Atascadero deal would let hotel delay fees

City again makes offer to private enterprise to get a project started

tstrickland@thetribunenews.comNovember 3, 2012 

The Marriott’s design plans include a Mediterranean-style facade.

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Atascadero leaders have finalized a deal to allow a 130-room Marriott Spring Hill Suites hotel to postpone paying its developer fees to entice it to build on the city’s north end.

This is not the first time the Atascadero City Council has made concessions to lure private enterprise to the city.

In 2009, the city’s now dissolved redevelopment agency pledged a $1.5 million guarantee to help kick-start the long-stalled Colony Square on El Camino Real. The move ultimately led to the development of the city’s only movie theater — Galaxy Theatres — proving to be key to its revitalization of downtown.

And, most recently, the council agreed to front nearly half the cost of two future shopping centers’ multimillion-dollar road improvements on the north end of town instead of making the developers put up the cash for future businesses. One of those retail plazas includes the city’s much-discussed future Walmart store.

The four-story Marriott project, located in the Home Depot shopping center on San Ramon Road and El Camino Real, could break ground as soon as next year for completion by summer 2014.

The city stands to make about $25,000 in interest on the deferral deal, which the applicant requested in August. That’s interest income of $5,000 annually over five years on a rate of 0.98 percent, as set by the council.

The deferral means a collection of the full amount will be delayed, though funds will be received each year with interest, officials said, with the full payment to be made in five years. The payments equal about $65,000 annually, with a balance of $309,279 due at the end of the five-year period.

But Atascadero must also temporarily forgo a lump sum of about $610,220 worth of developer impact fees the city would have normally used to buttress the development’s impacts on nearby parks and services, such as police service.

That deferral doesn’t affect the fees the hotel still has to pay upfront as permits are processed — about $110,000.

The hotel’s design plans were approved at the city’s Planning Commission last month, its final stop in the city’s process to approve the project.

Specifically, the commission allowed Home Depot center developer Atascadero 101 Associates to amend the second phase of its shopping center to drop a potential spot for a gas station and add use for the hotel facility and two freestanding retail buildings at 8,000 and 10,000 square feet each, according to the application.

The Marriott’s design plans include a Mediterranean-style facade with 5,000 square feet of meeting space inside the hotel, a pool and a dining area with bar.  The hotel has the option to expand its meeting space if needed.

Overall, construction costs for the building are estimated at $20 million, according to the city.

Once the hotel is open, an influx of the site’s tax revenue to the city could boost its general fund by nearly $400,000 annually, Assistant City Manager Jim Lewis said.

According to city projections, the sum includes approximately $32,000 from property taxes, $350,000 from transient occupancy taxes and $18,000 in sales taxes.

“Once the hotel is built, the developer believes enough interest could be generated to complete the remaining commercial development opportunities at the site,” city staff said in a presentation report to the council. The two commercial pads could work for possible tenants such as retailers or restaurants.

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