Red Lion Inns this week pledged $9 million for construction of a major hotel in downtown Glendale, a move that left city officials optimistic that construction can begin next year.
The action was unusual because hotels generally are financed by independent investors, not by the operating chain. Red Lion officials said they are eager to partly own as well as to manage the proposed $36-million hotel, to be built on Central Avenue just north of the Ventura Freeway.
The Glendale Redevelopment Agency in January selected Red Lion over two other hotel chains as the operator of what will be the the first major hotel and convention facility in the city. Developers had been negotiating since then with a variety of investors to secure financing.
In July, the agency set a Sept. 1 deadline for an agreement on financing between the hotel chain and developers. Such an agreement was signed shortly before the Glendale Redevelopment Agency met Tuesday.
Susan Shick, Glendale's deputy redevelopment director, said the financial agreements call for Red Lion Acquisition Co. of Vancouver, Wash., to invest $9 million in the project, with the remaining $27 million in construction cost to be obtained through a conventional bank loan. The city also expects to spend $9 million to $10 million for land and a parking facility. The city will eventually get part of the hotel's profits.
Stanley Cohen of Newport Beach, who in partnership with Heltzer Enterprises of Los Angeles will build the hotel, said several investors expressed interest in the project but that the financial proposal by Red Lion was the most acceptable.
Dennis Schuldheisz, vice president of development for Red Lion, said, "Glendale is a city on the move, and the redevelopment agency and the city government are aggressive and progressive. We are very excited about the opportunity to participate." The redevelopment agency voted unanimously to complete negotiations with Cohen and Red Lion. That is expected to take about six months, Shick said.
"We want to move the project forward as quickly as we can," Cohen told agency members Tuesday. Construction of the 16-story, 350-room hotel could begin next year, with completion in late 1989, he said.
The hotel will be built on the east side of Central Avenue north of the Ventura Freeway between Burchett Street and Arden Avenue. It will contain convention and meeting halls, banquet rooms and a "sky lounge" restaurant at the top.
Allstate Insurance Co., which owns three office towers next to the hotel site, proposed last year that the project be incorporated into a larger development involving Allstate.
Officials of the Chicago-based corporation suggested that a fourth office tower be built on Central Avenue north of the hotel between Arden Avenue and Glenoaks Boulevard. They also proposed that a multilevel garage in their existing complex be expanded to provide parking for the hotel and the new tower. That proposal could save the city $2 million to $3 million in building a garage, Shick said.
However, Allstate broke off negotiations with the city last spring because, Shick said, it did not want to discuss shared parking until financial commitments were solidified for the Red Lion hotel. Shick said the commitment obtained Tuesday from Red Lion allows the city to reopen negotiations with Allstate.
Some members of the City Council said they were angered that Allstate appeared to be manipulating the hotel development.
Two of the five council members, who also serve on the redevelopment agency, said Tuesday that Allstate has no say in the hotel project and that development will move forward with or without Allstate's cooperation.
"They are not the only players in town," Councilman Jerold Milner said, indicating that the city may select another developer to build on the proposed Allstate site.
Mayor Ginger Bremberg said, "I'm sick and tired of Allstate jerking us around."
Allstate officials could not be reached for comment.