Grover Beach may help developer fund hotel project
October 7, 2016
By JOSH FRIEDMAN
As a reward for potentially generating millions of dollars in tax revenue for the city, Grover Beach may financially assist a developer that plans to build a hotel on a site with no water and sewer connections. The developer is requesting a few forms of financial assistance which total more than $2 million.
Los Angeles-based development firm Urban Commons is planning a 132-room hotel at 950 El Camino Real, which is located near Highway 101. Urban Commons has secured financing for the project and plans to begin construction this month, according to a Grover Beach staff report.
However, the developer is requesting financial assistance from the city in order to afford the costs of installing water and sewer mains. The water main is expected to cost at least $1.38 million, and the sewer main is expected to cost $754,000.
In a letter to Grover Beach City Manager Matthew Bronson, Urban Commons requested the city consider paying half the water main costs, or $690,000, and 60 percent of the sewer main costs, or $452,000.
Additionally, Urban Commons requested that Grover Beach waive most of the transient occupancy tax (TOT) that the developer would pay over the first five years of operating the hotel. Urban Commons offered to pay just $778,000 of the projected tax bill of more than $2 million.
In all, the financial assistance would total about $2.4 million.
Bronson stated in the staff report the planned hotel is an important economic development project that will broaden the city’s tax base. He suggested the city council consider providing financial aid to Urban Commons, which could come in the form of upfront reimbursement for infrastructure costs, reimbursement overtime and/or deferred payments of development fees and/or TOT.
Grover Beach’s general fund reserves are only about $350,000 above the mandatory 20 percent minimum. Financially assisting Urban Commons may involve the city borrowing money from its wastewater fund, according to the staff report.
On Monday, the issue was on the agenda at a council meeting. The council opted to take no action and continue the hearing in the near future.