Grover Beach may help developer fund hotel project

October 7, 2016
Matthew Bronson

Matthew Bronson

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.


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wolfhound

Perhaps Grover Beach should look at what occurred in Visalia when their entrepreneurial government were talked into investing 3 million with a developer to build a hotel.


It all started out with a 3 million investment by the city & snowballed from there into 24 million for a hotel they ended up having to buy, later appraised at 10 million!


Let the entrepreneurs risk their own money.


The city should not risk taxpayers money because it’s not theirs to risk. That’s not the function a a city government..


kayaknut

“The city should not risk taxpayers money because it’s not theirs to risk. That’s not the function a a city government..” Shouldn’t they at least ask the taxpayers before handing out their money?


Ricky2

Isn’t it cute how those red-blooded capitalist developer boys never miss an opportunity for a socialistic handout?


just the facts

It’s called Crony Capitalism! This is not the Free Enterprise Capitalism we have known in America in the past!


whatdouno

Obispan, yes actually you do pay taxes on medical marijuana. In order to follow the attorney generals guidelines you must: obtain a business license, be a nonprofit corporation, have a sellers permit and be bonded and keep meticulous records of all income and expenses.


grayotter1

Brilliant idea! What’s wrong with trading a great tax base for water???

When was the last time you went to a $100+ night motel/hotel and paid attention to their little sign asking to conserve water?

I say to myself “At the exorbitant rates I’m paying they’re probably making an additional profit on my saving water. I only get a 2 minute shower at home. I’ll take a 10 minute shower here. I’m paying for it…”

Remember all the excess water motels use reduces the amount of water you can use at home during these drought years.

Sounds like a Mayor Schoals scheme…


Nightrider

I would like to see whether or not Big John Sholes has a mitt in this mess. This is a good location, use of this land. But Very little taxpayer’s $ should be used. What does Debbie Peterson say about this?


obispan

This is not a “sweet deal” a la the Nick Tompkins and the Copeland family public giveaways (money paid to Jan Marx delivers astounding returns). Cities want hotels and the 10% tax, hotels want a break on paying impact fees and other considerations, in consideration. If this land is developed as office or housing the city gets nothing, ever, other than a piddling share of the property tax. You don’t pay tax on your doctor, dentist or accountant’s bills, so that is bad. Sales, about 1% of the gross, and that is a lot of money, so restaurants/retail is good. Hotels, 10%. That is like having a little casino. Pismo gets one quarter of their municipal budget from hotels’ taxes and every other city is always actively seeking them.


Ricky2

But, Obispan, it seems you haven’t read the article carefully. They want EXEMPTION from paying the transient occupancy tax for many years. So how is THAT to the city’s benefit? The 10% “windfall” disappears with that provision.


isoslo

I would like to know who has received political contributions from this group and their related people and how that politician votes on this issue. We all know Adam Hill will take the money and vote in favor.


RonHolt

Uh, this is in the City of GB not SLO County. While Adam Hill would certainly take any such contributions, he could only help in indirect ways with this. Look at contributions to Grover Beach politicians (& candidates) to see where any potential corruption lays.


jimmy_me

I want to open up a cannabis dispensary in GB, yet another source of tax income for the city. I too will be requesting a loan from the city. Wish me luck!


obispan

What tax? Do you remit to the State Board of Equalization? Prescription medicine is not taxed in California and marijuana is otherwise illegal.


SLOBIRD

You can only have 4 plants in your yard. You can sell or give away marijuana. Dealers will be required to get a State seller’s permit, I will assume the City they live in will want them to get a license, a dealer will be required to collect sales tax and no, marijuana is not consider a medicine. However, you will be able to go to a doctor and get a prescription and then be exact. Rules are different between holistic user and a regular cannabis user. People need to read the Proposition to know what is in it, don;t be like a Democrat and vote for it and then find out what is in it because it will bite you is the a$$.


shishkabob141

At least Arroyo Grande city staff attempts to hide the sweet deals they give Tompkins and Mangano.