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HomeMy WebLinkAbout12.11.2017 SP & PC Minutes @12:30MINUTES SPECIAL MEETING OF THE HOUSING STANDING COMMITTEE OF �� THE CITY COUNCIL AND °gLIF0 PLANNING COMMISSION CITY OF SOUTH SAN FRANCISCO P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, California 94083 Meeting will be held at: CITY MANAGER CONFERENCE ROOM 400 GRAND AVENUE SOUTH SAN FRANCISCO, CA MONDAY, DECEMBER 11, 2017 12:30 p.m. 1. Call to Order. TIME: 12:31 p.m. 2. Roll Call. PRESENT: Councilmembers Addiego and Matsumoto, and Planning Commissioners Faria and Wong. 3. Public Comments. None. Matters for Consideration 1. Motion to approve the Minutes from the meetings of June 26, 2017, August 7, 2017 and October 16, 2017. Mayor Pro Tempore Matsumoto asked the status of the Serrano property. ECD Deputy Director Selander stated Mr. Serrano had indicated they were moving to a new home and there were no tenant evictions. MOTION Commissioner Wong moved and Commissioner Faria seconded a motion to approve the minutes from the meetings of June 26, 2017, August 7, 2017 and October 16, 2017. The motion carried unanimously. 2. Report regarding developer selection process for the proposed hotel development at Oyster Point. (Ernesto Lucero, Economic Development Coordinator) Economic Development Coordinator Lucero explained that three final development teams would present their proposals. He introduced members of the team and provided an overview of the development selection process. Mayor Pro Tempore Matsumoto asked if legal would be present. Coordinator Lucero stated legal would be on the phone at 4:00 p.m. when closed session began. He reviewed the hotel site. Councilmember Addiego asked how the ground lease affected the assessed valuation and property tax. Coordinator Lucero stated they would pay property tax. Director Greenwood stated Finance would prepare an analysis but the value of the land would not be incorporated. Coordinator Lucero discussed the developer selection process. Mayor Pro Tempore Matsumoto asked why OTO pulled out. Coordinator Lucero stated they indicated construction labor costs and union labor requirements were obstacles. Councilmember Addiego stated it was City controlled property, therefore, prevailing wages were required. Coordinator Lucero explained the process for negotiating and ground lease agreements. Councilmember Addiego asked when the matter would be presented to the Council. Coordinator Lucero stated it was anticipated to go to Council in the middle of February. Mayor Pro Tempore Matsumoto asked why the process was moving so quickly. Councilmember Addiego suggested not making a final decision at this meeting. Mayor Pro Tempore Matsumoto stated she was prepared to make a determination based on the written proposals. Commissioner Faria stated he had questions and was unsure if he would be able to decide. Commissioner Wong stated he would like to see the presentations prior to deciding if he was prepared to make a decision. Coordinator Lucero discussed the components to be included in the presentations. He summarized the three proposals. Julie Purnell, CBRE Hotels, San Francisco, discussed her experience and provided a brief background of hotels in the City. She explained the differences between full service, select service, extended stay, boutique, branded and independent hotels. Mayor Pro Tempore Matsumoto asked if Kimpton was boutique. Ms. Purnell confirmed that they had been a boutique hotel. Commissioner Faria asked if there would be banquet capabilities. Ms. Purnell stated JMA was proposing a Westin, Le Meridian or Two Roads and suggested asking how well versed the independent hotel was in servicing banquet facilities. She suggested asking each developer how much was indoor versus outdoor space. Mayor Pro Tempore Matsumoto asked if Le Meridian was the French company. Ms. Purnell JOINT HOUSING STANDING COMMITTEE MEETING DECEMBER 11, 2017 MINUTES PAGE 2 stated they used to be but were now part of Marriott. Commissioner Wong asked if there was a brand that would do better. Ms. Purnell stated it was part of a larger mixed use destination, therefore a full- service option was important. Commissioner Wong asked about stays in South San Francisco versus San Francisco. Ms. Purnell discussed the closure of the convention center and impact on hotel stays. She discussed