There will be two hotel proposals on Tuesday’s agenda and, unlike its counterpart the Hyatt House, the proposed Marriott Residence Inn – an extended-stay hotel proposed for Fermi Place near the intersection of Mace Boulevard and Second Street, a 2.69-acre parcel that currently lies vacant – has generated nearly no opposition.
On Thursday, the Vanguard met with the development team which believes that there is space in the market for what they call a true extended-stay hotel. They have looked at the location and the market for the last year and a half, and believe that there is no such product in Davis, while there has been leakage to outside the area.
Because of the lack of the extended-stay product and the lack of a Marriott in Davis, there are a lot of people who are not finding their way to Davis.
The team does not believe that a conference center is important to the extended-stay hotel. Instead, they see business travelers, research training, people who are relocating, and families as their potential targeted clientele.
They believe there is already a market for their product in the Mace Ranch area – citing big companies like Mori Seiki, HM Clause, Schilling Robotics and others that are already on Second St. and in need of space for their business needs.
They also believe that being on the east side of town, with the development of Legacy Fields and soccer tournaments, they can serve those visiting families, many of whom are looking for full kitchens rather than eating out all the time.
Staff writes, “The Planning Commission noted proximity to businesses such as Mori Seiki, as well as the Davis Legacy soccer fields south of Interstate 80. Commissioners noted the site’s distance from UC Davis as underscoring the need for transit and bicycle accommodations.”
At the same time, there is some concern about the ability to reach LEED status. When the city council was putting Nishi on the ballot last spring, there was a prolonged discussion as to whether that project could obtain LEED Platinum.
There are some challenges with the location. The staff report notes, “Sustainability features including carport photovoltaic panels generating an estimated 75 kilowatts of electricity, a commitment to achieving a LEED equivalency certification through a mutually agreeable third party, and purchasing any remaining electricity from offsite renewable sources through the proposed City of Davis Community Choice Energy JPA.”
Staff notes, “The Planning Commission received public comments requesting additional sustainability provisions, including LEED Gold. The Planning Commission requested the applicant to seriously consider striving for LEED Gold, and included a comment that additional solar could be installed on carports in the south parking lot.”
The applicant is continuing to explore opportunities to increase their sustainability commitments and, at the time of drafting this report, have agreed to the following:
- A commitment to build the project to a LEED equivalency certification standard that would be verified through a third party energy consultant agreeable to the City at the applicant’s expense.
- Installation of photovoltaic infrastructure (i.e. switchgear tie-in points and conduits) allowing for expansion of the photovoltaic system in the future.
- A commitment to participate in the Community Choice Energy program when it is implemented.
- In efforts to promote alternative modes of transit, the applicant has agreed to the installation of a “Getting Around Davis” informational concierge area in the lobby that combines fixed wall signage and interactive electronic support with a focus on the bicycle loan program, City bike routes, local public transit, transit support services and local amenities.
Staff recognizes “that recent changes to building codes, and the City requirement for Mandatory CalGreen Tier 1 compliance, result in a very efficient building envelope with high-performing lighting and utility systems and (they) are encouraged by the applicant’s increased sustainability commitments that go beyond the CalGreen Tier 1 compliance requirement.”
Staff recommends “the applicant’s sustainability provisions be included as conditions of approval for the conditional use permit.” Staff further recommends that “the applicant increase their sustainability commitments by building the project to a minimum LEED Silver equivalency certification standard that would be verified through a third party energy consultant agreeable to the City. The applicant has voiced concerns about their ability to achieve points necessary to obtain a LEED Gold equivalency after a detailed review of the criteria.”
The applicant has stated that “outside of being near transit, the project scores relatively low on site location points given the suburban location. The applicant has voiced concerns that in order to make up the points lost on site location in other categories, the additional costs would result in a project that is no longer economically viable.”
This is similar to what the development team told the Vanguard. Their initial inclination was not to chase LEED due to the suburban location that makes such a status difficult to achieve. The city has asked them to at least obtain LEED equivalency.
