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Compton Will Be Urged to Foreclose on Hotel Project

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TIMES STAFF WRITER

The developer of the ill-fated Compton Lazben Hotel has failed to meet a deadline for paying $6.8 million in construction loans that he owes the city, and two council members said they will propose that the city take over the project.

Compton redevelopment officials billed the $35-million hotel and convention center complex along the Redondo Beach Freeway as the catalyst for the city’s economic revitalization, but from its inception about five years ago, the project has been plagued with delays and financial difficulties.

Councilman Maxcy D. Filer said he plans to propose that the council begin foreclosure proceedings against developer Naftali Deutsch. Councilwoman Patricia A. Moore also said she would support such a move, which would have to be approved by a majority of the five-member council.

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“Why shouldn’t the city be responsible and take back the hotel and supply everything the citizens were promised?” Moore asked.

Under the terms of their agreement with the city, the developers were to pay off the loans by May 31, according to a report that the staff of the city Redevelopment Agency sent the council last week.

Deutsch said, however, that his agreements with the city were written in such a way that it was “understood” that he did not have to pay off the loans until the hotel generated a sufficient cash flow.

Deutsch also said he is “days away” from reaching a franchise agreement with the Hilton Hotel Corp. A top city administrator said City Manager Howard Caldwell is taking part in the talks with Hilton. Caldwell and Hilton representatives did not return calls from The Times.

Filer, however, said he is skeptical about any franchise discussions: “I don’t want to upset any negotiations, but I just believe this is a ploy.”

The developer has earned the enmity of some people in Compton, who say he has not lived up to the terms of his development contract. Deutsch halted construction several times, saying he needed more money. The city gave him more loans.

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“Here when people are five days late paying their water bills (to the city), they get their water turned off,” Moore said, “and this man can go on never paying a dime to us.”

Filer said: “He has been in default as a contractor for over two years. He has been in default of the loan (payments) over 10 months. He is now in default on the loan.”

According to Filer and Moore, the developers owe the city more than $400,000 in interest payments, in addition to the $6.8 million in principal that was due last week. The city and the developers have been arguing for two years about whether the project was built to the city’s specifications.

City officials, saying some of the furnishings and construction materials did not meet specifications, withheld some payments from the construction firm, Tucon Development, until it replaced some of the items.

The Deutsch family owns Tucon and other construction companies that worked on the hotel. Deutsch’s son, Benjamin, said his father now has no financial interest in any of the construction companies or any of the financial or management companies involved in the hotel development.

Benjamin Deutsch said he and his three brothers own and control all the various firms.

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