Mountain View Voice

News - July 2, 2010

Shoreline Hotel deal fizzles, again

City will offer site for Google office buildings instead

by Daniel DeBolt

The city's third attempt in over a decade to build a conference center and boutique hotel on city property next to Google headquarters has apparently fizzled. On Tuesday the City Council decided to move ahead with Google offices for the site instead.

According to one council member, after several closed-door council meetings the city has pretty much gone back to the Robert Greene Company, a hotel developer, and said "no deal."

The council felt the city's $30 million subsidy was too large and too risky and some council members were opposed to what could have been a costly labor peace agreement.

At one point last year, City Manager Kevin Duggan said between $28 million and $31.5 million in Shoreline tax district funds could subsidize the $80 million hotel project. Economic development director Ellis Berns explained that the deal with Google to allow office buildings was not a risk for the city and would require no city investment.

The city's cash-strapped general fund will likely see at least $1.2 million a year in general fund revenue for leasing Google 9.4 acres on a city-owned lot known as "Charleston East." Google is already set to build offices on the northern 9.2 acres of Charleston East in a deal that produces $1.2 million a year in lease revenue for the city's general fund and $300,000 in property taxes, although nothing has been built. Both sites sit along Shoreline Boulevard between Amphitheatre Parkway and Charleston Road.

"Economic conditions with hotels are very difficult at this point," said Duggan. "We didn't think a return on that property could wait for several years."

On Tuesday, June 29, the City Council approved an "exclusive right to negotiate" with Google for office buildings on the site. Several years ago, Google also proposed to develop a hotel and conference center on the site, but that deal fizzled in 2008.

Last year city officials said that the hotel deal with Robert Greene could make the city $1 million to $2 million a year in general fund revenues from hotel taxes and land lease revenue. It was "probably the best alternative we have to continue to generate new general fund revenues," Duggan said at the time.

But perhaps just as importantly, a conference center and hotel could encourage further businesses development in the Shoreline area.

"We still think a good hotel and conference center would serve North Bayshore really well," Berns said. "Right now that will be on hold."

The council went from voting 6-1 to select Greene as the developer last year to apparently having a majority against the project in recent closed session meetings. Perhaps a factor in the change of opinion was a recent controversy over the source of the funds to subsidize the hotel, property taxes that some believe should go to local schools instead.

E-mail Daniel DeBolt at ddebolt@mv-voice.com

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