However, they believe that they can achieve LEED certification but not at the Gold level. They noted that Jackson Properties has done other LEED office buildings, but at this stage in the process they do not want to overstate the level they can reach. They are not wanting to make promises that they can’t hit.
The site not being at an urban location makes it tough to get enough points in LEED’s scoring system, and therefore they believe that LEED Gold is pushing it.
Staff is recommending, in order to further the sustainability commitments, “that a third party photovoltaic consultant/designer agreeable to the City be engaged to further refine the photovoltaic system sizing for the project to ensure the system size achieves optimum energy production for the project in a manner that makes economic sense subject to review and approval by the Director of Community Development and Sustainability.”
The big advantage of the Residence Inn is that it is not close to residential uses. The adjacent neighborhood already has Target in between it and the proposed hotel. And while the neighborhood bitterly opposed Target, there has been almost no pushback on the hotel.
The Planning Commission noted that the hotel use is compatible with nearby business uses.
The Vanguard did talk to the developers about the lack of restaurants near the hotel. Dan Ramos, who owns the land, pointed out that the entire 11-acre property along Mace was originally planned for hotels with restaurants, in order to serve the businesses in the area. His belief is that restaurants could come forward as demand is established.
But, for their part, they believe that with an extended stay, many people who stay there will be utilizing the full kitchen rather than eating out every day, and therefore the proximity of Target which is across the street and within easy walking distance is more important than the lack of immediate nearby restaurants.
—David M. Greenwald reporting
Given the ease of access to I-80, the Residence Inn will appeal to those who have business in Sacramento. In general, it is a much more pleasant and convenient environment and location, than comparable hotel locations in Sacramento. (And, gasp – they will drive – to Sacramento, and within and around Davis.) Virtually no one staying at a hotel like that will do so without a car.
As I previously mentioned, some will be Federal employees (e.g., teams of auditors working in Sacramento), who don’t pay TOT.
Are those reasons to oppose it? (Probably not.) But, let’s be honest, here.
You don’t care about LEED certification?
Chamber Fan: Yes, I care, but I’m not that knowledgeable regarding LEED certification. Don’s post (on behalf of Alan Pryor, below) asks some tough questions, regarding that.
I’m also wondering if adhering to LEED actually saves the proprietor money, over time.
Where is your cite for why employees on/off Federal business don’t pay TOT tax? Due to the ‘commerce clause’, that just doesn’t sound right… what is your reference for saying that is an exemption?
http://www.defensetravel.dod.mil/site/rssDetail.cfm?id=33
hpierce:
http://cityofdavis.org/business/business-resources/frequently-asked-questions/transient-occupancy-tax-fact-sheet-2016
I have knowledge of this, separate from the ordinance cited above. I also know that many hotels “adjust” their rates to match (generally by lowering their rates) the maximum per-diem (reimbursement rate) for federal employees. (That’s why some chains are popular with federal employees. Residence Inn was one of these, and perhaps Hyatt as well.) Since Residence Inn has kitchen facilities, it also helped to enable such employees to avoid restaurants (and still legally receive full meal reimbursements, from their employer).
I strongly suspect that the Residence Inn (in particular) will be popular with federal employees (e.g., those conducting audits of state agencies in Sacramento). But, I’m not sure if it will be a significant factor, regarding the overall amount of TOT.
In other words, meals were generally reimbursed at a per-diem rate, as well. (Not based on actual cost.)
The applicant has stated that “outside of being near transit, the project scores relatively low on site location points given the suburban location.
I posted about the relative locational merits of the two proposed hotels a few days ago. This statement from the RI developers is indicative of the problems with site for RI when compared to the Hyatt House. The HH is more proximally located to restaurants (including but not limited to, an in-house restaurant), downtown and UCD, and has much better I-80 visibility. RI has better I-80 access.
I continue to be of the opinion that both should be built. But we shouldn’t be persuaded that the ease of access to I80 for RI, makes it a more viable or better location for the hotel.
