The construction industry was one of the first to reopen amid coronavirus shutdowns, but ongoing struggles of the hospitality industry has one South Bay developer asking for a change of plans.
The Santa Clara City Council is set to discuss Tuesday an amendment to the plan for Gateway Crossings, a 21.4-acre mixed-use project, located along Coleman Avenue near Caltrain, VTA and the anticipated extension of BART into the South Bay.
Just shy of a year since it was first approved, Cupertino-based developer Hunter Storm is now asking to delay plans for a 225-room, 152,000 square-foot high-rise hotel, which was part of the first of two phases of construction in the development agreement.
Instead, the developer wants to start on construction for Buildings 1 and 2 concurrently, which would include 725 residential units, 73 of which would be deemed affordable. Construction on the hotel would begin before Building 3.
Josh Rupert, director of development for Hunter Storm, told the city’s Planning Commission in June that the hospitality industry has lost $31 billion in room revenue since February and 7.7 million lost jobs in April.
“Unfortunately, here locally we have not been immune to the effect of COVID in the hospitality and travel industry,” Rupert said. “In some regards we’ve actually been feeling it much worse … Experts don’t project revenue per available room will return to pre-COVID levels until 2025.”
Originally slated for the San Jose side of the project, the hotel is considered a boon for Santa Clara, as it will generate tax revenue from occupants. The city is preparing to ask voters to increase hotel taxes in November.
The approved project featured 1,565 residential units – 157 set aside as affordable – alongside 45,000 square feet of retail, a lease with the Police Activities League and nearly 3 acres of park land.
Rupert said last year he hoped to begin construction on the first residential building and hotel within 24 to 36 months without “any intention of slowing down,” the developer now says travel restrictions and public health guidelines have essentially halted the market.
While the Planning Commission ultimately gave its approval in June, the vote was 4-2-1, after Commissioners Anthony Becker and Suds Jain opposed, and Nancy Biagini recused.
The two “no” votes stemmed from concerns that delaying the hotel benefits the developer. They requested conditionally approving the change, if the rate of affordable units was increased from 10 percent to match the city’s current City’s Affordable Housing Ordinance, which requires that 15% of units be affordable.
This isn’t the first time the developer has made changes to the plan to meet the community’s needs, previously adding more retail space and residential units. After final approval, Hunter Storm leaders highlighted their willingness to work with the city and residents.
“I’ve earned a seat at the table that I’m someone who is committed to this project and to the city,” Hunter Storm President Deke Hunter told councilmembers in July. “If things change — whether it’s market forces, or your goals change or the VTA’s goals change — I think that we’ve shown ourselves as a company a decade ago, today and tomorrow that we will participate in that process.”
But Santa Clara resident Adam Thompson, who sits on the Old Quad Residents Association and has been involved with conversations about the development, said that engagement didn’t happen with the recent changes.
He said if the development agreement is changed due to COVID-19 impacts on the hospitality industry, then changes should also be made to help residents hit hard by the pandemic.
“I don’t think we’re being greedy or anything, but we’re seriously concerned,” Thompson said. “All we’re saying is if you’re making an adjustment to the schedule, we want to make an adjustment to the affordable housing quantity – that’s it, it’s a fair trade. If somebody doesn’t do it, then all (the developer) is doing is profiteering, and we’re going to be in the same position we’ve been in for the last 20 to 30 years — not enough affordable housing and nowhere to go.”
Contact Katie Lauer at katie@sanjosespotlight.com or follow @_katielauer on Twitter.
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