occupancy rates in South San Francisco which demonstrated it was not dependent on compression from San Francisco. Mayor Pro Tempore Matsumoto discussed concerns regarding sales tax and a recession. Ms. Purnell discussed forecasting and recession recovery. Mayor Pro Tempore Matsumoto discussed her experience on the Conference Authority. She asked which brands were considered lower price. Ms. Futrell provided examples of economy lodging hotels. Shashi Group Chaitanya Prakash provided an overview of the Shashi Group and explained the recent change to take over management, rather than utilizing a third -party operator. He discussed the focus on growth in the larger Bay area, corporate markets, and campus projects. Jean DiMaria, Director of Development for Shashi, presented the dual branded Marriott proposal for Oyster Point, including a Westin and Element. She discussed the restaurant, meeting space, fitness amenities, and LEED silver standard. She displayed the conceptual plan for the hotel. She discussed complications of the project due to multi - stakeholders, collaboration, and easements and encroachments. Councilmember Addiego asked complications on the prior uses. Ms. DiMaria discussed geotechnical aspects of the property. Mayor Pro Tempore Matsumoto questioned the impact of sea level rise. Senior Planner Gross stated the habitable areas would have to be above the lowest level. Mayor Pro Tempore Matsumoto stated she wanted the candidates to be aware of additional construction costs. Councilmember Addiego asked how construction cost escalation was built into the project. Ms. DiMaria discussed budget escalation through 2022. Councilmember Addiego discussed escalation for the new Civic Center project. Ms. DiMaria acknowledged the potential for environmental issues and increased costs. Ms. DiMaria discussed parking requirements for the project and proposed 0.7 spaces per room. Mayor Pro Tempore Matsumoto asked about conference space. Mr. Prakash stated there was 9,500 square feet of event space. Mayor Pro Tempore Matsumoto discussed the need for event space. Ms. DiMaria discussed the five meeting rooms proposed and associated parking. JOINT HOUSING STANDING COMMITTEE MEETING DECEMBER 11, 2017 MINUTES PAGE 3 Director Greenwood stated self - sufficient parking was necessary. Mayor Pro Tempore Matsumoto stated ballroom space was important to her. Mr. Prakash explained the parking studies to be performed and referenced Loft Cupertino. Commissioner Wong asked which brand would be on which side. Ms. DiMaria explained the Westin and Element sides. She stated the entire project would be built at one time. Commissioner Wong asked about the impact of the recession on the JW in Cupertino. Mr. Prakash stated a full- service hotel was appropriate and hoped there would not be a recession like 2008. Commissioner Wong asked how risk against biotech downturn would be handled. Mr. Prakash stated other sources of business would be captured. Councilmember Addiego asked for information on weekend guests. Ms. DiMaria stated compression from San Francisco would be an opportunity. She discussed efforts to obtain customers. Mr. Prakash stated it was necessary to create the right product for leisure customers as well. He discussed outsourcing for food products. Ms. DiMaria discussed redevelopment, tax revenues to the City, employment, and community benefits. In response to Councilmember Addiego, Ms. DiMaria stated the hotels would not operate with union contracts. Commissioner Faria asked how occupancy was retained in both hotels. Ms. DiMaria discussed the demand for extended stays. Mr. Prakash explained that the Westin and Element were part of the same hotel and would flow seamlessly. Commissioner Faria asked the meaning of retail. Ms. DiMaria stated it was flexible and could be a cafe or sundries. Commissioner Wong asked if the design would be similar to other Westins. Ms. DiMaria stated they had not done elevations but understood the City wanted iconic, high quality design. Mr. Prakash discussed possibilities for retail, including fitness. Ms. DiMaria expressed gratitude for the opportunity to be interviewed. Mr. Prakash stated Shashi focused its locations on corporate campuses and would manage its own hotels. In response to Councilmember Addiego, Mr. Prakash stated they had five hotels and two under development. Ensemble