Shanetucker:
I see your points, and I believe that the Residence Inn would probably be somewhat more car-dependent (and would encourage a daily automotive “commute” for some, to/from Sacramento, and to downtown Davis and the campus). However, it is less impactful in other ways (e.g., regarding neighbors, driving through impacted areas such as the Richards/Olive intersection, to reach the city and downtown).
There seems to be conflicting information regarding how many hotels in town (and possibly on campus – if the University pursues another one at some point?) that the city can support, before existing business and TOT is significantly impacted.
Regarding restaurants, note the last paragraph in the article above (pasted below). If true, perhaps not as “positive” of an impact as some might hope, for local restaurants:
Regarding restaurants, note the last paragraph in the article above (pasted below). If true, perhaps not as “positive” of an impact as some might hope, for local restaurants:
Yes, perhaps. If a business traveler is staying at one of these hotels for several days consecutively, they may for a day or two, choose buy some type of prepared meal at a grocery and warm or thaw it at their hotel room, or choose to eat breakfast in their room instead of at the hotel breakfast. Extended travelers (over a week) may choose to do more substantial meal preparation periodically. However, I don’t think there is much doubt that local restaurants will benefit from additional hotel room supply.
However, it is less impactful in other ways (e.g., regarding neighbors, driving through impacted areas such as the Richards/Olive intersection, to reach the city and downtown).
I’m not sure this is correct with respect to traffic. Routes from RI to downtown include I80 (Richards Blvd), 2nd street (crossing all the way thru 2nd or 3rd street into downtown or to UCD). I don’t think those routes are faster than from HH, or any better equipped to handle more traffic than Richards.
Posting this for Alan Pryor:
The applicant has stated that “outside of being near transit, the project scores relatively low on site location points given the suburban location. The applicant has voiced concerns that in order to make up the points lost on site location in other categories, the additional costs would result in a project that is no longer economically viable.”
Once again our City Planning Staff has shown it’s ability to be snookered by unsubstantiated developer claims with regards to the economic difficulties in meeting minimally acceptable energy efficiency standards. Like Cannery and Embassy Suites before, it seems that all a developer has to do to get past our soft-handed Planning Department is to say something like they can’t “chase LEED due to the suburban location that makes such a status difficult to achieve“. And then our City Planning Dpartment Staff essentially folds and then parrots the developer claims to the City Council.
But did our Planning Department actually delve into this claim to quantitatively verify it? Did they even ask the developer applicant to estimate what additional costs would be required to achieve LEED Gold certification vs LEED Silver or just their proposed CalGreen Tier1 (the City’s minimum acceptable).
Did they require the developer, through an independent respected 3rd party engineer, to estimate what additional energy savings would accrue to the developer if they went to LEED Gold vs CalGreen Tier1? If so, why was this information not reported in Staff’s report? If this verification was not done, why not?
Has our Planning Department looked at other Marriots to see what level of energy efficiency they have acheived? One only has to go to the Marriot website to see that there are slews of other Marriott’ hotels with LEED Gold certification IN SUBURBAN AREAS (http://www.marriott.com/corpo
Did our Planning Department actually ask the developer to quantitatively explain why these hotels could achieve LEED Gold certification and still show economic viability but that the developers could not do so here despite being in an area with lesser land costs and, in some cases, higher energy costs? If so, why was this not reported in Staff’s report? If not, why not?
Our Planning Department is supposedly top-notch and hard driven and VERY well paid. Well, why then do they continually accept developer claims that energy efficiency is not economically viable and let developers off-the hook without verifying facts. Their continued failure to do so imply pushes our City even further away from achieving our Climate Action and Adaptation Plan goals. Every time the Planning Department lets developer pull the wool over our City Council’s eyes, it just lets developers dig our carbon hole a little deeper. Is this ever going to stop?
