like he’s going to have to work awfully fast,” Langslet said.
Even if Feinberg pays his rent and the commission approves his change in plans, it would take about 30 days to get a city building permit, he said.
"(Feinberg) has done a commendable job over there,” Langslet added. “We just hope he can get this all resolved.”
Commissioners have said they are in no mood to extend Feinberg’s mid-January deadline. “What we’re saying is, let’s get on with it,” said Talin. “That land has been sitting there non-productive for seven or eight years.”
Hotel Market ‘Overbuilt’
Feinberg’s $50-million plan, which he has said is responsive to an “overbuilt” hotel market, calls for first-phase construction of 209 rooms in an eight-story tower and three clusters.
If the market allows, a second phase would be built within two years. That phase would add 146 rooms to the tower, bringing its height to 32 stories.
The first phase would include a scaled-down central facilities building that would include convention space, offices and a restaurant.
In an interview earlier this month, Feinberg said financing for the addition would not be a problem. He said he was concerned, however, about whether the hotel market would support a single 355-room tower.
“The mix of clusters and tower gives us a lot more flexibility in being responsive to the marketplace. . . . With one building, you have to do it all at one time or nothing,” he said.
Feinberg, who runs Southern California operations for the St. Louis-based Feinberg Group, of which his brother is president, has also announced plans to add 130 rooms to the 34-room Las Casitas hotel on Catalina Island.