Simi Valley Radisson, a Reminder of Free-Spending ‘80s, Is for Sale

For sale: Simi Valley’s largest, most upscale hotel, with 195 rooms, pool, spa, restaurant, bustling nightclub and spacious banquet facilities. A real deal--1990 asking price of $19.6 million now slashed to $11.7 million.

The plush Radisson Hotel, which opened four years ago on a prime hilltop near the Simi Valley Freeway, a few miles north of the Ronald Reagan Presidential Library, was a La Jolla developer’s dream--and his financial downfall.

The hotel’s cost overruns also helped doom the savings and loan that funded its construction.

Today, the federal Resolution Trust Corp., which took possession of the Radisson, is trying to sell this vivid reminder of the free-spending 1980s.

The flamingo-pink hotel, with majestic palm trees soaring beside its front entrance on Enchanted Way, remains in operation.

Visitors to the lobby are greeted by a mirror-backed bar, elegant carpets, abstract paintings and soft pastel furniture. The windows offer a panoramic view of Simi Valley.

Yet the financial problems that surrounded the Radisson’s birth continue to haunt it.

Just last month, Ventura County placed the hotel near the top of its public list of delinquent property taxpayers, saying its owners owed more than $1.3 million.

More recently, however, county officials said they planned to cut the Radisson’s tax bill because a new assessment has determined that the hotel’s value is millions of dollars lower than the county’s original estimate.

Nevertheless, after studying a thick file that showed unpaid property taxes dating back to 1986, David P. Busse, chief of standards with the Ventura County assessor’s office, concluded, “This property has had a rather checkered history at best.”

That history has no shortage of victims:

* The original developer, Mir Kazem Kashani, ran out of money well before the hotel was finished. He sought protection from his creditors under federal bankruptcy laws, and his oceanfront La Jolla estate was sold recently for $4.5 million to help pay his debts.

Kashani could not be reached for comment last week regarding his role in building the Simi Valley hotel. Radmila Fulton, the court-appointed trustee who is overseeing the sale of his assets, said Kashani remains active in an import-export business.

* The hotel’s general contractor, Keller Construction of El Monte, contends that it is still owed more than $1.4 million. The company has spent more than $300,000 in legal fees just trying to collect, said Tom Keeton, Keller’s vice president and general manager.

“We may end up collecting $150,000,” Keeton sighed. “I’ve fought this case so much for so long that I don’t even want to talk about it.”

* Finally, County Bank of Santa Barbara, which loaned $20 million to build the hotel, was seized by federal regulators in March, 1991, and put out of business a year later.

A source familiar with the bank’s financial problems said the hotel’s construction loan was far and away the bank’s largest. When it placed the bank in receivership, the federal office of thrift supervision cited its “losses on speculative real estate loans.”

“This property has had a history of poor financial management by everyone concerned,” said Busse, who appraised the hotel in 1988, when it was still unfinished. “When the developer goes belly-up and the lender goes belly-up, it doesn’t suggest that things were structured properly.”

“It really was too much hotel too soon for Simi Valley,” said attorney David Commons, who was appointed by the court to supervise completion of the Radisson. “It was built at the go-go time for hotels, when all the appraisers had rosy predictions about how these hotels would perform.

“Nobody foresaw the glut in hotel rooms, let alone the impending recession.”

Despite its troubled origins, the Radisson’s current general manager, Tim Adams, is optimistic.

“We feel very positive about 1993 for the hotel,” he said. “We expect the restaurant and banquet business to be up. We expect moderate room revenue increases.”

Adams declined to disclose current sales figures or room occupancy. But a real estate ad for the Radisson says the hotel’s gross income in 1991 was $5.4 million.

With its scenic location close to a freeway and a Simi Valley business park, the hotel would be an excellent buy for someone who is not looking for huge, overnight profits, Adams said.

“A long-term investor could do very well with this,” he said. “Eventually, real estate’s going to come back. If somebody’s looking for immediate cash flow, it wouldn’t be a good investment.”

For many years, Simi Valley’s only lodging was a modest Motel 6. But in the mid-1980s, construction began almost simultaneously on three hotels--the Radisson, the Clarion and the Travelodge--that together gave the city 413 new rooms.

“I think each of the three developers was told that no other hotel was being planned for Simi Valley,” said Dick Schwalbenberg, who has been general manager of the Clarion Hotel since it opened in 1986 as a Quality Inn.

“There was a lot of concern” about whether Simi Valley could support three new inns, he said. “But at that point there was a lot of money that had already been invested, and they couldn’t abandon the projects.”

Business people who watched the Radisson rise said Kashani spared no expense in a bid to make his hotel the most opulent.

“He was pouring money into there like it was a Taj Mahal,” said Nancy Bender, executive director of the Simi Valley Chamber of Commerce. “He had the idea of building something more elegant than anything else in the area.

“It was like a personal thing with him, rather than a commercial venture.”

Commons, who finished the hotel, said some of the cost overruns occurred because Kashani received an incomplete set of plans when he took on the project. The developer initially borrowed $13.5 million to build the hotel, but the bank had to provide another $6.5 million to finish it, Commons said.

The Radisson opened in February, 1989, initially as a Ramada Hotel. Simi Valley leaders were happy, in part because the city had had a shortage of large convention and meeting rooms. The hotel’s ballroom can accommodate about 300 people.

“Mr. Kashani spent a lot of money on decorations, which is probably why he ran out of money,” said Mayor Greg Stratton. “But it’s a very impressive hotel. I think we’ve been very pleased.”

Some local business leaders believed that the Reagan library, which opened in late 1991, would help fill the city’s hotel rooms. But inn operators say most of the library’s visitors have not stayed overnight in Simi Valley.

Today, all the area’s hotels have about 45% to 50% occupancy, said Schwalbenberg, who manages the Clarion. The Radisson charges about $89 based on double occupancy on weekdays, compared to $80 at the Clarion and $68 at the Travelodge.

“I think the area will grow into the number of hotel rooms we have now,” he said. “But we definitely don’t need any more.”

Schwalbenberg predicted that the Radisson will be sold by the end of 1993, perhaps after federal authorities lower the price even more.

“It looks like a good bargain,” Schwalbenberg said. “But if the hotel can’t produce enough money” to pay its bills, “then it’s not.”