Council Moves Forward With Olson Hotel

In packed chambers on Tuesday, city council voted to work with R.D. Olson Development and their proposal for a 130-room boutique hotel to potentially be built at the old city hall site.

The decision was met with hearty cheering and applause.

“This is a historic day for our city,” said Mayor Keith Curry. “Certainly a historic day for the Lido Peninsula and the Lido Village.”

The motion passed unanimously, 6-0. Councilman Mike Henn recused himself because he has an “indirect” business relationship with a business in Via Lido Plaza, adjacent to the city hall property, which could be a conflict of interest.

According to the staff report, R.D. Olson was recommended because it’s architecture and design compliment the area, it will economically benefit the community and the city, and it’s proposed daily rates are similar to the costs and rates identified in a previous analysis, thus reducing the risk for financial under-performance.

“For these reasons, staff believes that the R.D. Olson team and concept would result in a development that best balances the city’s economic and land use priorities for the former city hall site,” the report reads.

The facts and figures for the Olson proposal: Daily room rate approximately $279; estimated $402.3 million into the community and $17.25 million in city revenue over the next 10 years; and estimated cost of the project is $46.6 million.

“We also think that this plan does a very good job of engaging the community from the surrounding streets, with it’s public plazas and paseos,“ added Kim Brandt, the city’s community development director. “But as a general note, we felt that all of the proposals scored very high in that area.”

Olson beat out the competition of Sonnenblick Development, who proposed a 148-room boutique hotel, and Shopoff Group, who suggested a mixed-use idea of 99 luxury apartment homes and 15,000 square feet of upscale retail space.

Councilwoman Nancy Gardner called all three developers “class acts,” referring to how gracious they were to each other.

Although all three proposals had attractive aspects, she added, Olson was the best fit “for this particular project, for this particular site.”

Other council members echoed what Gardner said, including councilman Tony Petros, who also emphasized that they weren’t approving the specific project, but are instead acting on an memorandum of understanding, which may lead to a lease.

“This is not a project approval,” Petros explained. “We are not here tonight to approve a particular project. We are here tonight to find a dance partner and start the dance. And that dance will lead to a series of negotiations.”

An Ad Hoc Negotiating Committee comprised of council members Ed Selich and Rush Hill was also created. The duo will work out the details with city staff and the Olson team and then report back to council in a closed session. The final lease will then be presented at a regular meeting for public input and final approval by the council.

Both Gardner and Petros also raised concerns about parking.

Gardner questioned whether the parking would be adequate and had doubts if there were enough spaces for hotel employees.

“We aren’t plunking a new hotel down in the middle of Newport center with a lot of parking,” she commented. “We are putting it in an area where there isn’t any parking…Part of our parking (plan) has to consider how we handle (employees).”

Petros suggested that the ad hoc committee clearly articulate the parking issue and possibly consider additional parking.

“I think at this point it’s a little too conceptual,” to figure out exact parking needs, Brandt replied, and as the process continues and they get a better understanding of what the actual project will be, the parking demands will be properly assessed.

Parking is a big concern for that area, said CEO of the selected developer and local resident, Bob Olson.

“We will do a complete parking study, as mandated by staff, as is typical of every hotel that we’ve ever developed,” Olson said during his brief presentation at the meeting.

“The last thing we want to do is to develop a hotel that is short on parking,” Olson said.

He added that not all 80 employees would be there at the same time. At the most, he estimated, there would be about 30 to 35.

Other changes and refinements are likely to still be made, he said.

“We’re not done,” he added. “We’ve still got work ahead.”

The Lido House Hotel, as it is intended to be called, will be feasible, neighborly, appropriate and “beachy,” and more, Olson said.

Representatives for both the other developers also spoke before the vote.

“I clearly get the overwhelming support for a hotel and I would certainly concur, if you go with a hotel, I believe you’ve made the right choice from staff’s recommendation,” said William Shopoff.

“Should things turn a different way,” Shopoff offered, “we remain interested.”

Chris Piche, director of business development for C.W. Driver, the design/build general contractor selected by Sonnenblick, spoke as well.

He read from a letter from Robert Sonnenblick, who could not attend the meeting due to a personal conflict.

Although they felt their five-star resort was a good fit, from a technical and feasible standpoint, he said they appreciated the “great competition” and congratulated Olson.

For public comment, Curry encouraged the crowd that after hearing council viewpoints they should consider the old political axiom, “When you’re winning, stop talking,” which garnered a few chuckles from audience members and council members alike.

Per Curry’s suggestion, there were just a few comments in support of the staff recommendation of working with R.D. Olson Development, but each received ample applause.

There were a couple comments on the other side of the issue as well.

City watchdog Jim Mosher criticized the motion, saying he was disappointed that the 4.26-acre property was now designated as commercial use and not an “imaginative new public use.”

There is nothing “innovative, unexpected or unusual” about any of the proposals, Mosher commented.

He also mentioned the longstanding height restriction of 35-feet, which all three would violate.

Part of what city council approved on Tuesday included amendments to the General Plan that changed the zoning designation from public facilities to mixed use. The amendments also established a 55-foot maximum building height (with architectural features up to 65 feet in height). The amendments still have to be reviewed and recommended by the Planning Commission before coming back to the council for final approval.

Mosher said that even though staff and council have said that the project concept is just being explored and nothing is concrete, that it feels pretty permanent to him.

“I don’t know about dancing partners,” Mosher said, referring to Petros’ earlier comment, “but it seems clear to me that we are here tonight very firmly committing ourselves to a very definite, yet unproven, project and apparently for the next 99 years.”

Robert Hawkins, an attorney representing several community groups, agreed that it felt as though an actual project was definitely being approved and questioned the legality of a 99-year lease on the state level.

Both Hawkins and Mosher were concerned that the California Environmental Quality Act has been violated and there has not been a proper environmental review of the project.

Hawkins also suggested that a resolution was needed to specify the succeeding bidder.

City attorney Aaron Harp responded, explaining that the council can take action with a motion, instead of a resolution, which still allows them to designate a winning bidder and start negotiations.

Also, council isn’t approving a project, Harp reiterated, just moving the ball down the road, going into negotiations and starting the process of looking at a project. So there is no violation of CEQA. According to the staff report, an environmental review will be done later, when a lease agreement is decided upon.

“Future decisions to authorize redevelopment of the property are subject to CEQA and will undergo environmental review prior to approval. These future decisions may include a lease agreement for use of the property and of amendments to the city’s General Plan, Coastal Land Use Plan, and Zoning Ordinance,” the report reads.

There are also a few different ways through which California does allow for 99-year lease, Harp added.

Although there were a few critics, the overall attitude of the audience was heavily in favor of moving forward with Olson.

Councilwoman Leslie Daigle said she focused on how the property can revitalize the area and put a lot of thought behind what the community wanted.

Curry, and other council members, praised all three firms and their proposals, but felt Olson was the best choice.

“I think the recommendation for the Olson group was the right recommendation,” Curry said. “And I believe that we still have some negotiations to go, we have some parking issues to solve, we have the (California) Coastal Commission to get through beyond that. But I have every confidence that we can do that. And I have every confidence that this proposal will help revitalize the peninsula, it will be an outstanding resource to the Lido community and one that we’ll all be, collectively, very proud of for having participated in.”