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City set to pick hotel developer: Residence Inn proposed for San Carlos gateway
May 24, 2014, 05:00 AM By Michelle Durand Daily Journal

San Carlos’ gateway could be home to a 205-room Marriott Residence Inn by mid-2016 if the City Council Tuesday night gives the green light on a recommended developer for the landmark property off Highway 101.

The council spent nearly $14 million in November on three Industrial Road and San Carlos Avenue parcels long eyed for a hotel and, at its next meeting, will consider picking RD Olson Development to turn the wish into reality.

RD Olson has built six hotels in just more than two years and two hotels are currently under construction, wrote Blake Evans, vice president of finance, in a letter attached to its state of qualifications and proposal.

RD Olson beat out five other businesses that submitted proposals — and two other front-runners — in large part because it did not ask the city to subsidize the project and proposed a four-story hotel rather than five. The smaller height is more compatible with the surrounding area, said Community Development Director Al Savay.

“One of the key factors the city is looking for is the quality of the development and the architecture. It is a gateway site to the community and we want to be really clear and in agreement that this will be a high-quality project,” Savay said.

City staff also pointed out that the multi-million dollar subsidies requested by bidders Huntington Hotel Group and OTO Development would keep the city waiting roughly two decades to see any substantial difference in its transient occupancy tax revenue.

Savay said an extended-stay hotel like a Residence Inn is a good fit for the San Carlos market because it appeals to business and family travelers. With the Palo Alto Medical Foundation poised to open its new medical campus, Savay said the hotel may also be good for those visiting patients or needing to stay in the vicinity.

The hotel could mean more than $1 million in new transient occupancy taxes yearly for the city, according to Savay.

The city might also find financial benefit in its development agreement with Olson but Savay said that’s too far in the future at this point to estimate.

The council’s approval of the RD Olson recommendation lets City Manager Jeff Maltbie negotiate a memorandum of understanding and begin working on design. A disposition and development agreement could be considered by the council by mid-2015 for the land sale to RD Olson and, once done, Savay said groundbreaking could be soon after with a tentative opening in early summer 2016.

The choice of a developer moves the city that much closer to realizing its goal of a hotel on the 3.91-acre plan composed of 595 Industrial Road, 850 E. San Carlos Ave. and 810 E. San Carlos Ave. The city closed escrow on the San Carlos Avenue parcel in March and is currently in the midst of escrow on the other two with a finance plan due to the council by June.

The council approved the land purchases last fall as a “calculated risk” that the market and developers would be receptive.

In advance of the purchase, the city rezoned the industrial area into a new landmark commercial district to promote uses with an economic benefit, like a hotel. All other uses require conditional use permits.

The City Council meets 7 p.m. Tuesday, May 27 at City Hall, 600 Elm St., San Carlos.

(650) 344-5200 ext. 102



Tags: hotel, savay, council, development, carlos, olson,

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