Brian Ehrlich expressed enthusiasm for the opportunity to develop a hotel project. He summarized development goals. He introduced the team and its experience, Ensemble's portfolio, and comparable experience. He explained the process and brand selection. He stated they were focused on Canopy and Curio — Hilton Hotels. JOINT HOUSING STANDING COMMITTEE MEETING DECEMBER 11, 2017 MINUTES PAGE 4 Michael Moskowitz explained the difference between brand standards and guidelines. Mayor Pro Tempore Matsumoto asked the star value. Mr. Moskowitz stated it would be four star. Mr. Ehrlich discussed the option of a curio hotel. Mr. Moskowitz discussed program, design, cost, and site constraints. He stated the design needed to take advantage of the waterfront, create a destination and importance of the design. He summarized the design and programming. Mayor Pro Tempore Matsumoto asked how many people could fit. Mr. Moskowitz stated 6,000 square feet would accommodate 500 sit down. Commissioner Faria asked the square foot cost for curio to canopy. Mr. Ehrlich stated it would be studied. Mr. Moskowitz anticipated curio would be more expensive. Mr. Ehrlich stated there was one canopy in Washington D.C. Mayor Pro Tempore Matsumoto stated she appreciated that the hotel would be Ensemble's number one priority. She discussed their request for 50% of TOT over 10 years. Councilmember Addiego asked about the proposed number of rooms. Mr. Moskowitz reviewed the site plan and stated more rooms required more parking. He stated the proposed project could be delivered sooner than a high rise. Mr. Ehrlich stated they could provide data the numbers on rooms, parking and rates. Mr. Moskowitz highlighted important variables including solar, winds and views. He discussed the architectural homage to reclaim the bay. Mr. Ehrlich discussed the benefits to the City. Mr. Moskowitz explained why not dual brands. He discussed Ensemble's expertise, commitment, and collaboration. Mayor Pro Tempore Matsumoto stated she liked the concept. She asked why extended stay was not included. Mr. Ehrlich stated they asked the biotechs and their focus was for meeting space. Mayor Pro Tempore Matsumoto requested the design from Menlo Park not be utilized. Mr. Ehrlich stated they did not do cookie cutter. Commissioner Wong asked what would determine canopy versus curio. He suggested curio design for that area. Mr. Moskowitz explained the advantage to curio and canopy. Councilmember Addiego asked total properties. Mr. Moskowitz stated they had 13 properties and utilized an operating partner. Councilmember Addiego discussed use of top 20 operators. Mr. Moskowitz discussed the properties under labor agreements. Commissioner Faria asked about general contractors. Mr. Moskowitz stated the contractors depended on the job and had not yet been selected. Mr. Ehrlich stated they had considered JOINT HOUSING STANDING COMMITTEE MEETING DECEMBER 11, 2017 MINUTES PAGE 5 modular. Commissioner Wong asked about TOT proposal. Mr. Moskowitz explained hotel performance, construction cost, and share of TOT. Commissioner Wong asked what happened if performance was not as projected. Mr. Moskowitz stated it was an associated risk but they prepared for downturns. Mr. Ehrlich stated open communication was necessary with all constituent groups. Mr. Moskowitz expressed enthusiasm at the opportunity. JMA Ventures Kevin Morgan introduced JMA and its investment portfolio. He discussed applicable projects and overall goals. Jamie Robertson stated they had gathered community desires and done technical due diligence. Mr. Morgan stated they envisioned a public private partnership. He explained their proposal for a boutique hotel or Marriot. Mr. Robertson introduced the proposed team. Mr. Morgan discussed underwriting assumptions. Mr. Chapman stated assumptions were very informed. He discussed their involvement in the community and experienced, local team. Mr. Robertson explained the approach, process overview and contact. Mr. Morgan discussed efforts to obtain feedback from the community and need to generate weekend business. He discussed JMA's experience in hotel and mixed use development. Mr. Chapman discussed the Rincon Restaurant project. Mr. Robertson highlighted out of the box nature and complexity of each project. He explained the geotechnical approach. Mr. Morgan presented