But depending on your perspective, the deal's price tag — it could cost the city more than $30 million — is either an unwise subsidy or it's a smart investment that will help save the city from future financial woes.
The city is planning to use somewhere between $28 million and $31.5 million in Shoreline tax district revenue to help defray the costs of the proposed "four diamond" hotel, which would be privately developed at a cost of $75 million to $80 million on vacant city property next to the Googleplex. Council member John Inks says the deal is too risky.
"I'm not warm to the idea right now because of the city subsidy," Inks said. "Whether it requires a subsidy is not clear."
Inks was the lone dissenter earlier this month when the City Council voted 6-1 to select Robert Greene Company as the developer.
Despite assurances from city manager Kevin Duggan, and cost estimates from consultants (which Duggan admits are probably conservative), Inks says he does not know enough about the project to be able to assure his constituents that the investment is a good one — that it wouldn't put the city at risk of unforeseen costs, such as the need for more subsidies in the future to finish the hotel or keep it running.
City officials say the hotel's occupancy taxes and land lease revenue would provide $1.5 million to $2 million in annual revenue to the city's $89 million general fund, which faces a deficit of $6 million for next year. Property taxes from the hotel, along with property taxes from the Google land lease on the north end of the site, would be enough to pay for the city's contribution to the hotel's development. Duggan has proposed using a no-interest bond to pay for the $30 million up front, which would not raise taxes or require voter approval.
Duggan went as far as saying that the hotel was "probably the best alternative we have to continue to generate new general fund revenues."
Inks points out that the deal that fell through last year to have Google build the hotel would have cost the city nothing. The city went "from not subsidizing the project to being a major contributor," he said.
Another failed deal for that site, this time with Hyatt in 2002, would have cost the city $19 million.
But Duggan said it doesn't make sense to make comparisons with deals that did not work out.
The hotel and convention center is also vital to the city's efforts to remain competitive in attracting new businesses to the city, he said.
"A lot of the Bayshore area is getting older," Duggan said. "In order for it to stay competitive a number of things need to happen."
Architect Bob Glazier called the project's conceptual design a "very simple and economical approach to a hotel," adding that it wasn't a "resort." Developer Robert Green said the idea was not to compete with the "amazing" and "amorphous" office structure that Google has planned on the north end of the site, but to complement it.
The design makes use of glass walls for a transparent look, and glass hallways along the rear will allow a view of the offices Google has planned. A restaurant that fronts the corner of Shoreline and Charleston Roads will be the only one in the immediate area. Greene described it as "not just a hotel restaurant, but a great amenity for the whole community."
Greene said he is interested in a green building and will seek LEED certification.
The convention center would host business conventions as well as community events such as weddings and graduation parties.
The property would be operated by Kimpton Hotels, which oversees 45 hotels nationwide. Joe Long, vice president of acquisitions for Kimpton, told the council that Kimpton was rated one of the 100 best companies to work for by Fortune Magazine, and Kimpton's customer satisfaction level topped all other major hotel operators, according to a 2008 survey.
Long described the hotel's style as to the right of center on the spectrum between "conventional" and "uber-hip."
Union OK with talks
The local chapter of Service Employees International Union has yet to speak at a public hearing or picket the hotel site, as they did last year when Google would not meet to discuss a labor neutrality agreement.
That is probably because the Robert Greene Company and Kimpton Hotels have told the SEIU that they would be "happy to sit down and work something out," Greene said last week.
"Whether that leads to a labor neutrality agreement remains to be seen. I think they [the SEIU] are comfortable we are heading in the right direction," Greene said, adding that the labor neutrality would "help relations with the city."
A labor neutrality agreement would all but guarantee that the hotel operator would not interfere with union negotiations. Last year city and Google officials would not confirm speculation that the deal with Google fell through over the issue.
If the developer and the city do not to come to an agreement on ground lease terms by early July (or September if an extension is used), the city has the right to put the project out to bid again.