The developers of the Hyatt House hotel have proposed a somewhat scaled down project, reduced the number of floors to three on the backside of the building and the number of rooms from 120 to 118. In addition, they have committed to a ten-year funding mechanism for community assets in a greenbelt park.
Still, as a letter from neighborhood representatives Neil Dhanowa, Alissa Burnett and Bridget Boyd makes clear, after meeting with a majority of the neighbors, “the overall consensus is still that they do not feel a hotel of this size is appropriate in the location we have been discussing.”
The January 20 email to, among others, Ashley Feeney of the City of Davis, which the Vanguard acquired through a records request, states, “Everyone was happy with the mitigation efforts you have put forth and really appreciate the changes to the property we were able to work towards. The general consensus is a frustration that even though the design was altered in size to be 3 stories in the rear and 4 stories in the front, the overall size of the hotel being only reduced 2 rooms down to 118 rooms was a sore subject, as well as the pool being a requirement of the property.”
According to them, “The feelings were that even with the proposed changes the project/development team was not truly making a sacrifice in the same manner that the neighborhood was by effectively ‘giving something up.’”
The letter discusses the idea of a dedicated Rose Creek fund with the city, to which the development team would contribute. They explain, “The fund would receive a quarterly deposit from the hotel via a $1 per night contribution. While the hope was that this would stand as long as the hotel was in business, Guneet and I settled on a 10 year term in which the property owner would guarantee the nightly amount should the room occupant choose not to voluntarily accept/contribute.”
After ten years, “this fee would be moved to a voluntary pass through to the hotel guests at the same rate, but would effectively remove this perpetuity from being guaranteed by the owners.
“The second part of this discussion was around an upfront one time monetary contribution to the Rosecreek fund. While our hope was to be in the ballpark of $350k, Guneet agreed upon a $100k contribution as the max amount feasible, but that we would collectively work with the city to attain approval of an additional $150-$200K from either the general fund or from the $1.8 million in impact fees from this project prior to project approval,” the letter continues.
Finally, they “discussed a friends and family rate for Rosecreek families. The sticking point here is that the neighborhood needs some sort of agreement that this rate will hold with the property should ownership change. Open to ideas here from your side, but think this is really valuable as well as helps us be an advocate for your property in our community and hopefully increase your occupancy.”
However, the neighbors indicated, “if all of us can get the city to agree to an immediate contribution, or allocation, as outlined above to be used to completely renovate Brentwood park, we will not oppose the project moving forward.”
They write, “Given all of the outlined changes we discussed the other week, as well as this total investment, we believe we can come to an agreement. This is what our stance will be unless the development team is willing to take on the extra monetary contributions, but from my understanding that is not feasible. So the X factor is how we collectively get the city to commit something here.”
The final point is that “if we can secure the funding to overhaul Brentwood park from the combination of your contributions as well as the city’s, the Rosecreek neighborhood will not pursue litigation.”
But the neighbors add that “we are not in control of the actions of those we have not spoken with or know about. Should a situation evolve where some outside 3rd party decides to move forward with legal action, we will happily state neighborhood support for the project given all of the changes and guarantee of monetary contributions.”
In the meantime, Roshan Patel sent a letter to the city dated Monday (January 23) that threatens litigation. Noting both the significantly smaller Embassy Suites Conference Center and the hold on the Mace Ranch Innovation Center (but ignoring the planned expansion of both Sierra Energy and the University Research Park), Mr. Patel writes, “I strongly urge the City Council oppose the Hyatt House Hotel.”
He adds, “The City is adding an unsustainable amount of hotel rooms in inappropriate locations without any new demand generators. This will ultimately lead to devastating effects to existing hotels including but not limited to closures, abandoned buildings, homeless encampments, deferred maintenance, blight, and other environmental issues.
“I’d like to remind the Council that adding hotels without any new demand generators is not going to solve any of the [City’s] financial problems and it is not a community benefit for anyone. Please oppose the Hyatt House Hotel based on Davis’s smart growth policies,” he writes.
Mr. Patel warns, “If the City continues to ignore my concerns, I suggest the City prepares to govern itself accordingly in the Court of law based on an invalid environmental impact report and breaking zoning and land use laws.”
He argues, “The EIR inadequately addresses potential impacts of urban decay of existing hotels in the community. Additionally, based on section 65860 of the California Planning, Zoning, and Development Laws – I have reason to believe the project is in violation of planning and zoning law as the Hyatt House Davis project is not consistent with the city’s General Plan Land Use policies and the South Davis Specific Plan policies.”
—David M. Greenwald reporting
LOL, I was going to comment but I’ll just leave it at LOL.
Ashley Feeney signed a letter opposing the hotel? Seriously?
The neighborhood requests seem way outside the bounds of reasonable to me. And given Patel’s letter, it seems that the project is going to be litigated no matter what sort of concessions the owners make. If I were the developer, I’d be sequestering all those discretionary funds for use as legal fees.
Guess I was more tired than I thought – the third name is Bridget Boyd
In my personal opinion Roshan Patel’s assessment of market demand is inconsistent with the available facts. Let’s look at his points one by one.
“The City is adding an unsustainable amount of hotel rooms in inappropriate locations without any new demand generators.”
His point assumes that either (A) the demand generated by UC Davis is monolithic and “old” or (B) the demand generated by UC Davis is fully tapped or (C) the demand generated by UC Davis is not growing. None of those three assumptions are correct. The demand from UC Davis is multi-faceted, largely untapped, and growing in concert with the growth of UCD applications and enrollment.
From my personal meeting with Mr. Patel, I know he bases his use of the word unsustainable on the information provided by the March 2016 HVS Market Study provided to Council. In Figure 1.1 of that study HVS predicts an increase of 42% in Davis hotel market revenues over two years if both the Embassy Suites and either the Marriott or Hyatt House are built.
My question to Mr. Patel is “How does a 42% increase generated from a 28% increase in room supply qualify as unsustainable?”
‘This will ultimately lead to devastating effects to existing hotels including but not limited to closures, abandoned buildings, homeless encampments, deferred maintenance, blight, and other environmental issues.”
The bleak picture he paints with these words is rhetorical. He provides no evidence that the existing hotel operators in Davis are going to act in a manner that will cause any of the described actions to occur. In fact if revenues are growing faster than room supply is growing (as HVS has predicted) then what market forces would cause any of the doom and gloom outcomes Mr. Patel describes.
Patel does not need to provide evidence of this to the City or to the Vanguard nor would I if I were him – I’d save the evidence for his legal brief. But an appellate court decision in a recent case involving Petrovich’s plan to expand his Gateway Center in Woodland shows that a developer has to consider the potential impact of their new developments on downtown blight as part of the CEQA review.
All Patel needs to do is present a fair argument to the court that there is a reasonable cause to believe that if the demand growth is not there then the project could potentially contribute to decreased occupancy leading to “blight” in downtown hotels and that this question was not adequately addressed in the MND.
I think our Planning Dept has once again stumbled over their own feet again by insufficiently addressing CEQA issues so the courts will probably have to sort it out.
Revenues are not occupancy rates. Revenues could increase as a result of more expensive rooms coming onto the market (such as at Embassy Suites and Marriott and a new Hyatt) but occupancy rates could also potentially substantially decrease in existing downtown hotels leading to “blight” as is described by law. Hard to believe we could add potentially up to about 370 new rooms to the City’s hotel stock and about double our number of available hotel/motel rooms in the City and not see decreased occupancy rates in downtown hotels.
Cite?
Untrue, and/or likely not to stand up in court… unless the uncited appellate ruling shows to the contrary… even then it needs to be ‘certified’ (wrong term?) to be precedent…
Cite?
I said that based on your cite, we could evaluate the veracity of my opinion… strongly suspect you ‘went there’, based on your lack of ability to provide a cite… a tad disingenuous, don’t you think?
Alan raises some good points. Here are my personal opinions about those points.
“But an appellate court decision in a recent case involving Petrovich’s plan to expand his Gateway Center in Woodland shows that a developer has to consider the potential impact of their new developments on downtown blight as part of the CEQA review.”
The City commissioned and paid for and received in a March 15, 2016 Council meeting a market study completed by the expert firm HVS, which supplemented the June 17, 2015 market study prepared by the expert firm PKF Consulting.
So, I personally believe the City has indeed seriously considered the potential impact of the added hotels, but let’s drill down into some of the details of that impact consideration.
“Revenues are not occupancy rates. Revenues could increase as a result of more expensive rooms coming onto the market (such as at Embassy Suites and Marriott and a new Hyatt) but occupancy rates could also potentially substantially decrease in existing downtown hotels leading to “blight” as is described by law.”
As noted in my comment above HVS’ expert assessment is that Davis hotel market revenues will increase by 42% over the first three-year period of the scenario that adds 89 rooms to the Embassy Suites and 120 rooms at either the Marriott or Hyatt site. The combined 209 rooms is a 28% increase of the current 731 rooms in the Davis hotel market. During that same three-year period when HVS projected a revenue increase from $17,870,423 to $25,369,162, HVS also projected that occupancy would go from 74.8% to 69.6%. To put that 69.6% into perspective, Table 5-1 of the HVS reports that from 2007 through 2014 the occupancy rates were 64.7%, 62.5%, 59.7%, 56.4%, 63.3%, 65.2%, 68.7%, and 69.8%. Only one of those eight occupancy rates is above the HVS projection of 69.6%. Did any of the hotels contribute to downtown blight in the 2007 through 2014 period?
So at the detail level, I personally believe the City has seriously considered the potential impact of the added hotels.
“Hard to believe we could add potentially up to about 370 new rooms to the City’s hotel stock and about double our number of available hotel/motel rooms in the City and not see decreased occupancy rates in downtown hotels.”
Let’s start with your math. 89 + 120 + 118 = 327 not “about 370”
Second, Council’s approving a proposed hotel in no way guarantees the proposed hotel will actually be built. Both the Embassy Suites and Marriott have been slapped with law suits. There is no certainty that either of them will be built.
Regarding the possibility of decreased occupancy rates, the banks who are going to consider lending the money to build the hotels are acutely aware of the possibility of decreased occupancy rates. If that possibility is indeed as negatively powerful as you suspect, then those banking lenders are going to think twice about providing the proposed new hotels with the money they need to translate their plans into reality. The normal workings of the financial marketplace is a much more appropriate place to be making the potential decreased occupancy argument. City Council isn’t in the business of assessing investor fiscal risk. They don’t have the skills to do so. That is a job for the banking/investment community.
Good analysis, although Embassy has settled their suit.
Most Vanguard readers are familiar with the fact that I dig in and do research on the issues I choose to comment on. In doing my detailed research on the market demand for hotel rooms in the Davis market I ran into the following interesting information when comparing the 2011 HVS market analysis (commissioned by UCD) with the 2016 HVS market analysis (commissioned by the City).
In 2011 the HVS analysis made the following projections of occupancy in Figure 5.9
2011 predicted occupancy increase of 5.1%
2012 predicted occupancy increase of 4.7%
2013 predicted occupancy increase of 4.3%
2014 predicted occupancy increase of 2.6%
2015 predicted occupancy increase of 1.3%
In 2016 the HVS analysis reported the following actual increases of occupancy in Figure 5.9
2011 predicted occupancy increase of 12.2%
2012 predicted occupancy increase of 3.0%
2013 predicted occupancy increase of 5.4%
2014 predicted occupancy increase of 1.6%
2015 predicted occupancy increase of 5.7%
So, over the 2011-2015 period HVS predicted an aggregate 19.4% increase in occupancy rate, which turned out to be a 30.9% increase in occupancy rate.
The actual increase in revenue per available bed (RevPAR) was even more dramatic. HVS reported that as 54.6% during the same period.
If HVS has similarly understated its projections going forward, their 69.6% projected occupancy rate would be several percentage points too low, and the $25,369,162 annual revenues projection would rise to $27,800,000 or higher. That $2,400,000 difference would mean $300,000 in added TOT revenues for the City.
There are several large parking lots in downtown. Build the Hyatt House there with ground-floor retail and affordable housing in the same building, but with different entrances, though perhaps a shared pool (this is also “innovation”!). This location in South Davis doesn’t have the best connection by bicycle to the rest of the city and the campus – at least not for quite a few years (after I-80 – Richards improvements and a direct connection from Pole Line to the bike route on Olive towards campus.) A dedicated shuttle is expensive to run, and it’s a sign of poor development skills when a dedicated shuttle passes locals waiting at a bus stop.
Build something on this space that benefits the neighbors directly. Three stories and no parking except for what’s required for ADA.
A radical vision? It’s the vision of the City of Davis, which desires a 30% bicycle modal share more or less by 2020 for employees and guests of a hotel like this. Do we seriously believe the Hyatt in this location will achieve that, or do enough to compensate for other destinations that have far less than a 30% bicycle modal share? Short-term visitors and other people who will visit campus frequently are the ideal targets for use of bicycle transport to locations too far to walk to, and dense places where walking is best. The location for the planned Hyatt House offers none of that in the short-to-medium term.
Wrong universe. For better or worse — and I’d argue generally, though not always, for better — we live in a command economy, not a planned economy. Municipal planning power has its limits, and the city largely lacks the ability to compel development. We’re faced with a yes/no decision on the Hyatt project in its proposed location, not a “let’s put it over there” decision.
Don… the current discussion is related to tree sizes to be planted… I always heard, from two certified arborists… that a 5-10 gallon tree would, after 5 years surpass and be healthier than a 25-50 gallon (box?) tree planted at the same time… sources: Bob Cordrey (may he rest in peace), and Rob Cain…
That is correct. I consider 15 gallon to be the best choice if you want a reasonably large tree at the outset that will then make the best root growth. Bigger container sizes are not better. If you want a bigger tree eventually, plant a bigger species. If you want a bigger tree sooner, plant a faster growing species.
Thx… affirms what I was told… one of the speakers tonight also affirmed…
To paraphrase a Maria Muldaur song, it ain’t the size, it’s the potential….