On Tuesday four developers sought the City Council's favor to develop the city-owned Moffett Gateway property, presenting various ways to arrange hotel and office buildings on the 6.7-acre site on Moffett Boulevard at Highway 101.
Developers wooed the city with fancy renderings and promises to bring in brand-name hoteliers, public amenities like park space, signature restaurants, long-desired conference and meeting rooms, environmentally friendly LEED silver buildings, bike sharing programs and bridges to the Stevens Creek Trail. Narrowed down from 12 initial proposals, all four included hotels, some with office space.
The council met behind closed doors afterwards to discuss the proposals and will officially select a developer on June 24, said Alex Andrade, the city's economic development director.
Because of the city's booming tech industry, "there's a lot of travelers coming here with nowhere to stay -- that's the reality," said Robert Olson, CEO of R.D. Olson, one of the prospective developers. Olson noted in his presentation that there is over 800,000 square feet of office being built in Mountain View and much more in the works. "Try to get a room tonight, it's crazy," he said.
The city purchased the site several years ago for $9.5 million and last year the City Council agreed with the goal of leasing it to generate revenue for city services.
City staff and their consultants do not recommend the site for housing, as it would not bring in as much revenue as hotel and office development and would suffer from freeway noise. "(Housing is) not appropriate due to existence of TCE, which makes it less desirable," said Andrade on Tuesday.
He was referring to a portion of the site's soil and groundwater that is contaminated with trichloroethylene (TCE), something that hasn't always stopped housing development elsewhere in the city. A city-commissioned report pointed to a leaky sewer line -- which connects to a Whisman Road Superfund site -- as the source. An Environmental Protection Agency investigation is still underway that might hold early computer chip makers responsible for cleanup costs, but Andrade said the city will require that developers pay for cleaning up the site, as well as installing "vapor barriers and any mitigation efforts needed" to prevent TCE vapors from getting trapped inside buildings.
Among the supporters of hotel space for the site was Lenny Siegel of the Campaign for a Balanced Mountain View, a group which is advocating for balancing the city's job growth with adequate housing growth. Siegel is also director of the Center for Public Environmental Oversight, and attended the meeting mostly to make sure developers knew the site's toxics needed mitigation. He did not advocate for housing there.
"This area needs a hotel (and an) extended-stay hotel makes sense," Siegel said. "We have companies like Google using apartments as extended-stay hotels so it takes a little bit of pressure off the rental market."
As previously reported in the Voice, Google has been leasing apartments at the new Madera apartment complex on Evelyn Avenue for employees visiting from around the world.
Developer designs compared
All of the projects also included a restaurant and hotel component, as well as publicly accessible open space. The designs are conceptual and preliminary, and all four come in under the 1.85 floor area ratio density in the city's general plan, though two go above the four-story limit for the site: R.D. Olson proposes six stories and Hines Interests LP proposed going an unspecified amount over four stories.
All four developers have expressed interest in buying an adjacent 3-acre site from Caltrans -- which developers said Caltrans wants to sell -- to make the site 10 acres. But only R.D. Olson and Hines Interests LP included the parcel in possible designs for the project.
Irvine-based R.D. Olson Development pitched $126.9 million in hotel buildings for the entire 10-acre site, and no offices. There would be two Marriott brand hotels: a 250-room, six-story full-service hotel and 160 room Residence Inn, described as an "extended stay" hotel. If Caltrans does not want to sell the corner parcel, the company also proposed a smaller $61 million "back up plan" with a 135-room Residence Inn and a 120-room Courtyard by Marriott hotel.
"I don't think the back up plan happens because Caltrans wants to make a deal," said Olson.
Both of the proposals include a 5,000-square-foot restaurant space along Moffett Boulevard, a pedestrian bridge across Stevens Creek, LEED Silver buildings and 10,000 square feet of meeting space, including a 7,500-square-foot conference space.
The company boasted being named Marriott's 2014 developer of the year and promised "the city's first 4.5 star hotel."
Hines Interests LP
Houston-based Hines Interests LP proposed offices and hotel use on the full 10-acre site, including two office towers along Highway 101 totaling 260,000 square feet, surpassing four stories to an unspecified height, Andrade said. The hotel component is a 180-room hotel along Moffett Boulevard. If Caltrans doesn't sell its 3-acre parcel by the freeway, the company proposes a 140,000-square-foot office building, a 136-room boutique hotel and 3,000 square feet of retail for the 6.7-acre site the city owns.
The company did not indicate that it would include meeting space or a pedestrian bridge over the creek. There would, however, be an electric car charging station, a bike share program, a shuttle service and membership in the city's Transit Management Association.
Its representative said that it is "a great time to build an office building and have it be successful" and urged the council to not take too much of a risk on hotel development. "There are a lot of hotels under development in various stages of planning and construction right now."
San Francisco-based Broadreach Capital Partners pitched a proposal for 136,000 square feet of office, and a 182-room hotel, which would go on the 6.7 acre site only. Public benefits include 3,000 to 5,000 square feet of meeting space and a bike and pedestrian creek bridge to the Stevens Creek Trail. It includes LEED Silver buildings, a bike sharing program and membership in the city's Transit Management Agency, which runs a shuttle service for its members.
The company boasts owning $24 billion worth of property.
Pitching a proposal for the 6.7-acre site only, Newport Beach-based T2 Hospitality proposed a three-hotel campus totaling 483 rooms: an extended stay hotel with 124 rooms, a business class hotel with 169 rooms and a "lifestyle brand" with 190 rooms.
The proposal includes no pedestrian bridge over Stevens Creek, but there's 10,000 square feet of total meeting space, LEED Silver buildings, a car sharing program, a bike sharing program and membership in the city's Transit Management Association.
The developer boasted interest in the project from nine "premium brand" hotel companies, including Hilton, AC hotels and Marriott.
Hotel revenue appears promising
T2's Mont Williamson presented a chart that revealed one reason why a hotel is so attractive to the city 62.4 percent of the city's revenue from the site could come from hotel taxes, also known as "transient occupancy taxes." Another developer revealed that hotel lease revenue would likely be less than from housing or office because when bidding for private real estate, "hotels cannot compete with office or multi-family (housing) for land pricing," said Olson.
"There's a great demand for hotel rooms in Silicon Valley," Williamson said, showing a graph that put the area to be relatively profitable, at "6 to 7 revenue basis points above the national market." He showed a map of the region with northern Mountain View highlighted and said, "There's a little hole right here that has no hotel product."
There are three other hotel proposals elsewhere in the city, including another on city-owned land: a Virgin Hotel proposed for the city parking lots at Hope Street and Evelyn Avenue downtown. A seven story and 165 room hotel is proposed as part of in Merlone Geier's second phase of development at San Antonio Shopping Center, and there's yet another by Shashi Group LLC: a 200-room, five-story hotel near Google headquarters on a 1.4-acre site at 1625 North Shoreline Blvd.
"You can build office space anywhere and we are," said longtime resident and neighbor of the site, Robert Weaver. "I think it should be hotel, 100 percent. Office space can go any place else. We have a dearth of ballroom meeting hall facilities," he said, recalling that the city's Chamber of Commerce had to go to a Palo Alto hotel to host a recent award ceremony.