Local News in Brief : Anaheim : City, Hilton Owners Agree on Loan Payoff

The City Council on Tuesday approved settlement of a lengthy legal dispute between the city and owners of the Anaheim Hilton Hotel over who will repay a construction loan for a parking garage next to the Anaheim Convention Center.

In a 1982 agreement, the city borrowed money to pay for construction of the garage with the expectation that the owners would assume loan payments. But after a dispute arose with the new owners, the Anaheim Hotel Partnership, over repayment of the loan, the city assumed responsibility for the debt.

Since 1985, the city has made loan payments of $11.2 million, and city officials say the payments are partly to blame for an $8-million shortfall in the city’s 1987-88 budget.

The settlement calls for the city to assume responsibility for loan payments on the parking structure. In return, the city will sell the land beneath the garage and 1,600 spaces of the 3,200-space structure to Sunbelt Savings Assn. of Texas, a limited partner in the hotel ownership, for $37.88 million in cash. The hotel will retain ownership of the remaining 1,600 spaces to serve hotel customers. The city will also receive 20% of the profits from any future sale of the hotel.

The income generated from the settlement, along with a new refinancing arrangement of the original $54-million loan recently obtained, will allow the city to recover the $11.2 million in loan payments already made and will virtually offset future loan payments, city officials said.