And if the Vanguard simply repeats what the developer and Staff claim (e.g. “The applicant has voiced concerns that in order to make up the points lost on site location in other categories, the additional costs would result in a project that is no longer economically viable.”) without any quantitative justification to substantiate the claim, has the Vanguard simply become an unpaid advertising shill for the Planning Department and developer.
David posed a very simple question in the title of this article, “Will Residence Inn Get to LEED Status?” The answer is, “Yes they can even get to LEED GOLD and do it without economic pain but only if our Planning Department and Council finally get backbones and force them to do it rather than completely letting them off the hook like in the case of Cannery and Embassy Suites.
So in Alan’s view, unless this gets to LEED Gold, it’s a no go? I realize my question is probably unfair given the lack of ability for Alan to respond.
Alan and Don… neither of your houses/business structures even come close to current state law as to new construction… much less LEED (drawn up by the same type of folk that believe rainwater needs to be cleaned up before it reaches rivers or (God forbid) the oceans).
Many are theorists who believe that sulfur and mercury from diesel engines pollute the air means that urban areas must require new development to trap those pollutants (with no explanation of how the ‘trapped’ pollutants may be disposed of). Yet, ag properties are exempt from the discharge requirements, except for egregious violations. Enter the LEED folk… not enough to meet the more strenuous State and Local Codes, but push for Nirvana as the minimum standard…
Would lead one to vote uber-conservative/uber-libertarian… I’ve read the LEED criteria… have either of you? It is one tough row to hoe, and what is “achieved” is questionable.
I’m a person who believes in environmental protection, based on science, but this LEED thing, given how you have to pay a lot to get “certified”, is arguably a money-grubbing hoax.
Um, two points:
1. I was just posting for Alan because he was having technical problems logging in. I don’t know anything about this issue.
2. Clearly you haven’t seen Alan’s house.
Perhaps… will stand in abeyance, as to Alan… no reflection on you, Don, but rest assured, if you were starting out in business today, in Davis, and had to meet current building codes, much less LEED certs, you’d think twice…
But as to costs to get certified… http://www.usgbc.org/cert-guide/fees
And that doesn’t include the physical improvements/measures to meet the criteria… and if you miss the mark, and want a “re-do” you will have to pay additional fees to the private entity to get certified… LEED is not a government function… as I understand it, it is a private monopoly.
My own view: we need revenue for the city. If we don’t get it, we’re not going to be very environmental. Forcing people to stay outside of Davis isn’t very environmental either.
Hey, I can post again…
No one has provided any concrete evidence that we are losing substantial hotel stays to other communities. Much has been made in the Vanguard article and elsewhere of the supposed large unmet demand for needed new hotel facilities in Davis. A lot of this talk is based on a Planning Department Staff survey of event planners (with an “unknown number of respondents”) at UCD reported in the Davis Vanguard (https://davisvanguard.org/2016/10/staff-recommends-approval-proposed-hotels/) as follows:
“…unmet need for supply exists and will increase over time.” They note that “there are people attending UC Davis events but not staying in Davis hotels.”
…50% of event planners that responded (unknown number of respondents), replied that more hotel rooms are needed.
50% of respondents think there is enough demand for two new hotels (this is not explained any further).”
But if only 50% of event planners surveyed believe that such a need for more local hotel rooms exist, that means that 50% of the event planners surveyed DO NOT believe there is a need for more local hotel rooms! It kind of takes the shine off that survey when you report it that way. But the reality is that nobody knows what the demand is because, amazing as it seems, there has not been any formal study of how much hotel guest leakage to other city’s is occurring.
It is almost incomprehensible to me that these proposed major development decisions are being promoted by Staff without obtaining this most straight-forward market information. Without this basic information, Staff comments about market demand are pure speculation and obviously conjured up to support their recommendation to build many new hotels proposed in Davis and hope enough scrutiny is not given to underlying facts to discredit this amateurish approach to development justification.
