From: D
To: drlum, svaidhyanathan@cupertino.org, dpaul@cupertino.org, bchang@cupertino.org, sscharf@cupertino.org, rsinks@cupertino.org, citycouncil@cupertino.org
CC: davidb@cupertino.org, aartis@cupertino.org, benjaminf@cupertino.org, cityclerk@cupertino.org, cityclerklist@cupertino.org
Sent: 8/13/2017 7:22:42 P.M. Pacific Daylight Time
Subj: Re: August 15, 2017 City of Cupertino City Council Meeting, Agenda Item #16C ...Congratulations Dr. Lum on your mammoth undertaking. I've always felt that individual hotel allocations should not be granted (even though I do not object to the Goodyear or Cup. Village per se) until we have a general allocation for the City as a whole, so that rooms can be allocated fairly and according to objective needs. The hotel allocation of course depends on a general office allocation for Cupertino, which logically should come first. That has to be aligned with community sentiment and certainly cannot be the 3 m. sq. ft that some dreamers have proposed.PhyllisIn a message dated 8/13/2017 1:58:21 P.M. Pacific Daylight Time, drlum writes:Subject:Consider whether to authorize the formal submission of General Plan amendmentapplications for the three proposals received in the 2017 Second Cycle including: 16A- Hotel at Cupertino Village site; 16B - Hotel at Good Year Tire store site; 16C - Mixed -use development at the Oaks Shopping Center (16A and authorized at the August 1 CityCouncil meeting. 16C continued to August 15).Seems unusual to have 16A, 16B and 16C as one agenda item on August 1, 2017;seems even more unusual to have 16C this evening, now as one agenda item onAugust 15, 2017.City of Cupertino should revise its strategyIn light of recent retail panel and recent events, Retail Strategy Report dated March 6, 2014,and its seven Study Areas:Study Area #1 Cupertino Inn and Goodyear Tire site > GPAStudy Area #2 City Center siteStudy Area #3 PG&E siteStudy Area #4 Mirapath siteStudy Area #5 Cupertino Village site > GPAStudy Area #6 Vallco Shopping District siteStudy Area #7 Stevens Creek Office Center siteshould be redone to be more current.Study Area #8 Oaks > GPANotably, the City of Cupertino did request the same entity, Economic & Planning Systems, Inc.,to review the Fiscal Analysis of the Cupertino Village Boutique Hotel, the Cupertino Hotel, andthe Westport Cupertino GPA applications; especially the transient occupancy tax based onaverage daily room charge of $300 (Cupertino Village Boutique Hotel and Cupertino Hotel) and$200 average daily room charge for the hotel in Westport Cupertino, generating $1,701,630 forCupertino Village Boutique Hotel, $1,434,888 for Cupertino Hotel, and $1,042,440 for the hotelin Westport Cupertino, all at 70% occupancy.These conclusions are vey optimistic, as to degree of percentage of occupancy due to hotelsaturation with 8 to 11 hotels in the immediate area of the City of Cupertino (see existing,under construction, approved, and GPA) and similiarly others in the market area (see below)as well as the daily room charge of $200-300.The City isn't getting the value from the developers but from the patrons paying thetransient occupancy tax. If less than 70% occupancy, then a decrease of transient occupancy tax.If developers are confident in these projections, perhaps they would opt to guarantee theirprojected hotel occupancy taxes.Cupertino Hotels Transient Occupancy TaxTransient Occupancy Tax (TOT) = 2017-2018 $ ?2016-2017 $ ?2015-2016 $5,852,244 actual2014-2015 $ ?June 20, 2013-2014 $4,590,156 actualFirst year for 12% Transient Occupancy Taxand Full Operation of Aloft HotelJune 30, 2012-June 30, 2013 $3,769,000 for 5 hotelsAloft Hotel opens December 2012June 30, 2011-June 30, 2012 $3,112,934Transient Occupancy Tax 10% > 12% effective January 1, 2012Increase or