The City Council decided Tuesday that a new hotel and office space would be the best use of a forested piece of city-owned property along Highway 101 at Moffett Boulevard.
With Mayor John Inks opposed, the council voted 6-1 to seek hotel and office development proposals for the 6.69-acre site -- which also runs along Stevens Creek. It was a Santa Clara County-owned vector control yard until it was bought by the city for $9.5 million in 2009.
The City Council has long had the goal of leasing it to a developer to pad the city's budget, which has seen costs growing faster than revenues for years.
"I just want to see the property working for us as soon as possible," said council member Jac Siegel. "It's been sitting there for many years."
Council members had the choice of selling the property for $11 million or leasing it for an estimated annual payment of $2 million a year, according to a study by Seifel Consulting, Inc. Such a lease payment could be used to finance a bond for one of several long-desired city infrastructure project, including a large new city park, council members said the previous Tuesday.
It was found that office and hotel use would bring in more income than other uses, including a big box store.
"We modeled a variety of land uses," said community development director Randy Tsuda. "A combination of hotel and office seemed to yield the highest potential return."
Some council members expressed interest in a footbridge from the site to the Stevens Creek Trail, possibly in exchange for allowing a higher density development on the site than specified in the city's general plan.
"If a developer proposed more hotel, we assume that's a possibility," Tsuda said of changing the zoning. "It doesn't seem to be the ideal location for that type of hotel -- the type of hotel that would require a higher density than what's in our general plan. It is more appropriate for a three-diamond hotel, not a four-diamond hotel."
Council members decided to add a requirement that developers "address" labor peace with unions that organize hotel workers in their development proposals, though council members were wary of making such an agreement a requirement of the project.
The developer and hotel operator "would agree to not interfere with labor and what city would get in return is there would be no labor unrest," said council member Margaret Abe-Koga.
Council members Jac Siegel, Mike Kasperzak and Mayor Inks said they wouldn't support it, having blamed such an agreement for the demise of deals to subsidize a four-star hotel on city land at Charleston Road and Shoreline Boulevard, a situation Kasperzak called a "fiasco." Member Margaret Abe-Koga blamed the recession for the failed deals -- one with Google in 2008 and another with Robert Greene in 2010 -- saying the council never came to such a conclusion in closed session meetings.
"I missed three hotel development opportunities in my time on the council, it would be nice not to miss another one," Kasperzak said.
Abe-Koga said the "flipside" to not allowing "card check neutrality" union organizing could be seen at the Hyatt hotel in Santa Clara -- years of picketing by union members.
Corner site to remain undeveloped
The city attempted to negotiate with Caltrans to buy an adjacent 3.03 acre site that had been a Highway 101 on ramp roundabout. City officials say Caltrans simply wanted too high a price for the site, $6 million -- an appraisal basing its value on its worth when assembled with the adjacent 6.69 acre parcel.
"Because of the assessed value of the Caltrans parcel and other considerations, including the fact the Moffett Gateway property can be economically developed without the Caltrans parcel, staff does not recommend acquisition of the Caltrans parcel," a city report said.
City officials said it was their belief that the Caltrans parcel would remain unable to be developed, though the city has no jurisdiction over it. There are 104 trees on the Caltrans parcel.
The city is continuing talks with Caltrans to obtain access rights through the parcel, which fronts 486 feet of Moffett Boulevard to allow a driveway through the site from Moffett Boulevard. Without it, there would only be 40 feet of access along Moffett Boulevard at the southern edge of the site, where a driveway would meet Leong Drive's stoplight.
Toxics don't prevent development
Tests found relatively small amounts of the toxic solvent trichloroethylene (TCE) in the soil and groundwater on the site, cleanup of which could be costly for the city if a polluter isn't found.
"It is believed the TCE originates from an off-site source, up gradient," said the city's property manager, Dennis Drennan. The Environmental Protection Agency is investigating the source, and EPA officials said at a community meeting Tuesday night that it "appears" that such mysterious hot spots of TCE in the area have come from leaking sewer lines that run through the site and along Evandale Avenue and Leong Drive, lines which may have carried the solvent from nearby semiconductor manufacturing sites in the 1960s and 1970s, such as Fairchild Semicondictor on Whisman Road. The investigation is so far not conclusive.
"It potentially could come to the city to clean up the Moffett Gateway property," Drennan said. Without a polluter found to be a "responsible party" the "owner of the property is the responsible party." Raising some eyebrows, Drennan added that "the lessee could become the potentially responsible party" -- to which Kasperzak said developers would probably want to be "held harmless" in any development agreement.
Because of the toxics found in the soil, and the site's isolated nature, residential development was not recommended, though zoning allows up to 60 units per acre. Vapor intrusion barriers would be required under any new buildings, as TCE vapors can cause cancer and slew of other health problems from long-term exposures and defects in fetuses when pregnant mothers are exposed to certain levels over a matter of weeks.
A substantial number of trees will have to be cut down. There are 256 trees on the site, and "any viable project would require a majority of the trees be removed," said Alex Andrade, economic development manager. About 203 would have to be removed or relocated, but tree preservation will be a factor in selecting developer bids, city officials said.
The city is set to request developer bids for the site in January, 2014. Bids would be due in March 2014.