News

President Hotel: Developer seeks parking exemptions

AJ Capital requests waiver of more than $13 million in parking in-lieu fees

When a developer proposes a project in Palo Alto, it's a safe bet that parking will emerge as the main issue of contention.

Just this week, as the City Council took up a proposal to revise its zoning code to encourage more housing, the council discussion was exclusively on the methodology of the parking study that accompanied the staff report. For the dozens of residents who criticized the new housing rules, which included relaxed parking requirements, the city's parking congestion once again emerged as "Exhibit A" in their opposition.

And as the city considers a proposal by the developer Adventurous Journeys Capital Partners (AJ Capital) to return the President Hotel, a 75-unit apartment building at 488 University Ave., to its original use as a hotel, parking is once again the subject of discussions — albeit, private ones.

The issue will have major ramifications for AJ Capital, which in June bought the 89-year-old building. Under the current zoning laws, a new hotel would be required to provide a parking space for every 250 square feet of space. In the case of President Hotel, that would amount to about 200 spaces. But because the iconic Spanish Colonial building existed before the current laws, it only includes 10 basement-level parking spaces.

The city's zoning law also allows commercial developers who are unable to actually build parking spaces to pay "parking in-lieu" fees. As the AJ Capital team is trying to advance its project, one of the questions that the city is weighing is whether to require the developer to pay these fees. In the downtown area, the fees equal $70,094 for each space not provided. A favorable decision — namely, an exemption from the fees — would thus save AJ Capital more than $13 million in in-lieu fees.

Parking fees are mentioned repeatedly in AJ Capital's correspondence with city officials, which the Weekly has obtained, and are featured prominently in the developer's Oct. 26 agreement with the tenants, which offered them more money and an extended stay (until June). It is also listed as a key issue in the two different term sheets that AJ Capital drafted and submitted to the city.

One term sheet, which Tim Franzen, president of AJ Capital's Graduate Hotels division shared with Councilman Greg Scharff on Sept. 24, states that for the agreement with tenants to take effect, the City Council must approve "exempting Hotel President from parking requirements no later than Oct. 8, 2018." Further, it states, the city must approve two loading spaces on Cowper Street adjacent to the hotel by Jan. 31, 2019.

The company dropped the provision for the loading spaces in the one-page term sheet that AJ Capital later put together — a list of demands that Councilwoman Lydia Kou said made her "furious." Even so, AJ Capital requested that by Dec. 10 the city reach a "binding consensus" to approve "applicable parking issues to allow the President Hotel restoration project to proceed without payment of in-lieu parking fees."

The term sheet, to which Kou alluded at this week's council discussion of zone changes, also offers residents additional relocation assistance, with the exact amount based on when the tenant vacates the building. This additional assistance, however, is conditioned on whether or not an "agreement with the city is reached on parking," the sheet states.

Jeff Levinsky, a land-use watchdog who first alerted the city to zoning code that prevents the hotel conversion (which the city is now preparing to reconsider), told the Weekly that the hotel building remains "mostly not parked," which is allowed for certain older residential buildings that are considered "grandfathered." However, AJ Capital would need to provide the parking — or at least pay for it — when proceeding with the conversion. Levinsky estimated that the building would require 198 spaces (other estimates range from 174 to 204 spaces).

"That's a lot of money if you're using the in-lieu program," Levinsky said.

Unlike AJ Capital's other demands — namely, the lifting of the downtown cap on non-residential development and the elimination of the "grandfathered facilities" provision that requires renovated non-conforming buildings to retain the same use — the waiving of parking fees is currently not on the council's docket in the coming weeks. Nor is it clear that the city is entertaining AJ Capital's request for a waiver. (Interim Planning Director Jonathan Lait did not respond to the Weekly's inquiry about whether the city is considering parking exemptions for the hotel project.)

In addition to seeking the exemption, AJ Capital has been making a case that its project would need far fewer parking spaces than the city code requires. In late October, Steve Emslie, a land-use consultant who is advising AJ Capital, submitted to the city a parking-demand study from the transportation-consulting firm Fehr & Peers. The study claims that the city's required parking rate in the downtown district — one parking space for 250 square feet of space for all uses except residential — is "substantially higher than most industry standards and recent hotel parking data collected in surrounding communities." It is also higher than it would be for hotels outside of downtown, where the city requires one space per guest room, with additions for eating and drinking, banquets and other ancillary uses.

According to the Fehr & Peers study, which the Weekly obtained through a Public Records Act request, the hotel would have 100 rooms and 30 full-time employees, spread out over three shifts. The study states that the city's existing requirements for the downtown area result in 174 spaces, or 1.74 spaces per room. If the hotel were located in a different area, the ratio would be one space per room, or 100 spaces.

Even that, however, is higher than necessary, the report states. For that determination, it relies on the Institute of Transportation Engineers parking manual, which lists the average peak parking demand for "business hotels" at 0.60 spaces per room. Those hotels at the upper end of the demand scale (the 85th percentile) had rates of 0.75 spaces per room.

"Therefore, a relatively conservative parking demand for a typical business hotel would range between 0.6 and 0.75 spaces per room," the study states.

The study also makes the case that companies like Uber and Lyft have changed how people travel. Hotels, the consultants wrote, "are reporting a trend where travelers elect to use (ride sharing) over rental cars when traveling by air." The use of these companies, the report states, has a "direct impact of reducing hotel parking demand."

