By Jon Wiener
More than four years after negotiations with Hyatt for a 350-room hotel near Shoreline Park fell through, the city has newfound confidence it can bring a high-quality hotel to the North Bayshore area.
At a study session on Tuesday, council members expressed support for a staff proposal that would create a mixed-use development at Charleston East, a 19-acre site next to Google’s headquarters.
The plan would set aside half the site to lease as research and development space, and use the revenue to subsidize a 200-room hotel and conference center on the rest. Together, after the initial subsidy, which could exceed $16 million according to staff estimates, the city could collect around $4 million in annual income from the lease and the occupancy tax.
Council members expressed reservations about the subsidy, but praised the plan as a good way to provide what they said was an important missing piece of the city’s infrastructure.
“A major hotel in the city is an amenity to the community,” said council member Mike Kasperzak, who said that it could host proms, weddings and meetings.
Economic development manager Ellis Berns said Hyatt plans changed in late 2001 as the hotel industry took a hit nationwide, and the council balked at the company’s request for a $19 million investment from the city. Berns said the subsidy needed this time may wind up being much smaller, and that the development of office space would provide a new source of funding for it.
Google has been in talks with city staff about expanding into Charleston East for several months, and CEO Eric Schmidt formally expressed that interest in a letter to the city in early December. The company’s rapid expansion and the growth in the biotech sector are driving a resurgent demand for office space in North Bayshore. Vacancy rates in the city’s preeminent industrial park had been as high as 30 percent two years ago but are now down to less than half that.
The city had set aside 4.2 acres of the site for a “cultural education” center, but decided to remove that designation after the Computer History Museum opened on Shoreline and the California Air and Space Center (formerly “SpaceWorld”) focused its energy on Hangar One or another Moffett Field site.
Charleston East also had been one of the sites the city considered for new playing fields, and council members said that its development for other uses will create added pressure to build fields in Shoreline Park and Cuesta Park Annex.
Council member Greg Perry was clearly frustrated with the direction of the discussion, and said the land could be better used for other purposes.
“I think we’ve forgotten why we exist as a city,” he said. “Where do we think we are going to put playing fields? Why are we a city if we aren’t going to do parks and libraries and things like that?”
Perry and council member Tom Means said the site would probably generate more revenue for the city as high-density housing. But every council member except Perry has wanted to keep North Bayshore off-limits to housing out of fear that new residential developments will slowly drive existing businesses out of the area, as has happened in other parts of the city.
E-mail Jon Wiener at jwiener
