1 August 13, 2015 Update on Port of San Diego Lower Cost Overnight Accommodations Study.

1August 13, 2015

Update on Port of San Diego Lower Cost Overnight Accommodations Study

2

San Diego Unified Port Act

Details Port’s responsibilities

Directs Port to manage San Diego Bay and the Tidelands

Promote commerce, navigation, recreation and fisheries

3

Port by the Numbers

• About 527 employees• 11 departments• 123 are sworn Harbor Police

Officers

Fiscal Year 2015/2016 budget:

$147.1 million revenueReal estate: $93.5 millionMaritime: $35.7 millionHarbor Police: $14.7 millionOther: $3.2 million

https://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRw&url=https://www.portofsandiego.org/harbor-police.html&ei=fQD5VJK1L8jsgwSInoSIAQ&bvm=bv.87611401,d.eXY&psig=AFQjCNGuJP07aniwfbk2HmNPuLElFP0N5A&ust=1425691054989341

4

Economic Engine

• Two maritime cargo terminals• B Street Cruise Ship Terminal• Port Pavilion on Broadway Pier• SD Convention Center • South Bay Wildlife Refuge

Airport terminals and expansions 20 dedicated public parks Shelter Island Harbor Island National City Marina Basin

$1.7 billion invested since 1963

5

Purpose of Study

Establish a baseline of existing lower cost overnight accommodations

Create the framework for a future policy

Foundation(draft 12/14)

Nexus Study (in progress)

Site Criteria&

Identification

EnvironmentalReview

✔

6

Progress Update

Foundation

(draft 12/14)

Nexus Study

Site Criteria&

Identification

EnvironmentalReview

✔ ✔(draft 08/2015)

Establish nexus for establishment of fair share fee concept to fund construction of lower cost accommodations

7

Next Steps

Foundation(draft 12/14)

Nexus Study

(in progress)

Site Criteria&

Identification

EnvironmentalReview

• Develop scope, schedule and budget for Phase III• Following Phase III, commence Environmental Review• Form policy as part of PMPA

8

Conclusion

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S a n D i e g o U n i fi e d P o r t D i s t r i c t

Port Master Plan Amendment No. 47 (PMP-6-PSD-14-0003-2) East Harbor Island

NORTH

HARBOR ISLAND DRIVE

EXISTING RESTAURANTS

California Coastal Commission Hearing - Item Th22d August 13, 2015

FUTURE HOTEL SITES

EXISTING MARINA

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Port Master Plan Amendment Area

Current Port Master PlanOne 500-room “high quality” hotel

Proposed Port Master Plan Amendment

Port Master Plan AmendmentUp to three hotels with combined

total of ≤ 500 rooms

Proposed 175-room Sunroad Hotel

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• 175-Room, 4-Story Select Service Hotel• Roadway and Traffic Circle Realignment• Enhanced Public Access• $30M Estimated Investment in Improvements

Area w/175-room HotelProposed Port Master Plan Amendment

12

Resolution of IssuesCCC Staff Issue Port Staff Response

• Parking

• Shuttle

• Activating Uses

• Bulk and Scale; Public Views

• Public Access

• 15 public parking spaces across the hotel sites

• Participation and expansion of bayside shuttle system

• Provision of public amenities

• Building envelopes ≤70% of each hotel site; views through access corridors

• Interim promenade to be constructed until existing buildings are demolished and promenade can be realigned

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Public Promenade

Existing Promenade

Proposed Promenade

Proposed 175-room Sunroad Hotel

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Outstanding Issue

• Reserve portion of site for lower cost accommodations.

• New PMPA to change designation of lower cost accommodations site.

• 2 of 3 hotels cannot be built prior to completion of Port’s study.

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Up to 500 Hotel Rooms Method to Satisfy §30213

Port’s Provision of Lower Cost Overnight Accommodations

• 175 rooms (Sunroad Hotel)

• 325 rooms– Minimum 82 rooms

(25% of 325 rooms)

– Maximum of 243 rooms

• Pay in-lieu fee or provide on-site

• RFP for mid-scale or economy [no payment of in-lieu fee]

• Pay in-lieu fee or provide on-site

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Issues with CCC Staff Approach• Requires regulating room rates - prohibited by Section 30213.

• Preempts Port’s study that is currently underway.

• No nexus study to support the fee, set aside or land dedication.

• California law recognizes regulatory taking’s protections apply to public land.

• Requires East Harbor Island to remain underutilized indefinitely.

• Port needs to achieve a rate of return on land to support reinvestment in public initiatives.

17

Port’s Lower Cost Overnight Accommodations Policy

Preliminary four phase study underway:

Foundation(draft

12/2014)

Nexus Study(draft

08/2015)

Site Criteria&

Identification

EnvironmentalReview

✔ ✔

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NORTH

HARBOR ISLAND DRIVE

Sunroad 175-room Hotel

*175-room hotel is part of 500 total hotel roomsPort Master Plan Amendment Area

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SupportersGovernment• Mayor of Chula Vista, Mary Salas• Mayor of National City, Ron Morrison

Environmental• San Diego Coastkeeper

Tourism & Hospitality • San Diego Port Tenants Association• Lodging Industry Association San Diego Tourism Authority• Flagship Cruises & Events• The Downtown Partnership

Chambers of Commerce• San Diego County Regional Chamber of Commerce• Chula Vista Chamber of Commerce• National City Chamber of Commerce• San Ysidro Chamber of Commerce

Community Organizations• Mexican American Business and Professional Association• Chicano Federation of San Diego County• National Latino Peace Officers Association- San Diego Chapter• National Latina Business Women’s Association• U.S. Hispanic Contractors and Professionals Association• Hispanic Contractors and Suppliers Association• TTG Environmental

Labor & Trade Organizations• Kaylake Reinforcing, Inc.• J.R. Construction, Inc. CMS Interiors, Inc.• Condon-Johnson & Associates, