Negotiations stalled for hotel at San Benito and Fourth
streets
In less than a year the moratorium on new construction will end,
but plans for a business class hotel on the corner of Fourth and
San Benito streets are at a standstill.
Negotiations stalled for hotel at San Benito and Fourth streets
In less than a year the moratorium on new construction will end, but plans for a business class hotel on the corner of Fourth and San Benito streets are at a standstill.
The last buildings on the 400 block were razed in 1994. For most of the year, the lot is empty. During the summer, the lot is used once a week for the Farmer’s Market. It is the site of Santa’s Village during the Lights On Parade. That corner is key to downtown, said Doug Emerson, a member of the Hollister city council.
“I would hope that something is built there,” he said. “There’s probably more traffic on that corner than any other.”
A developer, Tod duBois, has an exclusive non-negotiation agreement with city officials to build a hotel with conference rooms, plus retail space, Avera said.
City officials agree that the 400 block is important to improving Hollister’s economy, but officials are stuck in negotiations that could prove hard to end.
In a catch-22, city officials have requested a report from duBois to show that the project is likely to have a positive economic impact for the city if they are to subsidize the project. duBois does not want to finance the report without a guarantee that city money is available to subsidize the project.
“If we’re going to go back to square one,” Emerson said, “one year from the moratorium ending, we have to start over today.”
If the developer cannot get a loan that will cover the cost of construction, the city will need to subsidize the project.
“There is a good understanding that likely a project of this size is not going to pay for the balance,” Avera said.
If the gap between what the building would cost to construct and the amount the developer could borrow is huge then the, “council would have to analyze how important it is to have a hotel in downtown Hollister,” he said.
At this point, no one is certain what kind of subsidy duBois will need in order to start building, and whether that subsidy would financially benefit the city.
The impact of the hotel depends on many factors, such as how many hotel rooms Hollister could support, how much the hotel operator could charge for those hotel rooms, and what the occupancy rate for the hotel would be, he said.
“If we’re going to subsidize this, or sell the land for a dollar, we have to know that the economic impact will benefit the city,” Emerson said.
In 2004, the city council approved duBois’ proposal. The building has retail space on the ground level and a hotel with conference rooms above.
City officials agree that the hotel is still a good use for the lot.
“Yes, the city of Hollister would like a business class hotel somewhere,” said Jeff Pyle, manager of Hollister’s economic development department. “If you had to rank sites around town, that one would come up pretty high.”
A hotel would generate traffic around downtown, he said.
But the exclusive non-negotiation agreement means that city officials cannot negotiate with another developer or sell the property. If duBois and city officials cannot come to an agreement, the easiest way to terminate the project is for the developer to walk away, Avera said.
He does not believe that negotiations could go on indefinitely.
“I think that there are conditions in the non-negotiation agreement that would prevent that,” Avera said.
The city has a contract with Keyser Marston Associates, Inc., a firm that specializes in real estate and public-private partnerships. Consultants at Keyser Marston are working on a report that is supposed to help city officials answer questions about the potential of the hotel.
“Part of what the city is looking for in this [report],” Emerson said, “is whether or not the hotel makes sense in this area.”
The report should be ready in a few weeks, Avera said.
However, he thinks the report will probably say that the consultants do not have enough information to complete an accurate report, he said.
“For the city to complete that report,” Emerson said, “Keyser Marston needs to know what the occupancy rate is going to be.”
City officials agreed that it is duBois’ responsibility to fund the report that will determine what the occupancy rate of the hotel would be.
There is no formula for partnerships between public and private entities, Pyle said.
“There’s lots of ways a developer and a city can come to an agreement on a project,” Pyle said. “Every location is different.”
duBois has not signed a contract for the report yet, he said. The report would cost $20,000.
He has already spent between $50,000 and $75,000 on the project, .
“It cost me about $30,000 to just come up with the proposal,” duBois said. “I hesitate to keep spending without knowing the city can subsidize the project.”
duBois is committed to doing whatever the city council wants to do. He does not want to lose the money he has already put into the project.
“I can’t keep putting money into this project,” duBois said, “Unless the council has the money to subsidize this project and the political will to move it forward. I think it’s failed before because they haven’t really committed to it.”
duBois is hesitant because he said the city council has a history of failed attempts at building a hotel on that spot.
“The track record there is pretty telling,” duBois said.
City officials have come close to reaching an agreement with developers in the past, Avera said. The moratorium has made it more difficult, he said
City officials are still committed to building a hotel on the 400 block, Pyle said.
“Yes, the city of Hollister would like a business class hotel somewhere,” Pyle said. “If you had to rank sites around town, that one would come up pretty high.” Those working in tourism in the county did not believe the project would compete with other proposals around the county.
County officials approved 200 hotel rooms at the San Juan Oaks Golf Club. Scott Fuller, general manager of the Club, says that they intend to ask for 50 more.
“Right now there is a lack of hotel space,” he said. “People come here for day trips then go back.”
Pyle agreed, though he was unsure about the future of duBois’s proposal.
“It would be nice to move the project along,” Pyle said. “I don’t know if that’s going to happen or not.”
