Developers eye Capitola City Hall site for 80-room hotel

Complex deal involves park, parking garage and move of civic facilities

By Jondi Gumz, Santa Cruz Sentinel

A group of developers wants to build an 80-room hotel on the site of occupied by Capitola City Hall and Police Department.

CAPITOLA >> Two developers are interested in building an 80-room hotel on city property a few short blocks from the beach and relocating City Hall and the police station.

The complex proposal also would establish a new park on the recently completed Pacific Cove lot and consolidate parking lots into a new multi-story parking garage.

A formal plan for the 7-acre city-owned site has not been submitted, but City Manager Jamie Goldstein will ask the City Council on Thursday for authority to execute a nine-month exclusive negotiating agreement with Lawlor/French LLC, headed by Owen Lawlor and Craig French of Santa Cruz. The meeting will begin at 7 p.m. in the Council Chamber, 420 Capitola Ave.

Lawlor declined comment Monday, saying, “Since there has been no council action yet. We have no comment now.”

The city manager has pushed to move the city facilities to higher ground since a broken pipe resulted in Capitola Village flooding twice in March 2011, inundating the police station and requiring the department to move into portable buildings for five months. The Council Chamber on the building’s lower level also was affected.

A hazard mitigation plan prepared the year after the flood identified moving civic facilities out of the floodplain as a high priority. No alternative site has been discussed publicly.

According to Goldstein, the cost of the move along with construction of a parking structure is more than $20 million. Details of the financial arrangement haven’t been disclosed.

Goldstein describes the developers as “very experienced” with “a strong understanding” of Capitola’s unique qualities.

Lawlor, a land-use consultant, has worked on mostly residential projects, including The Farm, 45 units completed in Soquel, and a 58-unit apartment complex at 350 Ocean St. in Santa Cruz, which is not yet under construction.

French, Capitola’s public works director before leaving for the private sector, was chosen 2011 Man of the Year by the Capitola-Soquel Chamber of Commerce. He worked on the Nob Hill shopping center makeover, converted the former county Office of Education into Capitola Self-Storage and guided a proposed 165-room La Bahia hotel to approval in Santa Cruz.

According to Goldstein’s memo to the council, terms of the agreement he has negotiated include the developer preparing options for an 80-room hotel with staff input and assisting the city with plans to relocate City Hall, build a parking structure and develop a new park.

The city staff would lead a public outreach process with the developer’s project manager, who would be reimbursed for up to $25,000 in design services for the garage and civic facilities. If the city decides against the project, the city would pay an additional $25,000 for costs incurred.

Local residents were surprised by the news.

Planning Commissioner Gayle Ortiz, a former mayor, emailed the council, writing, “I am more than a bit taken back by the fact that this negotiation has gone this far with zero public input.” She conceded “it’s not a bad idea to look at this proposal” but added “projects that have not gone well were kept behind closed doors too long.”

She asked how much staff time would be involved, noting that normally an applicant would pay the city for time rather than the city paying the developer.

The hotel business is up countywide with occupancy and average daily room rate exceeding those in 2008, the year before the economy crashed. Capitola officials long have wanted to attract a hotel developer because of the potential to generate revenue from room taxes.

The owner of the 11-room Monarch Cove Inn on El Salto Drive proposed to expand to 41 rooms, a proposal greeted with a wall of opposition from Depot Hill neighbors worried about traffic and destruction on Monarch butterfly habitat. A site on McGregor Drive spurned by developers is being turned into a park with a skate facility, pump track and dog park.

The last hotel to open in Capitola was the Fairfield Inn & Suites in 2011.

Leave a Reply