Not to be crude, but I’d rather not have any “hotel guest leakage” anywhere near me, at least. 🙂
Alan Pryor said . . . “Much has been made in the Vanguard article and elsewhere of the supposed large unmet demand for needed new hotel facilities in Davis. A lot of this talk is based on a Planning Department Staff survey of event planners.”
Alan, there is absolutely no need to use the subjective opinions of planners to see what is happening to Davis hotel room market demand since the UCD Conference Center opened in 2010 (and coincidentally the Hyatt Place was added to the hotel bed supply). The aggregate TOT revenues to the City of Davis have risen 44% since 2010 with no addition to City-located hotel beds. How many nationwide businesses do you know that have experienced 44% increases in “same store sales” over the past 5 years?
If you include the Hyatt Place beds and TOT then the increase in Davis-area beds has increased 25% while TOT revenues have increased 80%. How many Davis businesses do you know that have experienced 80% increases in revenues over the past 5 years?
Further, the UCD Conference Center has experienced a significant stream of convention inquiries that they were not able to accommodate because there were not enough Davis hotel beds to provide multi-day hotel accommodations for the conference attendees. Even with that constraint the Conference Center is operating at 50% capacity from “external” use (with an additional 25% room utilization coming from non-paying UCD internal employee meetings to) and 75% aggregate use. Further, the rennovations to Freeborn Hall are almost complete, and that will add even more meeting capacity to satisfy conventions IF there are hotel rooms to stay in.
Those aren’t projections or consultant guesstimates. They are cold hard facts available in public documents.
Matt – Maybe Schilling Robotics saw this type of growth until the great oil collapse came and their revenues started sinking like a rock. But that is the way with free markets. Irrational exuberance leads to over-expansion and hyper-growth and subsequent collapse in markets. The mistake some in Davis are making is to continue to think this type of hotel occupancy growth coming out of the great recession will continue indefinitely into the future – especially if we are looking down the barrel of another recession. But I know, Matt, that we are both old enough not to make this young man’s mistake.
In any event, you are talking about internal market growth and I am talking about hotel guest leakage. IMHO, the only justification for adding more hotel rooms in this highly inflated market is that we are adding major conference center capacity such as at Embassy Suites or we are leaking numerous guests to surrounding communities. For all of the reasons I spoke to above, it would be foolish for Davis to assume we are leaking guests with our own average occupancies at 70% unless we have hard data to prove otherwise
Alan, here are the fundamentals that relate to the increase in hotel market demand in Davis.
First is the 56% increase in UCD applications from 51,298 in 2009-2010 to 79,930 in 2015-2016. More applications mean more applicant/parent visits to Davis each academic year. UCD statistics for 2010-2011 show that the 54,521 applications produced 47,600 visits by “prospective students and associated visitors” ( a rate of 87%). We do not know the exact number of hotel room stay-days from those prospective student visits, but if you assume one hotel stay day per applicant family (some will not visit the campus at all, some will stay one day, some two days and others will need two rooms) then the resultant 28,632 additional applicant visits means a 16% increase in the 2014 Davis hotel occupancy of 176,473 occupied rooms.
Second is the 19% increase in UCD enrollment from 30,338 in 2009-2010 to 36,104 in 2015-2016, which mean many more (dare I say 19% more) parent visits to Davis each academic year. We do not know the exact number of hotel room stay-days from those parent visits, but if you assume one hotel stay day per enrolled student per year (some will not visit the campus at all, some will stay one day, some two days and others will visit multiple times) then 5,766 additional enrolled students means a 3% increase in the 2014 Davis hotel occupancy of 176,473 occupied rooms.
Third is the 7% increase in UC Davis Event Facilities that came with the opening of the UCD Conference Center in October 2009. According to UC Davis documents the Conference Center hosted 158 events its first year with 26,792 total estimated attendance. We do not know the exact number of hotel room stay-days from those additional events. Numerically, 26,792 represents 15% the 2014 Davis hotel occupancy of 176,473 occupied rooms.