decrease, whether increment linked to hotel coming on line, is + or -.ExistingAloft Hotel, open December 2012Courtyard by MarriottCupertino Inn > Cupertino HotelHilton Garden InnCypress (Klimpton) > Juniper (Hilton)Woodcrest at 5415 Stevens Creek Blvd in City of Santa ClaraSubtotal = 6 hotelsUnder constructionResidence Inn by Marriott in MainStreet CupertinoCity stipulate that if hotel includes 160+ rooms, then developer must provide banquetfacility for 400 people. Modified later.Hyatt PlaceDining area to provide sales tax revenueNote that Hyatt Place, San Jose closes dining area in eveningSubtotal = 8 hotelsApprovedMarina > HotelSubtotal = 9 hotelsAll proposals include hotel and consequently hotel tax; All proposals have EPS Fiscal AnalysisCupertino Village > GPA > HotelGoodyear site > GPA >HotelOaks > GPA > HotelTotal = 12 hotels = Saturation?City of Cupertino interested in revenuesUnfortunately, hotel projects with general plan amendments are generally approved, due to theexpectations of high amount of transient occupancy taxes they may generate for the city.The City should question the City's apparent practice of rubber-stamping hotel projects withgeneral plan amendments, i.e. the City should not allow developers to exceed zoning regulationsand/or general plans or specific plans, such as the Cupertino's Heart of the City Specific PThe City should provide for change of ownership of hotels; development agreements involve onlythe developer.Yet hotel projects proliferateNorth 40 studyMarket Study & Business Opportunities Assessmentby BAE Urban Economics, August 12, 2011Hotel Market AssessmentExisting Supply page 89Planned and Proposed Competition page 91Performance Trends page 93Market Area = Cupertino, Atherton, Campbell, Menlo Park, Palo Alto, Santa Clara, San Jose, Saratoga, Los Gatos, Los Altos,Los Altos Hills?Cupertino11 hotelsMenlo ParkBohannon Development projectMenlo Gateway under construction; "completion by the end of 2017"Gateway of Silicon ValleyMarriott's Autograph CollectionJW Marriott or Courtyard by Marriottpreviously projected to be akin to Marriott Renaissance ClubSport in Walnut Creek230 rooms > 250 rooms; May 2015Generate $1.2 million in hotel taxesSource:bySan Jose Mercury NewsMarch 9, 2015Hotel Financing Was Crucial to Getting Larger Project Goingby Nathan Donato-WeinsteinSilicon Valley Business JournalPage 12April 1, 2016Pollock Realty project1400 El Camino Real63 room hotelSubject to public benefit analysis per El Camino Real/Downtown Specific Plan of July 12, 2012," confusion over whether the developer was still planning to install a restaurant or meetingrooms at the hotel.""hotel are called out as one recommended (public benefit bonus) option, as such a facility'generates higher tax taxes for the City....""...$350 a night in its first year. The hotel is expected to generate about $8.5 million inroom taxes in its first 10 years."Source: Plan for Boutique Hotel Advancesby Kevin KellyThe Daily News (Palo Alto)Page 9August 7, 2015Comment: $8.5 million per year or $8.5 million for 10 year period.Mountain ViewUnder constructionSan Antonio Center, Phase 2Hotel 167 roomsPalo AltoProposedSan Antonio site: 744 & 750 San Antonio RoadEl Camino & San AntonioCourtyard by MarriottAC Hotel by Marriott"The hotels would add to the "absolute gridlock" on San Antonio Road"Source: Council Warm to Hotel Planby Jacqueline LeePalo Alto Daily NewsPage 6December 11,2015Su Hong Restaurant siteEl Camino & San AntonioSan BrunoProposedMarriott 152 roomsProjected hotel, property and sales taxes per year. = $800,000Total amount in subsidies to be given hotel developer = $3,900,000City-owned land, purchased in 2012 = $21 per square foot/$ ? in 2015, todeveloper for $1.00Waive building and permit feesNo transient occupancy taxes for 2 