Subject:
Consider
whether to authorize the formal submission of General Plan amendment
applications 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
City
Council
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 on
August 15,
2017.
City of
Cupertino should revise its strategy
In 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 > GPA
Study
Area #2 City Center site
Study
Area #3 PG&E site
Study
Area #4 Mirapath site
Study
Area #5 Cupertino Village site > GPA
Study
Area #6 Vallco Shopping District site
Study
Area #7 Stevens Creek Office Center site
should be redone to be more current.
Study
Area #8 Oaks > GPA
Notably,
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, and
the
Westport Cupertino GPA applications; especially the transient occupancy tax
based on
average
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 for
Cupertino
Village Boutique Hotel, $1,434,888 for Cupertino Hotel, and $1,042,440 for
the hotel
in
Westport Cupertino, all at 70% occupancy.
These conclusions are vey optimistic, as to degree of percentage of
occupancy due to hotel
saturation
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 the
transient
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 their
projected
hotel occupancy taxes.
Cupertino Hotels Transient Occupancy Tax
Transient Occupancy Tax (TOT) = 2017-2018 $ ?
2016-2017 $ ?
2015-2016 $5,852,244
actual
2014-2015 $
?
June 20, 2013-2014 $4,590,156
actual
First year
for 12% Transient Occupancy Tax
and Full
Operation of Aloft Hotel
June 30, 2012-June 30, 2013
$3,769,000 for 5 hotels
Aloft
Hotel opens December 2012
June 30, 2011-June 30, 2012
$3,112,934
Transient
Occupancy Tax 10% > 12% effective January 1, 2012
Increase or decrease, whether increment linked
to hotel coming on line, is + or -.
Existing
Aloft Hotel, open December
2012
Courtyard by Marriott
Cupertino Inn > Cupertino
Hotel
Hilton Garden Inn
Cypress (Klimpton) > Juniper
(Hilton)
Woodcrest at 5415 Stevens Creek
Blvd in City of Santa Clara
Subtotal = 6
hotels
Under construction
Residence Inn by Marriott in
MainStreet Cupertino
City
stipulate that if hotel includes 160+ rooms, then developer must provide
banquet
facility for
400 people. Modified later.
Hyatt Place
Dining area
to provide sales tax revenue
Note that Hyatt Place, San Jose closes dining area in evening
Subtotal = 8
hotels
Approved
Marina > Hotel
Subtotal = 9
hotels
All proposals include hotel and consequently hotel tax; All proposals
have EPS Fiscal Analysis
Cupertino Village > GPA > Hotel
Goodyear site > GPA >Hotel
Oaks > GPA > Hotel
Total = 12
hotels = Saturation?
City of Cupertino interested in revenues
Unfortunately, hotel projects with general
plan amendments are generally approved, due to the
expectations 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 with
general plan amendments, i.e. the City should
not allow developers to exceed zoning regulations
and/or general plans or specific plans, such as
the Cupertino's Heart of the City Specific P
The City should provide for change of ownership
of hotels; development agreements involve only
the developer.
Yet hotel projects proliferate
North 40 study
Market Study & Business
Opportunities Assessment
by BAE Urban Economics, August 12,
2011
Hotel Market
Assessment
Existing Supply page 89
Planned and Proposed Competition page 91
Performance Trends page 93
Market
Area = Cupertino, Atherton, Campbell, Menlo Park, Palo Alto, Santa Clara,
San Jose, Saratoga, Los Gatos, Los Altos,
Los Altos Hills?
Cupertino
11 hotels
Menlo Park
Bohannon Development project
Menlo Gateway
under construction; "completion by the end of 2017"
Gateway of Silicon Valley
Marriott's Autograph Collection
JW Marriott or Courtyard by Marriott
previously projected to be akin to
Marriott Renaissance ClubSport in Walnut Creek
230 rooms > 250 rooms; May
2015
Generate $1.2 million in hotel taxes
Source:
by
San Jose Mercury News
March 9, 2015
Hotel Financing Was Crucial to Getting Larger Project
Going
by Nathan Donato-Weinstein
Silicon Valley Business Journal
Page 12
April 1, 2016
Pollock Realty project
1400 El Camino
Real
63 room hotel
Subject 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 meeting
rooms 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 in
room taxes in its first 10 years."
