HomeMy WebLinkAboutPCDC Minutes 03/04/19961 MINUTES
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3 PETALUMA COMMUNITY DEVELOPMENT COMMISSION
4 MEETING
5 MONDAY, MARCH 4, 1996
6 ROLL CALL:
7 Present: Hamilton, Stompe, Maguire, Read, Vice Chairman Barlas, Chairman Hilligoss
8 Absent: Shea
9 MINUTES:
10 The minutes of the January 16, 1996, meeting were approved as submitted.
11 DIRECTION TO STAFF - SHERATON HOTEL at MARINA
12 On November 20, 1995, Kirk Lok approached the Petaluma Community Development
13 Commission asking if they would be interested in participation in the construction of a
14 Sheraton Hotel at the Marina. At that time the Commission took the following action:
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Staff contracted with Vernazza Wolfe Associates, Inc., of Oakland to do an "Analysis of
redevelopment agency experience in assisting hotel development, especially in connection
with convention facilities. " There has been some redevelopment agency assistance towards
hotel construction. That assistance has been in property acquisition, provision of off-site
improvements, waivers or reductions in certain planning or design requirements, loan
guarantees, and "gap" financing or subsidies to offset operating losses (especially at the
initial years of operation). Suggestions for future action by the PCDC included the
following:
(1) Identify the community objectives that would be the basis for PCDC involvement in the
hotel development. For example, does the City need meeting rooms or conference
sites? It is important to educate the public, so there are no surprises;
28 (2) Work with an experienced hotel developer and management company. The project's
29 owner should have financial resources to cover unanticipated operating losses;
30 (3) Take a hard look at the pro forma, i.e. illustrative, balance sheet that the developer
31 presents as his example of the hotel's potential profitability. Consider "worst case
32 scenarios. " Do not assume the anticipated occupancy levels and room rates will, in
33 fact, be the case for at least the first five to seven years.
34 (4) Determine what the actual demand is for the type of hotel rooms that are being
35 proposed. This research might include contacts with local businesses, the local
36 Chamber of Commerce, and may even an independent market study;
37 (5) Invest as little as possible in the project at the beginning. Condition the payments so
38 contributions are based on the performance of the facility;
PCDC Meeting Monday, March 4, 1996 Page 1 of 2 pages
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1 (6) Be objective from the onset. Avoid becoming so subjectively involved or captivated by
2 the project, so that you would become unable to let it drop should that be the most wise
3 action to take;
4 (7) The last suggestion was, if the City or Commission would continue to own the ground
5 on which a hotel were to be built, be wary of allowing the financial interests of a
6 primary lender to take precedence over that City's or a Commission's ground lease.
7 There would be no ground lease in this particular situation.
8 One person interviewed by Vernazza Wolfe Associates, Inc., said that substantial
9 investment is required for a hotel project; there are few lenders interested in hotels; and
10 those lenders, who are willing to participate in such a venture, will finance only about 40%
11 of the required money. The consultant learned, from looking at hotel deals that have
12 "fallen through," that the governmental agency involved in these types of investments
13 needs to realize they should not be too specific in defining a project because developers
14 need the flexibility to respond to such things as changing market conditions and financing
15 requirements.
16 Kirk Lok addressed the Commission and indicated he is willing to give his financial
17 support to a more in depth study of the proposed business plan and market projections for a
18 Sheraton Hotel to be located at the Marina.
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Connnission Direction and Comment - It was noted that Commission support of
additional study does not indicate that the Commission will, in the end, support
development of the hotel facility. The Commission suggested staff look at its
possible participation in the hotel project by reducing the potential PCDC liability,
or even without a fiscal or legal buy -in. Staff was asked if the Lok proposal were
rejected, what are the alternatives? How could Transient Occupancy Tax monies
be utilized? How about the development fees, can they be reduced or altered in
any way? What would the affect be? How about the Lakeville Assessment?
What is the amount of the assessment? Can that be altered? What would the
affect be? It was proposed that staff work with Mr. Lok, propose a scope of,
services, request submittal of "RFP's" for such a study. Staff is to come back
with the scope of work and name of firm recommended to do the study.
31 ADJOURN 3:50 n.m.
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33 ATTEST: M. Patricia 1111goss, C airman
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37 tricia E. Bernard, Recording Secretary
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