THE SANTA CRUZ COAST HOTEL
Frequently Asked Questions
March 8, 2004
What is the Coast Hotel Project? The owner of the Coast Hotel (formerly the Dream Inn) at 175 West Cliff
Drive has proposed to demolish the existing 163-room hotel and construct a new LEED Certified (“Green”)
hotel of either 250 rooms, or approximately 168,350 square feet, and a restaurant on the site of the current hotel
(on the beach side of West Cliff Drive) and a conference center and parking structure on the current parking lot
across the street (on the inland side of West Cliff Drive). A pedestrian bridge would connect the two. The
current hotel owner would own the hotel. The Redevelopment Agency would own the conference center and the
parking structure, and through lease agreements among the Agency, City and hotel owner, the hotel owner
would operate these two facilities.
What is the size of the Conference Center? The conference facility would be approximately 23,000 square
feet in size, with a ballroom seating 1,200 people and smaller banquet or meeting rooms. The building would
also house the hotel’s “back of house” facilities, including kitchen, housekeeping, laundry, administrative
offices, and employee parking. Total square footage of the building would be approximately 67,000 square feet
and the building would be approximately 48 feet high, approximately the height of the condominiums across the
What is the size of the parking garage? The parking garage would provide up to 630 spaces on six levels
above ground, approximately 49 feet high. The garage will have spaces reserved for hotel guests at the rate of
one space per room, and the hotel owner will pay the City for this reserved parking. Parking not in use by hotel
guests will be available to the public.
What effect will the project have on public parking in the area? Additional public parking will be provided.
The existing hotel currently provides private parking for 273 vehicles on two surface parking lots. The main lot,
on the west (inland) side of West Cliff drive contains 219 spaces and a smaller lot with 54 spaces is located
adjacent to the hotel. No public parking is currently provided by the hotel. The new garage would provide 630
parking spaces; of those, 250 would be reserved for hotel guests (assuming a 250-room hotel) and the remaining
spaces would be available for public parking. In the event a major conference or event required more parking
than the hotel’s 250 reserved spaces, the amount of public parking available in the garage may be reduced, or
the hotel operator may use valet parking to “tandem” park vehicles.
The project would require the removal of approximately 15 on-street metered parking spaces on Bay Street and
on the east side of West Cliff Drive in order to accommodate additional turn lanes and through traffic. These
public parking spaces would be replaced by public parking in the new garage.
Currently on or adjacent to With proposed project, assuming
hotel property 250 rooms
Public 15 on-street spaces (to be 380
Private 273 hotel parking spaces 250 (hotel valet parking for
What will be the impact of the project on traffic? An engineering company, Higgins and Associates, was
hired to perform studies of the impact of the project on traffic. The analysis included evaluating the Coast
Hotel project impact in concert with other additional development that may occur in the future. While several
intersections will be affected, the effect can be mitigated by requiring the hotel owner to pay its fair share
contribution toward improving those intersections. It is anticipated that prior to the hotel’s opening, traffic
signals and/or roundabouts will be constructed at key intersections, including Bay/West Cliff, Pacific/Beach,
and California/Bay. Much of the hotel traffic is expected to access the site from Ocean Street, using a dual
access approach recommended in the 1998 Beach and South of Laurel Area Plan. Specifically, the City
Council’s approval of the project requires signage directing visitors to the site via Ocean Street, Soquel
Avenue, Front Street, and the West Cliff Drive Bridge. Hotel marketing materials and information will list this
route to the hotel. Those motorists missing the Ocean Street turn onto Soquel Avenue will continue into the
Beach Area where additional signage will direct them to turn from Riverside Avenue at Second Street to
Pacific Avenue and then again to the West Cliff Drive Bridge. Other conditions of approval require “Left Turn
Only” signage to be placed at the Bay Avenue parking garage exit and for manual traffic control at the parking
garage during peak usage times to direct traffic leaving the project to proceed south toward Beach Street.
These conditions were imposed in order to reduce traffic on Bay Street and in the neighborhood.
In addition, the Redevelopment Agency will fund a crossing guard position for Bayview School children
crossing at Seaside and Bay Streets, and the City will allocate funds to develop a Neighborhood Transportation
Management Plan to address the Westside neighborhood in the vicinity of the hotel/conference center.
Assistance to Clearview Court Residents: For a period of ten years from the completion of the project, the
Redevelopment Agency will utilize the affordable housing portion of the property tax funds generated by the
project (approximately $158,000 per year) to assist Clearview Court residents. The Agency, in consultation
with the residents and the property owner of Clearview Court, will establish a program to provide funding for
improvements to the residences, voluntary relocation to other affordable housing, reductions in housing costs,
production of additional housing and/or other mechanisms which conform with California Redevelopment Law
for affordable housing.
