By Linda Taaffe
Plans to develop the city-owned property on the corner of First and Main streets in downtown Los Altos appear to have become tangled in a Catch-22.
The Los Altos City Council is scheduled next month to choose a land use and narrow the list of developers down to one before moving forward with specific parameters for the project. Part of this decision will be based on the developers’ purchase offers and ability to secure financial backing.
The three contractors competing to develop the .78-acre site told the Los Altos City Council last week that they cannot provide specific building costs or secure financial backing until the city gives them more detailed project objectives. Wednesday was the last scheduled meeting between the city and the developers before the council is scheduled to make its decision in mid- June.
Los Altos resident Kirk Hanson, an economic analyst at Stanford University, called the city’s approach flawed, saying the council had essentially asked the developers to hit a moving target.
Councilman Francis La Poll called the situation a case of what came first, the chicken or the egg.
He said the council chose to ask developers what they would want at the site rather than mandating a particular development.
“We wanted to push this very slowly along different fronts,” he said. “I think this has been a reasonable process.”
Kelly Associates/Joie de Vivre and Roxy Rapp/Innkeeper Associates submitted hotel proposals. Swenson/Camera Cinema hopes to build condominiums and a movie theater on the site.
According to an economic report by Keyser Marston Associates Inc, Kelly proposed a 95-room hotel with a 6,500-square-foot restaurant; Rapp proposed an 85-room hotel and cafe; and Swenson offered to build 35 condominiums with a six-screen movie theater.
Kelly offered $1.5-2 million for the property, based on the specifics of the project requirements; Rapp offered $3 million or the property’s appraised value, which ever is higher; and Swenson offered $1.2 to $2 million, depending on the project’s parking requirements.
Kelly said the hotel would require raising $10 million in equity. Swenson said the theater would require up to $5 million.
Each proposal includes a three-story structure and variations of an underground parking structure. The council asked the developers how much they could scale back the projects without financial risk.
Kelly said the hotel could operate on no less than 70 rooms. Rapp said the project needed 80-90 rooms to pay for the property.
Swenson said scaling back the condominiums would mean less parking.
Economic consultant Tim Kelly, who authored the Keyser report, recommended that the city take responsibility for terminating the current business leases tied to the First and Main site.
The Home Consignment Center and Nielsen’s Martinizing Dry Cleaning have leases that don’t expire until 2006.
The city purchased the First and Main streets property in 1995 with the long-term goal of improving the appearance of Main Street and creating more parking.
