Chinatown project in SLO is going up, slowly, in phases

The long-sought Chinatown project in downtown San Luis Obispo is moving forward after more than two years of delays, but it will likely be another decade before the entire project is complete.

The City Council approved a new plan late Tuesday that allows Copeland Properties to build the hotel, retail and residential complex in two phases, starting with the commercial and residential phase on Monterey Street and later the 78-room hotel on Palm Street.

The developer plans to build 46,140 square feet of retail space and 32 residential units while preserving and retrofitting the historic buildings at Chorro and Monterey streets, including the Blackstone, Sauer Bakery and former Muzio’s building. The only structure that will be demolished under the new plan is the vacant Bello building.

“The buildings on that corner were the subject of a lot of discussion about how much could be saved,” said Mark Rawson, project architect for Copeland Properties. “We are now happy to say we are really going to be saving a lot more than originally contemplated.”

Retail shops will be built on the lower level and small residences ranging from studios to two-bedroom apartments on the upper level.

Rawson would not disclose who might be the commercial tenants.

The project, expected to begin early next year, must be nearly complete within four years or Copeland will lose the right to purchase the city property needed to build the hotel.

Copeland Properties then has seven years to submit plans to build the hotel, according to the new agreement with the city.

The Chinatown redevelopment was approved by the city in 2009 after years of heated discussion over its design and height resulted in a project that most community members said they supported.

The down economy stalled the project from moving forward, and the phased approach is a way to get Chinatown plans moving despite continued challenges, said Claire Clark, the city’s economic development manager.

The $3.7 million deal the city agreed to as part of the project’s approval stands, giving the developer the option to buy 1.3 acres containing a city parking lot with 155 spaces, as well as the vacant public works building at 955 Morro St.

A series of safeguards have been built into the agreement. If the builder does not meet the city’s objectives, it can withhold its sale of the Palm Street property.

The new agreement allows Copeland Properties to pay the property price of $1.1 million in two parts. The developer will pay 60 percent of the purchase price with the construction of the commercial and residential phase and the remaining 40 percent when the hotel is ready to be built.

The city will retain ownership of a small parcel of land at 861-863 Palm St. until the hotel project moves forward. If Copeland fails to begin construction of the hotel within six months of the permit being issued, the city is entitled to keep the Palm development site.

In the meantime, Copeland will pay to demolish the unreinforced masonry building on the Palm property and add 16 parking spaces to be used while the Monterey portion of the project is built.

The remaining parking in the Palm lot will stay in use during the construction of the first phase, but vehicle access will only be from Palm Street.

The Chinatown development is the third in a series of downtown redevelopment projects by the Copeland family. The others are the Court Street project that includes Banana Republic and Pottery Barn, and the city’s parking garage and offices at 919 Palm St.

In closed-session negotiations between the city and Copeland, it was agreed that a $3 million dispute over the construction of the Palm Street parking garage would be permanently waived. In that agreement, Copeland forfeits its rights to pursue any legal action to that claim.