Will any heritage trees be affected? Of the existing 25 heritage trees on the site, ten will be retained, ten will
be relocated, and five will be removed.
To Be To Be To Be
Location Existing Retained Removed Relocated
Beach Side 8 5 3 --
Inland Side 17 5 2 10
Total 25 10 5 10
What will the project cost? It is currently estimated that the project will cost approximately $88 million to
construct. This number excludes the value of the land and is based on preliminary construction estimates. As
the plans are developed, that number may change.
How will the Project be Financed? The project will be financed through a combination of private investment
and Redevelopment Agency investment. The hotel owner will finance the construction of the hotel
(approximately $62 million) made up of equity from the owners of the hotel, the value of the land and through
borrowing from banks or other lenders. In addition, the hotel owner must retire the existing debt on the
property. The Redevelopment Agency will issue bonds in the amount of approximately $25-30 million to
finance the construction of the parking structure and the shell of the conference center (the foundation, roof, and
exterior walls) and issuance costs, depending upon the cost of construction. The hotel owner will bear all the
costs of constructing the interior improvements to the conference center. The bonds will be repaid over
approximately 25-30 years.
How will the Bonds be repaid? The money to repay the bonds will be new revenues generated by the project,
over and above the current revenue amounts and will include the following:
• Net new property tax increment generated for the Redevelopment Agency
• Annual parking payment of $624,000 from the hotel operator to the Agency
• A 4% surcharge over and above the 10% transient occupancy taxes (TOT), charged to hotel guests and
paid to the City
• Net new 10% TOT paid to the City
• Sales tax generated on taxable sales at the hotel and conference center
• Public parking revenues
These new revenues are anticipated to total approximately $2.7 million per year once the operation is stabilized
in its third year of operation, based on occupancy of 73% and an average room rate of $230. These projections
are based on the hotel’s history of performance. Up to that amount could be used annually to repay the debt
service on the bonds.
Why is the City’s Redevelopment Agency involved? In order for the private sector to invest in a project, there
must be a reasonable rate of return demonstrated to not only the investor but also the lender. Thus, the initial
costs of conference centers do not attract investor commitments. Typically, conference centers are built with
some type of government participation. Tourism has always been one of the key economic engines for the City
of Santa Cruz. To support that economic engine the City identified a conference center as a priority economic
development goal, and one was approved at the LaBahia site in the Beach/South of Laurel Plan in 1998. The
owners of that proposed project later changed the nature of their project to a smaller “boutique” hotel,
precluding its use as a conference hotel. The City subsequently approached the Coast hotel owners with an
interest in siting a conference hotel at their location. A conference center will provide the community a new
venue for weddings, meetings, parties, charitable benefits, and similar events and will draw visitors to the City
for conferences and events during the “off season,” helping to alleviate the seasonal fluctuations of the local
What are the Benefits of the Project? In addition to the benefits of the conference center, with its impact on
the local economy, the following effects are anticipated:
• Creation of new, full-time, high paying union jobs with employer paid healthcare
• A LEED Certified “green” building that is more complimentary to the environment than what exists
• An architectural landmark that will define the Santa Cruz beach area
• Improved handicapped access to the beach
• Contributions to a shuttle program, the Marine Sanctuary Exploration Center and a telelink to the
• The ability of local businesses, residents and professionals to host conferences, visitors and business
• Permanent revenues to the City’s General Fund from the 4% guest surcharge and 99 years of revenue
from the parking payment once the bonds are retired
• Increased Transient Occupancy Tax to the City General Fund
• More public parking for beach goers, reducing traffic congestion and parking in the neighborhoods
• Improved bicycle lanes and pedestrian walkways
• The Downtown, beach area, Mission Street, the wharf and Ocean Street business districts will see
additional business from the additional hotel guests and conference attendees
When will the project be completed? Depending upon when the project and its related General Plan and
Zoning Ordinance Amendments receive Council and Agency approval as well as Coastal Commission approval,
the project would be completed within 24-30 months following that approval.
Where can I learn more? The Environmental Impact Report is on the City’s web site (www.ci.santa-
cruz.ca.us) and is available for review at the City Planning Department and the Redevelopment Department.
Site simulations of the new buildings and financial feasibility information are also available on the City’s web
site. You may also contact Marty Ackerman at the Redevelopment Agency at 420-5150.