No blues yet for Hill Street hotel project

A Hill Street hotel project in jeopardy in Nipomo may have been saved Wednesday when Nipomo Community Services District directors approved issuing an intent-to-serve letter, despite suspending such letters two weeks earlier.

Directors voted 4-1, with Ed Eby dissenting, to issue the letter after hearing that the board's suspension had put the hotel's and another project's funding in jeopardy and the developers offered to “trade” water demand between the projects.

Under the plan, the Nipomo Commons project across Hill Street also will be reissued an intent-to-serve letter based on a promise to reduce its water consumption, with a portion of that savings to be allocated to the hotel.

The letters were approved after the 2-3 defeat of a motion by Eby, seconded “reluctantly” by Director Cliff Trotter, to continue the project without prejudice until the board receives its spring report on groundwater levels.

Eby argued that since Nipomo Commons did not submit a proposed water-use level when its current intent-to-serve letter was approved, there was nothing to base the savings on.

“In concept, I agree with this,” Eby said. “Practically, I disagree with it. We don't have the ‘before and after' (water demand) for the first project. So how can we be sure it will use less?”

Trotter added, “It's a meaningless prediction anyway.”

Robert Wislow of EDA Design Professionals, representing the hotel developer, said the water use estimate was not required by NCSD when the Nipomo Commons project applied for its letter through another design company that has since dissolved.

“What we do know is what the real estate brokers have for the (amount of water used) by such a project,” he said.

Wislow and hotel developer Rob Marinai of Oakland, who is a partner with Ed Shapiro on Nipomo Commons, said a delay in receiving an intent-to-serve letter could prevent them from securing financial backing for both projects because of the financial market's current instability.

“This project has ramifications that are far-reaching for that part of Nipomo,” Wislow said, calling it the “first domino in a chain of dominoes that could fall in that area.”

In addition to leading to access easements for the adjacent King Ventures project, he said, the project could lead to road improvements on South Frontage Road and “$2 million in fees to the district.”

Intent-to-serve letters are quasi-commitments by the district to provide properties with water if certain conditions are met by the developers. The letters are required for projects to continue moving through the county approval process.

In February, NCSD delayed any action on the hotel project's application for a letter until after the board receives the spring groundwater level report, likely in June.

Then March 12, directors approved a resolution suspending the processing of any intent-to-serve letter applications until that report is received if the projects would increase the net demand on the groundwater basin.

Under the developers' plan, Nipomo Commons would reduce that project's proposed water use from 38.7 acre-feet per year to 23 acre-feet per year by eliminating a health club and Laundromat. It would also cut back on irrigation demands.

Then 5.34 acre-feet of that savings would be allocated to the hotel project, which also revised its water demand estimate from 8.22 acre-feet per year, based on 100 percent occupancy, to 5.34 acre-feet per year, based on 65 percent occupancy.

Wislow said the lower occupancy rate is the average for Central Coast hotels.

“They could have left that stuff out anyway,” Eby said of the health club and Laundromat. “It's the economics I question.”

But Director Jim Harrison argued for approval because NCSD never asked originally for Nipomo Commons' water use estimate, and the developer has promised to reduce water use through elimination of two components and increasing irrigation efficiency.

“I don't see why we don't go ahead and approve this,” he said.

Board President Mike Winn agreed, concerned that a delay could jeopardize both projects.

“I think this is a very good project that's good for Nipomo, and I understand it's the keystone (for development in that area),” he said. “I'd hate to not approve this today and have it all fall apart by June.”

Associate editor Mike Hodgson can be reached at 925-2691, Ext. 2221 or mhodgson@santamariatimes.com.

March 27, 2008