Source: Plan
for Boutique Hotel Advances
by Kevin Kelly
The Daily News (Palo Alto)
Page 9
August 7, 2015
Comment: $8.5
million per year or $8.5 million for 10 year period.
Mountain View
Under construction
San Antonio
Center, Phase 2
Hotel 167 rooms
Palo Alto
Proposed
San Antonio site:
744 & 750 San Antonio Road
El Camino & San Antonio
Courtyard by Marriott
AC Hotel by Marriott
"The hotels would add to the "absolute gridlock" on San Antonio Road"
Source:
Council Warm to Hotel Plan
by Jacqueline Lee
Palo Alto Daily News
Page 6
December 11,2015
Su Hong Restaurant
site
El Camino & San Antonio
San Bruno
Proposed
Marriott
152 rooms
Projected hotel, property and sales taxes per year. = $800,000
Total amount in subsidies to be given hotel developer = $3,900,000
City-owned land, purchased in 2012 = $21 per square
foot/$ ? in 2015, to
developer for $1.00
Waive building and permit fees
No transient occupancy taxes for 2 years
" City has refused to release the EPS (Economic & Planning
Systems) analysis
that 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 can
see it, and yet they use the numbers in
the study to justify the subsidy."
City > financial incentive
3,000 square foot event space for meetings and
special occasion
After 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.
Referendum
Unite Here Local 2
3,000 signatures for referendum on
November 2016
OTC to guarantee that workers at the
proposed hotel would be able
unionize without fear of
retaliation
Lawsuit
Court ruled that action by City of San Bruno was admistrative,
not subject
to referendum.
Santa Clara
Related project
San Jose
Existing
Marriott
506 rooms
Purchased by CARE Global Investors for $83 million
Source: Downtown San Jose Marriott Fetches $83 million
by staff writer
San Jose Mercury News
Page D3
May 21, 2013
Hilton
Hyatt Place
Closes
dining area in evenings
Proposed Hotels
Residence Inn by
Marriott. 147 rooms
Fairfield Inn &
Suites by Marriott. 114 rooms
Marriott AC
Hotel
Stern & Stevens Creek
5696 Stevens Creek Boulevard
Height 85 feet
Developer "From an economic development perspective for San Jose, our
project
would clearly draw tax
revenue from Cupertino."
Cupertino Mayor: Heart of the City Specific Plan > Density
and height
Source: Border War: San Jose and Cupertino
Internal Affairs
by Scott Herhold
San Jose Mercury
July 30, 2017
1080 South De Anza
90
room hotel
South De Anza and
Park
86
room hotel
Almaden Ranch Shopping
Center
Southeast corner of Almaden Expressway and Cherry Avenue, next to
Highway 85, close to public transit
Wyndham
115 rooms
Source:
New 115-room Hotel Planned in Center
by Julia Baum
San Jose Mercury News
January 15, 2017
Edenvale
Highways 85 and 101
Source: New 115-room Hotel Planned in Center
by Julia Baum
San Jose Mercury News
January 15, 2017
North San Jose
North
San Jose
Trimble Road & Orchard Parkway
LBA Realty
250-room hotel
near Apple's North
San Jose campus and Samsung's campus
Source: San Jose Industrial Site Eyed for
Hotel, Retail, Office
by George Avalos
San Jose Mercury News
August 3, 2017
San Jose Urban Villages Plan
70 Urban Villages
Cottle Transit
Village
Lesson in unmet potential
"Despite thousands of new homes in the area,
light rail ridership from the Cottle station is
actually 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/Cupertino
Transit
access to between the north and southbound lanes of freeway 85
Access to
thousands of De Anza College students.
Terminal for
Transit Center
"The transit center will provide the basis for a future connection for
rapid
along State Route 85, 50 onsite parking stalls, and a shuttle
drop-off/pick-up area,..."
Located at North end of project
Included in proposal
Construction of Onsite Transit Center
Alternative #1 $3.5
million
Alternative #2 $3.5
million
Transit
Center
Located in between the north and southbound lanes of 85 freeway
Not included in proposal
VTA dependent
Light rail in median
questionable
Ridership and
Cost
River Oaks Transit
Village
"...developers successfully pitched light rail access to potential
tenants. Resident don't face the same
access
issues, and ridership has grown 20 percent in two years."