years" City has refused to release the EPS (Economic & Planning Systems) analysisthat produced the $3.9 million figure for the subsidy. ....remains incomplete,exempting the document from public records requests.""The city has used a legal maneuver of calling the study a draft so no one cansee it, and yet they use the numbers in the study to justify the subsidy."City > financial incentive3,000 square foot event space for meetings and special occasionAfter 2 years $800,000 a year in hotel, property and sales taxes.City to sell to the developer for its appraised value of $3.97 million.ReferendumUnite Here Local 23,000 signatures for referendum on November 2016OTC to guarantee that workers at the proposed hotel would be ableunionize without fear of retaliationLawsuitCourt ruled that action by City of San Bruno was admistrative, not subjectto referendum.Santa ClaraRelated projectSan JoseExistingMarriott506 roomsPurchased by CARE Global Investors for $83 millionSource: Downtown San Jose Marriott Fetches $83 millionby staff writerSan Jose Mercury NewsPage D3May 21, 2013HiltonHyatt PlaceCloses dining area in eveningsProposed HotelsResidence Inn by Marriott. 147 roomsFairfield Inn & Suites by Marriott. 114 roomsMarriott AC HotelStern & Stevens Creek5696 Stevens Creek BoulevardHeight 85 feetDeveloper "From an economic development perspective for San Jose, our projectwould clearly draw tax revenue from Cupertino."Cupertino Mayor: Heart of the City Specific Plan > Density and heightSource: Border War: San Jose and CupertinoInternal Affairsby Scott HerholdSan Jose MercuryJuly 30, 20171080 South De Anza90 room hotelSouth De Anza and Park86 room hotelAlmaden Ranch Shopping CenterSoutheast corner of Almaden Expressway and Cherry Avenue, next to Highway 85, close to public transitWyndham 115 roomsSource: New 115-room Hotel Planned in Centerby Julia BaumSan Jose Mercury NewsJanuary 15, 2017EdenvaleHighways 85 and 101Source: New 115-room Hotel Planned in Centerby Julia BaumSan Jose Mercury NewsJanuary 15, 2017North San JoseNorth San JoseTrimble Road & Orchard ParkwayLBA Realty250-room hotelnear Apple's North San Jose campus and Samsung's campusSource: San Jose Industrial Site Eyed for Hotel, Retail, Officeby George AvalosSan Jose Mercury NewsAugust 3, 2017San Jose Urban Villages Plan70 Urban VillagesCottle Transit VillageLesson in unmet potential"Despite thousands of new homes in the area, light rail ridership from the Cottle station isactually down about 5 percent from two years ago, according to the Valley Transportation Authority(VTA).""An elevated walkway drops riders in between the north and southbound lanes of the freeway (85),...""VTA officials also accuse Cottle developers of ineffective marketing the station-which developers deny...."Oaks > Westport/CupertinoTransit access to between the north and southbound lanes of freeway 85Access to thousands of De Anza College students.Terminal for Transit Center"The transit center will provide the basis for a future connection for rapidalong State Route 85, 50 onsite parking stalls, and a shuttle drop-off/pick-up area,..."Located at North end of projectIncluded in proposalConstruction of Onsite Transit CenterAlternative #1 $3.5 millionAlternative #2 $3.5 millionTransit CenterLocated in between the north and southbound lanes of 85 freewayNot included in proposalVTA dependentLight rail in median questionableRidership and CostRiver Oaks Transit Village"...developers successfully pitched light rail access to potential tenants. Resident don't face the sameaccess issues, and ridership has grown 20 percent in two years."Source: San Jose's Urban Villages Plan Faces Transportation Obstaclesby Chuck CarrollSan Jose InsideFebruary 24, 2017Branham Transit/Urban Village"In March (2017) the VTA asked San Jose