City Takes Over Hotel Operations, Seeks Ownership : Business: Officials want to recoup investment in what was to be part of redevelopment plan. No payment has ever been made on loans for project.
After loaning millions of dollars that have never been repaid, the city has taken over day-to-day management of a nearly deserted hotel and convention center that officials once billed as the centerpiece of the city’s economic redevelopment plan.
The City Council voted last week to take control of operations at the Ramada Hotel from the owners and developers--Naftali Deutsch, his four sons, and a number of corporations they control. But city officials had assigned staff to run the hotel even before the council’s official vote at a special meeting Wednesday.
"(The owners) had basically abandoned the project,” Councilwoman Patricia A. Moore said last week. “The restaurant was only serving up through lunch. . . . The hotel was basically running itself.”
Naftali Deutsch could not be reached for comment. A son, Andrew, said the family would have no comment.
Under an agreement between the City Council and the Deutsch family corporations, the city is to manage the hotel for six months, during which the city will negotiate with the owners to obtain title to the hotel.
Under the original agreement between the city and the hotel developers, Compton paid $15 million to Deutsch family firms to build a fully furnished hotel and convention center. However, there were several construction delays, and Naftali Deutsch told city officials that he could not finish the hotel without additional money. The council agreed to a series of loans totaling more than $5 million. Deutsch has never made any payments on the loans, city officials said.
The top floor of the hotel remains unfinished.
The city contends that Deutsch breached the contract. Moore said that Naftali Deutsch is contending that he invested millions of his own dollars in the hotel and is demanding that he be compensated for his investment.
Adams, who helped negotiate the series of construction and development agreements with Deutsch, hailed the city’s decision to take over management of the hotel.
Adams said an appraisal showed that the hotel is worth $40 million. He said the city will come out ahead, regardless of whether it sells the hotel or runs the facility itself.
Adams said the city holds first lien on the property, should the owners default on the loans or go bankrupt. He also pointed out that the city owns the land on which the hotel sits, as well as the parking structure attached to the hotel and the convention facilities, which take up almost all of the first floor.
Adams insisted that despite its troubles, the hotel is a highly valuable asset that will generate large profits if correctly managed. The facility, which had been called the Compton Lazben Hotel before the owners obtained a Ramada franchise last year, is along the Artesia Freeway between the Harbor and Long Beach freeways.
“Now the city has positioned itself to get more profit than it ever expected to get,” Adams said. “The city won.”