Fourth is the fact that 2014 and 2015 occupancy saw a significant decrease in stay days from events historically hosted in Freeborn Hall, because that facility was closed for seismic retrofit renovations. According to Lina Layiktez, UCD’s Director of Conference and Event Services a significant portion of the 75,000 person event attendance in Freeborn was for youth sports related events, which could not be accommodated at other UCD facilities, as a result those youth sports groups have held their events in cities other than Davis, with the intent of returning to Freeborn when the renovations are complete. Lina’s experience with these yout sports groups is that a high proportion of them stay in local hotels during the events, which typically last from Friday through Sunday or Monday. We do not know the exact number of hotel room stay-days from those youth sports events that have been absent from Davis since the summer of 2014.
Fifth is the fact that prior to the construction of the highly visible Hyatt Place and Convention Center on the UCD campus, there was very low awareness within both the Commercial and the Meeting & Groups segments of the availability, quality and value of Davis hotels. That poor image has been very largely supplanted with a quality image.
With those objective factors illuminate, I would like to address (1) your concern about Davis’ increased demand being a bubble that will implode when the next economic downturn happens, as well as (2) your comparison of hotel stay days to Shilling Robotics products. Regarding (1), the increases to UCD applications, to UCD enrollment, to the available inventory of UCD Event/Conference space, and to the increased visibility of Davis hotel options are all recession-proof realities. Further, UCD is expecting additional incremental increases in both applications and enrollment. Regarding (2) Schilling’s proprietary state-of-the-art devices are highly differentiated products. On the other hand, hotel rooms are commodities pure and simple. Hotels work hard to differentiate themselves from one another, but at the end of the day (pun intended) a hotel room becomes little more than a bed and a light switch providing a place to catch a person’s daily ration of 40 winks.
Alan, with the above said, I 100% support your fight for LEED Gold attainment by the Residence Inn.
Why? Do you know what that means? If so, OK… if not, why worship a questionable “god”?
Wow Alan. appreciate how you think Davis can prevent all those investors from losing money by controlling what you think warrants a sound investment. You must be a development and financial genius with a crystal ball too.
What would constitute concrete evidence? Also what’s the harm here if they are wrong?
Classic economic theory says that building new capacity to accommodate non-existent guests leads to over-saturation, decreased occupancy rates, and falling prices.
As I said above, this would negatively affect existing downtown hoteliers and downtown businesses dependent on those downtown guests (remember the downtown economy in 2008-2011? – it was brutal). Eventually it leads to bankruptcies to weed out the financially weaker players and fire-sale asset prices.
I believe stable, measured growth is much preferable to booms and busts. Assuming that is true, the rational choice would thus be be to entitle the Marriott now because it is the superior alternative of the two choices and then see if either the Embassy Suites gets built or there is a definitive study showing large leakage of hotel guests to other to other cities before entitling another large hotel.
There is another argument – there are a number of old, obsolete hotels and building new ones would possibly impact those hotels. That’s probably not a bad thing. On the other hand, given the news of potential more investment in Davis, the need for hotels is all the greater.
The Marriott will be built – the Hyatt will stall out because Friedman (who just purchased University Research park) will build a hotel on his land CLOSER to downtown, UCD, and not in a neighborhood.
I am told that a hotel has not been part of the discussion URP and is not in the works.
Well, maybe. But it’s a much better multi-family site, something that Mark Friedman has built in multiple locations with significant success. There may not be a better multi-family site in Davis.
Have you met Mark? I have, on several occasions… Commonsense does not to appear to have any in this regard… Adam confuses multi-family with extended stay hotels… yeah, ‘MF’ might make sense on the few remaining parcels in URP, given Tanglewood, etc., but with two short stay hotel/motel projects in the vicinity, can’t see Mark “going there” unless it was definitely “extended stay”… but, am thinking the earlier post(s) was thrown out as a ‘distraction’.
Will bet that Mark will go with the comm/office model that has worked well for the URP properties. The cite supports that theory.