officials to amend the city's General Plan so it could develop a3-acre parcel....""While the SR 87 corridor study moves forward, VTA is withdrawing the General Plan Amendment applicationfor the property...."Source: VTA Pulls Plan to Build Near Branham Light Railby Julia BaumSan Jose MercuryPage B10July 23, 2017Stevens Creek Blvd Urban VillageSan Jose Needs Traffic Mitigation in Urban Village Plans"...we believe the corridor (Stevens Creek Boulevard) needs significant transit improvementsthat are lacking in San Jose's current plan."Source: San Jose Needs Traffic Mitigation in Urban Village Plansby Lisa Gillmor, Rod Sinks and Savita VaidhyanathanSan Jose Mercury NewsAugust 7, 2017SunnyvaleExistingMarriott HotelProposed590 West El Camino Real. 84 roomsDegan Development"...plans to sell the project."No restaurant or barBusiness travelersPlanning documents > luxury hotel of business hospitalitySource: Five-story Hotel Coming to El Camino Real in Sunnyvaleby Victoria KerzaBay Area News GroupJune 1, 2017767 North Mathilda AvenueOTO DevelopmentHilton Garden238 roomsSource: Sunnyvale: Hilton Garden Hotel Proposed for Mathilda Avenueby Victoria KezraBay Area News GroupJanuary 20, 2016830 East El CaminoHuntington Hotel GroupHilton Homewood Suites130 roomsSource: Sunnyvale: 130-room Hilton Homewood Suites on El Camino Real Proposedby Victoria KezraBay Area News GroupMay 4, 20161250 Lakeside DriveWittek DevelopmentMillennium Hotel263 roomsSource: Commission Gets Look at Hotel, Housing Projectby Victoria KezraThe SunPage 5August 26, 2016Cupertino is in the crosshairs of development...Decreasing future growth and increased competition would limit the amount of hotel taxes going tothe City.Currently, it's one of the largest revenue generators for the CityCupertino Sales TaxSales Tax 2017-2018 $ ? TBD2016-2017 $ ? TBDJune 30, 2015-June 30, 2016 $21,350,056 actual2014-2015 unavailableJune 30, 2013-June 30, 2014 $19,794,036 actualJune 30, 2012-June 30, 2013 $18,721,000 actualJune 30, 2011-June 30, 2012 $17,326,460 actualRetail Sales Analysis: $799,758,000 2000$696,060,000 2011unavailable 2012unavailable 2013unavailable 2014unavailable 2015unavailable 2016TBD. 2017We have ceased our record of businesses leaving Cupertino altho the City of Cupertinocontinues to publiciize only new businesses.Top 40 Sales Tax Producers Top 40 Sales Tax Producers3rd Q/2016 1st Q/2013Gas Stations Decrease due to Electric Vehicles.Chevron Service Stations Chevron Service StationsRotten Robbie Service Stations Rotten Robbie Service StationsShell Service Stations Shell Service StationsValero Service Stations Union 76 Service StationUS Gas Service StationValero Service StationGrocery Stores. No sales tax on food; sales tax only on non-foodRanch 99 Markets MarinaSafeway Ranch 99 MarketWhole Foods market Whole FoodsNonexistent as of August 2017Granite Rock Elephant BarJ. C. Penney closed April 2016 Granite RockJC Penney closed April 2016Macy's closed April 5, 2015RestaurantsAlexander's Alexander'sBenihana BenihanaBJ's BJ'sDynasty DynastyLazy DogPark Place in Cypress HotelApple Campus 2 construction related sales tax due to point of sale in Apple Development Agreement:Frener & ReiferGoodfellow Top Grade Construction ?Mitsubishi Consumer Electronic ?PermasteelisaPowersecure ?Rosendin ElectricSeeleSuperior Air HandlingTeknionTotal amount of sales taxes per quarter should be disclosed for comparison purposes withother quarters; unable to determine trend of sales tax revenuesWill restaurant in the Oaks, Cupertino Village or North De Anza sites make the list?Will restaurant in Hyatt Place make the list?Free breakfast; Sales tax ??? State's pos
Sunday, November 19, 2017
Phyllis - Survey of Hotels in Cupertino and Other Cities
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