Fabulous Inns Signs to Develop 22-Acre Site

Fabulous Inns of America has signed an agreement in principle to jointly develop the 22-acre Stardust Hotel site in Mission Valley with a local real estate development firm, officials of both companies said Tuesday.

The agreement was reached last week, according to Garry Bosstick, general partner of Madison Square Partnership, which would develop some of the property surrounding the Stardust Hotel.

Fabulous Inns, which secured an option to purchase the property in September, would manage both the hotel property and the neighboring 214-acre golf course, according to Jeffrey Krinsk, Fabulous Inns’ chairman.

Krinsk cautioned that the deal is “still at the documentation stage.”

Fabulous Inns’ total cost to buy the Stardust Hotel could exceed $20 million, hotel industry sources have estimated.

The golf course is the site of a proposed $750-million development by Chevron Land & Development Co., a subsidiary of the oil giant.

Chevron has an option to take over the golf course land in 1994 but is trying to negotiate a purchase before that date to begin construction as soon as possible, according to Lance Burris, Chevron Land project manager in San Diego. “We’ve had ongoing negotiations . . . but we have no deal,” Burris said.

The 22-acre hotel site is owned by San Francisco-based Handelery Hotels Inc., former owners of the El Cortez Hotel in downtown San Diego.

The 214-acre golf course is leased to Handelery by Levi-Cushman, a joint trust/partnership. That lease expires in nine years, when Chevron is scheduled to take over and develop a mixed-use development that would include high-density residential units, commercial and retail space, office buildings and as many as four major hotels.

Fabulous Inns only recently secured an extension to the end of the month on its option to purchase the property. Finding a partner or financing has been slowed because of the company’s pending litigation over control of the small but profitable Fabulous Inns in Mission Valley.

Krinsk is a former dissident shareholder who alleged conflicts of interest by Fabulous Inns officials, leading to management ousters in 1983 and 1984. Since then, he and company President David Yardley have been embroiled in legal action with former President Walter Palmer and former Chairman Henry Maxwell.

At issue is how much stock is owned by Palmer and Maxwell. The case is mired in a lengthy appeals process, although periodic settlement talks have reportedly been held.

Madison Square Partnership was formed eight years ago by Bosstick and partner Don Roger Norman and has developed several commercial and retail projects in the county.

The company has finished its seven-building, 120,000-square-foot industrial development in Oceanside and is designing a second project there of 125,000 square feet.

Its Home Depot, an 80,000-square-foot retail building in Oceanside, is scheduled for completion in February.

Madison Square Partnership also has industrial and commercial projects either completed or in the works in San Marcos, Kearny Mesa and La Mesa, Bosstick said.