Source: San Jose's Urban Villages Plan Faces Transportation
Obstacles
by Chuck Carroll
San Jose Inside
February 24, 2017
Branham
Transit/Urban Village
"In March (2017) the VTA asked San Jose officials to amend the city's
General Plan so it could develop a
3-acre parcel...."
"While the SR 87 corridor study moves forward, VTA is withdrawing the
General Plan Amendment application
for the property...."
Source: VTA Pulls Plan to Build Near Branham Light Rail
by Julia Baum
San Jose Mercury
Page B10
July 23, 2017
Stevens Creek Blvd
Urban Village
San Jose Needs Traffic Mitigation in Urban Village Plans
"...we believe the corridor (Stevens Creek Boulevard)
needs significant transit improvements
that are lacking in San Jose's current plan."
Source: San Jose Needs Traffic Mitigation in Urban
Village Plans
by
Lisa Gillmor, Rod Sinks and Savita Vaidhyanathan
San
Jose Mercury News
August
7, 2017
Sunnyvale
Existing
Marriott Hotel
Proposed
590 West El Camino
Real. 84 rooms
Degan
Development
"...plans to sell the project."
No restaurant or bar
Business travelers
Planning documents > luxury hotel of business
hospitality
Source: Five-story Hotel Coming to El Camino Real in Sunnyvale
by Victoria Kerza
Bay Area News Group
June 1, 2017
767 North Mathilda
Avenue
OTO
Development
Hilton Garden
238 rooms
Source:
Sunnyvale: Hilton Garden Hotel Proposed for Mathilda
Avenue
by Victoria Kezra
Bay Area News Group
January 20, 2016
830 East El Camino
Huntington Hotel Group
Hilton Homewood Suites
130 rooms
Source:
Sunnyvale: 130-room Hilton Homewood Suites on El Camino Real
Proposed
by Victoria Kezra
Bay Area News Group
May 4, 2016
1250 Lakeside Drive
Wittek
Development
Millennium Hotel
263 rooms
Source: Commission Gets Look at Hotel, Housing Project
by Victoria Kezra
The Sun
Page 5
August 26, 2016
Cupertino
is in the crosshairs of development...
Decreasing future growth and increased competition would limit
the amount of hotel taxes going to
the City.
Currently, it's one of the largest revenue generators for the
City
Cupertino Sales Tax
Sales Tax
2017-2018 $ ? TBD
2016-2017 $ ?
TBD
June 30, 2015-June 30, 2016 $21,350,056 actual
2014-2015
unavailable
June 30,
2013-June 30, 2014 $19,794,036 actual
June 30,
2012-June 30, 2013 $18,721,000 actual
June 30,
2011-June 30, 2012 $17,326,460 actual
Retail
Sales Analysis: $799,758,000 2000
$696,060,000 2011
unavailable
2012
unavailable
2013
unavailable
2014
unavailable
2015
unavailable
2016
TBD.
2017
We have
ceased our record of businesses leaving Cupertino altho the City of
Cupertino
continues
to publiciize only new businesses.
Top 40
Sales Tax Producers
Top 40 Sales Tax Producers
3rd Q/2016
1st Q/2013
Gas Stations Decrease due to Electric
Vehicles.
Chevron Service
Stations
Chevron Service
Stations
Rotten Robbie Service
Stations
Rotten Robbie Service Stations
Shell Service Stations
Shell Service
Stations
Valero Service Stations
Union 76 Service
Station
US Gas Service Station
Valero Service Station
Grocery Stores. No sales tax on food; sales tax
only on non-food
Ranch 99 Markets
Marina
Safeway
Ranch 99 Market
Whole Foods market
Whole Foods
Nonexistent as of August 2017
Granite Rock
Elephant Bar
J. C. Penney closed April
2016
Granite Rock
JC
Penney closed April 2016
Macy's
closed April 5, 2015
Restaurants
Alexander's
Alexander's
Benihana
Benihana
BJ's
BJ's
Dynasty
Dynasty
Lazy Dog
Park Place in Cypress
Hotel
Apple Campus 2 construction
related sales tax due to point of sale in Apple Development
Agreement:
Frener & Reifer
Goodfellow Top Grade Construction ?
Mitsubishi Consumer Electronic ?
Permasteelisa
Powersecure ?
Rosendin Electric
Seele
Superior Air Handling
Teknion
Total amount of sales taxes per
quarter should be disclosed for comparison purposes with
other quarters; unable to
determine trend of sales tax revenues
Will 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