Hilton Developer Abandons Project After Three Years

CARSON â€”  In what one official described as a rough blow to the city after three years of effort, the developer of Carson’s proposed Civic Center Hilton hotel has abandoned plans to construct the $22-million project.

Less than a month after a new development agreement raised hopes among many officials that the long-sought hotel would finally proceed despite numerous delays and setbacks, the Hilton developer last week gave up for lack of financing.

“I feel we’ve given it our best shot,� said J. Jay Feinberg, vice president of the Feinberg Group, developer of the proposed Hilton. “We’ve just been struggling too long and too hard. All the pieces of the puzzle have just not come together.�

Councilman Walter J. Egan said he was taken aback by this latest problem. “I’m unhappy and disappointed and surprised; I thought it was really going to sail this time,� he said. “I thought it was a good project for the city of Carson. . . . I think it’s a rough blow to the city.�

Leaves Questions

Indeed, Feinberg’s pullout leaves Carson with a $5-million property investment in the proposed hotel site and questions about the future of the city’s Civic Center, where city offices, meeting facilities and convention quarters of the Community Center are located.

While many city officials say they hope to find another developer for a high-quality hotel on the the site, some expect it may take as long as two years to begin construction on the project. The Hilton was to break ground by Nov. 3.

“I would presume now that other hotel developers will be looked at and considered,� said Councilman Thomas Mills, “but the timing does put us behind. It’s very disappointing to have the deal fall through after this much effort has been expended. This hotel was initially supposed to be built in time for the Olympics� last year.

The proposed Hilton, to be an 11-story, 248-room development, has been sought by the image-conscious city as a lucrative and attractive centerpiece for a largely industrial community. It is also seen as an important drawing card needed to establish the city as a hub for high-quality development.

Other Adverse Effects

The collapse of the plans not only has left the city without such a development, but it may have other adverse effects, some say.

For one, the city’s ownership of the $5-million property, for which the city still owes $1.8-million, has been, and will continue to be, costly.

“It’s a setback in terms of money that we’re out and interest,� said Councilwoman Vera Robles DeWitt. “It’s costing us every day. We’re not in the real estate business.�

The hotel also was to provide what some see as a much-needed boost to convention business at Carson’s $13-million Community Center next door, which is currently underused. In addition, some say, the tumultuous course of the Feinberg development may deter other investors from coming to Carson.

“Every project becomes controversial here,� Egan said. “It appears the money and the commitments to loans did not come through because there was a lack of confidence in the project. Perhaps some of that lack of confidence has to do with the city of Carson itself. . . . When you read about the saga of the Hilton hotel day after day, week after week, and then you see something like the Marriott in Torrance where the city gets behind it and--boom--it’s built, that says something. The leadership on the City Council is making it difficult to invest and build here.�

Blamed City Officials

While declining to make any projections about the future of Carson’s hotel site, Feinberg agreed that the project’s demise can be blamed in part on city officials.

“I’m not sure they are aware of what’s involved in developing a project of this magnitude,� Feinberg said. “The process was dragged out unnecessarily.�

He said that several times when he had financing in place, the city was not prepared to act on the matter. Between that and skepticism in the financial community about investing in Carson, “I think this just was not meant to be,� he said. He said his company will now concentrate its efforts on its developments in Long Beach and on Santa Catalina Island.

Most council members, however, contended that the collapse of plans resulted solely from the developer’s lack of financing. At various times, the city had agreed to provide the developer as much as $1.5 million in tax rebates or to extend a $2-million loan to ensure the project’s completion.

Financing Didn’t Materialize

“It fell through because of lack of financing,� Mills said. “The developer didn’t have the funding. He had letters of intent for financing that didn’t materialize. I don’t see that the city can be blamed for this.�

“He was accorded every concession,� DeWitt said. “He should have had a hotel a year or two ago. He strung the council along. . . . He didn’t have the financing; that was clear quite some time ago.�

If the city was not to blame for the failed plans, however, DeWitt, who was Feinberg’s most vocal critic, said Carson officials should have been aware of the developer’s financial uncertainties.

“We all want a hotel, but I think we should pay more attention to the process of how we select a developer,� she said. “People had blinders on. Let’s just hope we’ve learned from our lesson in how to select developers.�

Still a Market

DeWitt and some other council members maintained that there remains a sufficient market for a hotel in Carson, in spite of the recent construction of several others in the South Bay. They said they believe the city will soon embark on choosing another developer.

“We will have another hotel, I think,� said Mayor Kay Calas, who declined to comment specifically on the matter because of her financial interest in property near the Civic Center. “I think there is a market for a hotel. I think Carson is going to do nothing but boom in the next 5 or 10 years because of its location near the freeways and the port.�

“I believe strongly in the viability of that site for a major hotel,� said DeWitt, who hopes to begin discussions on the matter at the next council meeting. “There were (other) hotel developers that had a keen interest in that site. The council just needs to determine its priorities and how it’s going to go about getting a new hotel.