Claims Loan in Arrears : Anaheim Sues to Evict Hilton Hotel Owners

The City of Anaheim filed a lawsuit Tuesday to evict the owner of the Anaheim Hilton Hotel from its building near the city’s convention center, alleging that the company, Anaheim Hotel Partnership, is $5.6 million behind in paying off a city redevelopment loan.

Hilton Hotels Corp. manages, but does not own, the $180-million, 1,600-room structure. City Manager William O. Talley said the city’s suit is not directed at Hilton, but at the owner.

“What we want is the owner to pay up or get out,” Talley said Tuesday. “We want the hotel to continue to operate, and we hope the legal action has nothing to do with the operation of the hotel.”

The city served the partnership with a notice to vacate last Friday, demanding payment or surrender of the hotel building and parking lot. On Tuesday, city lawyers filed suit in Orange County Superior Court, seeking to evict the owner.

The lawsuit names the Anaheim Hotel Partnership, Hilton Hotels Corp. and C-D III, a partnership that made the original redevelopment deal with the city by which the hotel and parking lot were built.

In 1982, the City Council authorized a $54-million “certificate of participation”--similar to a bond issue but technically different--for building the parking facilities. In its lawsuit, the city says that Anaheim Hotel Partnership, which took over the complex from C-D III in 1984, has failed to make two consecutive debt service payments.

The lawsuit alleges that a $3,018,910 payment was missed July 1 and that a $2,630,294 payment was missed Jan. 1.

“The city is entitled to immediate possession of the leased premises and the improvements based on the defaults alleged herein, the failure of defendants to cure such defaults and the notices provided by city,” the complaint says.

An official of the hotel, Christine Koeberle, assistant general manager, declined comment Tuesday night.

“This is no intent to remove Hilton,” said Talley, who called the hotel well managed and the “premiere” Hilton in Southern California.

“The city is saying, ‘Pay us what you owe us, or get off the premises.’ But we’re saying that to the owner of the property, and that’s not Hilton.”

Should the owner have to vacate, the mortgage holder would step in and take over, Talley said.

When it opened in 1984, the Anaheim Hilton operated with many empty rooms at a time when the city was plagued by a drop in tourism linked with the Los Angeles Olympics. Soon after, many other new hotels opened in the area.

Talley said he believes the Anaheim Hilton is now “doing very well.”

“We are well satisfied with the operation and the prestige it brings the city.”