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May 26, 2004

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Palo Alto Online

Publication Date: Wednesday, May 26, 2004

Guest Opinion: Hyatt needed to learn more about 'horse whispering' Guest Opinion: Hyatt needed to learn more about 'horse whispering' (May 26, 2004)

by Jim Baer

Some people are blaming the "Palo Alto Process," city staff or the one-year moratorium that ended in January (or all three) for Hyatt dropping the hotel from its plans for the 16-acre Hyatt Rickey's site.

But all are simplistic interpretations of the 15-years since the future of that site has been under active consideration -- and all fail to take into account Hyatt's own role in its unsuccessful approval process.

"Palo Alto Process" is defined as rigorous, unreasonable submittal requirements with extensive public participation for all projects, large and small.

I know the Process well. I've been associated with 75 projects and more than 200 public hearings. The number-one lesson I've learned is that if a project is reasonably consistent with Palo Alto policies in terms of size and use it is likely to win approval within a reasonable time.

Some approvals are straightforward, even easy. Others run into substantial difficulties because they involve more complex policy tradeoffs. Some projects are just not approvable. Recognizing the difference is not mysterious -- if a developer respects current community policies.

Therein lies Hyatt's problem. Since Hyatt initiated plans for redeveloping the Rickey's site, many other projects have been approved. Stanford got its general use permit approved by the county, with heavy city involvement. The Palo Alto Medical Foundation's new campus -- perhaps the most complex single development in the city's history -- was approved and built.

Other approvals included the multi-faceted Summerhill development on PAMF's former 9-acre site, the Stanford Shopping Center expansion, the Sand Hill Road residential projects, the new Westin Hotel, renovation of the Crowne Plaza Hotel (former Cabana), the development of more than 1 million square feet in the Stanford Research Park, and more than 100 smaller commercial projects and renovations.

Why was Hyatt unsuccessful?

In my experience, there are two success factors for developers in negotiating the Process.

First, one must learn to be a "Horse Whisperer." Monty Roberts' book, the basis for the Robert Redford film, teaches that even when a horse is stubborn or wild one doesn't use the whip but learns to speak the language of horses in movements, gestures and sounds. So, too, a successful developer learns to communicate respectfully with city officials, neighbors and policymakers, on their terms.

Hyatt assembled an extraordinary team of proven "Process whisperers." Leader Mark Solit has achieved many successes throughout California for Hyatt. And he had an accomplished team: residential architect Rob Steinberg, hotel architect John Hill, legal consultants John Sanger and Robin Kennedy, and Lee Weider and Anne Cribbs for community-communications. This team was eminently capable of delivering an approved project. The second success factor is that one must know how to "ski" the Process. One can manage both gravity and moguls without losing a sense of direction just by keeping the Process skis pointed downhill.

The unpredictable bumps of the Process will not defeat a project if -- and this is critical -- the project has a sense of gravity (momentum) and downhill direction, meaning whether a project is "approvable," as consistent with community policies.

Here is where Hyatt created its own fully predictable failure. Experienced persons in the community predicted that more than 300 housing units would never be approved.

This was made clear to Hyatt as early as 1997, when Solit interviewed more than a dozen Palo Alto insiders (names familiar to Palo Alto readers). City staff, Chamber of Commerce leaders, council members, developers and residential activists advised Hyatt that its project was effectively dead on arrival.

The hotel was not the problem. A project with 200 housing units would have been approved within two years. Hyatt's proposed 300 housing units plus hotel could have received a denial within the same time. Hyatt prolonged the Process rather than (1) accept certain denial for its 300+-unit project or (2) cut back to 200 units.

We cannot know whether Hyatt's refusal emanated from Hyatt's Chicago headquarters, overconfidence from past successes, or local arrogance. In any case, Hyatt created its own Process -- for failure.

Losing a Hyatt hotel has been a possibility for at least 15 years -- the days when Hyatt had both Rickey's and The Cabana hotel across El Camino. As Hyatt emerged in the 1980s as the leading high-end hotelier for business travelers, the 1940s-vintage Rickey's and its 1960s Cabana Hyatt no longer met Hyatt's high standards.

Hyatt considered closing Rickey's in the early 1990s, and offered to sell the site for non-hotel development. In 1991, I worked with Home Depot. Grocery and retail centers were explored by other developers.

The 1990s boom years filled local hotels, and Rickey's was retained while the Cabana was closed in favor of a proposed 150-unit residential development there. Hyatt was about to receive all city approvals for 150 homes -- when the site was purchased by B.B. Patel, who remodeled and now operates the 194-room Crowne Plaza Hotel.

Had Hyatt proceeded with the 150 homes rather than selling the Cabana land, economics might now support a new hotel at the Rickey's site.

Palo Alto, ironically, now has a 194-room hotel rather than 150 homes at the former Cabana site and the Rickey's site will have 150 homes and no hotel -- the hotel and homes have just jumped across the street.

Yet the loss of Hyatt as a Palo Alto hotel operator is unfortunate given the significant Hyatt contribution to Palo Alto as a business-travel destination for Silicon Valley, and -- just as important -- the community leadership and personal generosity of the Pritzker family to Palo Alto, Stanford and Northern California.

Jim Baer has for 25 years been one of Palo Alto's most active developers and been involved in community organizations. He can be e-mailed at [email protected]

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