the programming and design concept. Mr. Robertson presented conceptual renderings of the project Mayor Pro Tempore Matsumoto asked which portion was extended stay. Mr. Robertson explained the shared components and stated it had not yet been determined. Councilmember Addiego asked if it created one destination. Mr. Morgan stated there would be one door, one lobby. Mr. Chapman described the extended stay clients. Mayor Pro Tempore Matsumoto questioned why additional extended stays were necessary. Mr. Morgan stated the current extended stay was not appropriately serving the market. He stated a higher end project would be more appealing. Mr. Robertson discussed the experience with tenants on the HPC Campus. Mr. Chapman stated full service would engage extended stay guests. Mr. Morgan stated the boutique brand allowed more flexibility in extended stay rooms. JOINT HOUSING STANDING COMMITTEE MEETING DECEMBER 11, 2017 MINUTES PAGE 6 Mr. Morgan continued the presentation outlining brand consideration, number of rooms, and Westin/Element or Le Meridian, Mayor Pro Tempore Matsumoto asked about extended stay. Mr. Morgan explained that there was additional room and colleagues could be invited. He explained it was similar to a corporate apartment. Mr. Robertson discussed the economic benefit package and informed numbers. Commissioner Faria asked about parking and 6,000 squre feet of meeting space. Mr. Morgan explained the proposed design for ballrooms. Mr. Robertson stated meeting space flexibility would be built in. He discussed possible overflow parking and the goal to adequately park the facility. Mayor Pro Tempore Matsumoto asked about the public private partnership. Mr. Robertson explained the proposal to structure the project in a way that would work within the City's budget, including scoping and sharing TOT rebates. Mr. Chapman stated the new sources of revenue could help finance the project. Mayor Pro Tempore Matsumoto asked if they would sell the property. Mr. Chapman discussed long term ground lease and interest in purchasing the site in the future. He stated the first priority was to create a great project. Commissioner Wong asked what would determine the hotel brand. Mr. Morgan stated design would determine the brand. He discussed the opportunity to engage and embrace the bay. Commissioner Wong stated he liked the Americana in Downtown. Commissioner Faria asked the cost for extended stay. Mr. Robertson estimated extended stays at $250 and boutique $210. Mr. Morgan stated extended stay had higher occupancy. Mayor Pro Tempore Matsumoto estimated Genesis would exceed AC. Councilmember Addiego stated Oyster Point tied into San Fransicso. Jose Luis Martinez discussed extended stays, allowing a more customized solution. Cynthia Gomez, representing existing hospitality workers, discussed her job to improve wages and working conditions and requested the City consider the quality of the jobs and a union contract. She discussed sexual harassment from guests and assistance from unions. She encouraged priority to those committing to good jobs. Councilmember Addiego asked if JMA had contracts. Ms. Gomez stated JMA did both build and staff union. Councilmember Addiego encouraged his colleagues to meet with Ms. Gomez. CLOSED SESSION JOINT HOUSING STANDING COMMITTEE MEETING DECEMBER 11, 2017 MINUTES PAGE 7 3. CONFERENCE WITH REAL PROPERTY NEGOTIATORS Property: the 4.7 -acre portion of APN 015- 010 -600, dedicated for a proposed hotel. Agency negotiator: Alex Greenwood Negotiating parties: Ensemble Real Estate Investments, Shashi Group, JMA Ventures, and City of South San Francisco Under negotiation: Price and Terms of payment The Subcommittee adjourned to Closed Session at 4:25 p.m. The meeting reconvened in Open Session at 4:45 p.m. Matters for Consideration (Continued) 3. Report regarding developer selection process for the proposed hotel development at Oyster Point (Ernesto Lucero, Economic Development Coordinator) Councilmember Addiego announced that the Subcommittee directed staff to enter into an ENRA with the Ensemble Group. Adjournment Being no further business the meeting was adjourned at 4:46 p.m. Submitted by: Approved by: s. Gabrie odriguez, Deputy City Clerk p , Councilmember City of South San Francisco City of Sou San Francisco JOINT HOUSING STANDING COMMITTEE MEETING DECEMBER 11, 2017 MINUTES PAGE 8