The Fehr and Peers report concludes that the city's parking requirement in the downtown area is "substantially higher than the actual parking demand expected based on industry standards and locally surveyed parking demands for hotels."

This article is part of a larger story titled "Documents reveal secret dealings over President Hotel."

Watch Weekly journalists discuss this issue on an episode of "Behind the Headlines."

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Follow the Palo Alto Weekly/Palo Alto Online on Twitter @PaloAltoWeekly and Facebook for breaking news, local events, photos, videos and more.

Comments

40 people like this
Posted by Where’s the money?
a resident of Another Palo Alto neighborhood
on Nov 30, 2018 at 2:11 am

Let me get this straight. Palo Alto waives the right to collect $13 million. The tenants get some of that money. AJ Capital gets to keep most of that money. And Palo Alto spends millions of other money to build another garage downtown estimated to cost over $100K per additional space. What’s wrong with this picture?

A better picture? Palo Alto should charge the true in-lieu fee based on the actual cost of a building extra spaces and use that money to build actual spaces and reduce parking in the surrounding neighborhoods.


19 people like this
Posted by Politics & Business As Usual
a resident of Old Palo Alto
on Nov 30, 2018 at 7:38 am

> Let me get this straight. Palo Alto waives the right to collect $13 million. The tenants get some of that money. AJ Capital gets to keep most of that money. And Palo Alto spends millions of other money to build another garage downtown estimated to cost over $100K per additional space. What’s wrong with this picture?

It's called fiscal management. You do the math & the logic.


21 people like this
Posted by HM
a resident of Old Palo Alto
on Nov 30, 2018 at 8:56 am

How many part time employees would it have? Thirty staff members spread over three shifts is not nearly enough to service a luxury 100 room hotel.

And, it's time for the City to stop using Fehrs and Peers as consultants. They are biased and compromised.


16 people like this
Posted by Online Name
a resident of Embarcadero Oaks/Leland
on Nov 30, 2018 at 10:13 am

Online Name is a registered user.

Why isn't this hotel as "car-light" as the Ephiphany Nobu Hotel where we were told their guests, visitors and staff don't need parking?

How about some consistency!


12 people like this
Posted by Diffusion
a resident of College Terrace
on Nov 30, 2018 at 12:03 pm

Valet and off-site parking will serve AJ's needs.

More cars...coming to a neighborhood or street near you.


18 people like this
Posted by Online Name
a resident of Embarcadero Oaks/Leland
on Nov 30, 2018 at 4:06 pm

Online Name is a registered user.

Ah, the irony since many of the current President Hotel residents who were just evicted by this shady deal didn't have cars because they worked downtown where they live(d).


10 people like this
Posted by Watcher
a resident of Crescent Park
on Dec 5, 2018 at 10:25 am

@Online Name

No, no. Many of the tenants in the President Hotel did have cars. They bought parking permits. It was not a "car free nor lite" building.

As for Ephiphany Hotel and Nobu restaurant, they have leased parking from some place and offer valet parking. But, the City doesn't know where. You would think they would want to track it and have a count of parking spaces.



20 people like this
Posted by Mark
a resident of College Terrace
on Dec 5, 2018 at 11:18 am

This entire deal (parking just the most recent detail) stinks to high heaven, thanks for the excellent reporting!


16 people like this
Posted by MUST have parking
a resident of Adobe-Meadow
on Dec 5, 2018 at 12:43 pm

The law means nothing if they keep giving exemptions.
This is EXACTLY why we have parking issues and EXACTLY why they made the damn law!


9 people like this
Posted by Smart Money
a resident of Barron Park
on Dec 5, 2018 at 1:20 pm

> Let me get this straight. Palo Alto waives the right to collect $13 million. The tenants get some of that money. AJ Capital gets to keep most of that money. And Palo Alto spends millions of other money to build another garage downtown estimated to cost over $100K per additional space.

Pretty clever of AJ...playing with 'house money' is smart move and always the way to go.

How did the CPA get hoodwinked on this one? Are they counting on future parking revenues?

Not a very bright or visionary move on their part.


8 people like this
Posted by Corruption starts at the top
a resident of Crescent Park
on Dec 5, 2018 at 6:28 pm

Nobody got hoodwinked. The City Manager is fine with this. Before they applied he told them they could convert "by right." Not true, but that's what he told them.
Perhaps you haven't read about AJ's advocates. TWO of them come out of the City Manager's office. Steve Emslie was Deputy City Manager,and Richard Hackman was an assistant to the Manager.

In effect, the City Manager's office trains them to go work for local developers, then they come to the city for loopholes.
No hoodwinking, that's our City Manager for a long time.


2 people like this
Posted by It All Works Out In the End
a resident of University South
on Dec 5, 2018 at 6:39 pm

> Ah, the irony since many of the current President Hotel residents who were just evicted by this shady deal didn't have cars because they worked downtown where they live(d).

>> No, no. Many of the tenants in the President Hotel did have cars. They bought parking permits. It was not a "car free nor lite" building.

See? There is enough room for hotel guest parking...maybe even more than necessary as many guests take shuttles/taxis to the various hotels.

As for employee parking, the numbers remain to be seen but a new parking garage should be able to accommodate them + some random shoppers and diners.

All this fuss over nothing.


3 people like this
Posted by Ron
a resident of Community Center
on Dec 5, 2018 at 7:50 pm

I am surprised there isn't a perpetual line of snail oil salesmen wrapped around Sucker Hall, uh, I mean City Hall.


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