COMPTON — A $5.5-million city loan was made this week to the developers of the Compton Lazben Hotel, a proposed luxury high-rise and convention center that has been dogged by construction delays and allegations of cost overruns.
The City Council voted 4 to 1 Tuesday to make the loan to developers Lazben Financial Co. and its sister firm, D & B Development, which are building the $25-million to $30-million hotel along the 91 Freeway with financing from the sale of city industrial development bonds and tax certificates.
Construction on the 10-story, 300-room structure began in 1986 but has stalled several times while the city and the developers wrangled over financing and the terms of their joint development agreement.
When city officials gave the developers the initial project funds in late 1984, they were confident that the combination hotel and city-owned convention facility would be completed in plenty of time for this month's celebration of the Compton centennial. Now, even though the upper floors of the hotel remain in a skeleton stage, officials are confident that the building will be finished in time to be the site of the centennial ball Dec. 17.
Councilman Maxcy D. Filer complained during a lengthy council hearing Tuesday night that the developers had only 20 workers on the construction site. Naftali Deutch, who heads Lazben and D & B, said the loan would allow him to put a full crew of about 100 workers on the job.
"It is the council," Deutch said, "that has (delayed construction) three or four times to the detriment of the hotel (by repeatedly second-guessing refinancing plans)."
Filer said, "I'm not one of those who wants to get the hotel up at any price. I want a fair and equitable price."
A longtime critic of the hotel and other projects in the city's redevelopment plan, Filer cast the only vote against the loan.
Last year, the council hired an independent management firm to audit progress on the $15-million portion of the project that will become the city convention center and parking garage. In their report, auditors for Wexco International Corp. accused the general contractor--Tucon Development Corp., also headed by Deutch--of poor planning and conflicts of interest that could eventually lead to a $5-million cost overrun. At the time of the audit, Wexco claimed the city had paid the developers $1.3 million more than there was work to show for it.
Tucon officials strongly denied the accusation, however, and the council discharged Wexco.
In a report Tuesday to the council, which also acts as the city redevelopment commission, the redevelopment staff said the only way to avoid another construction delay was for the city to make the loan.
Redevelopment Director Laurence Adams reminded the council that one private lender, Bank Hapoalim, had agreed to make the $5.5-million loan to Lazben, but only if the hotel and its revenues were put up as security. However, on the advice of city attorneys, the council had refused to subordinate its financial interest in the hotel to that of the bank.
In addition to the loan, the council, except for Filer, also voted to extend two options to the developers. Under the first, Lazben and D & B would have the right for 10 years to purchase the five acres on which the hotel, convention center and parking garage are situated. The city redevelopment agency owns the land.
Under the second option, Lazben has the right for two years to develop the five-acre parcel next to the hotel where the city wants to create a restaurant and entertainment park on the theme of New Orleans' Bourbon Street. The city owns the land now. Lazben is talking with architects about designs for the entertainment park.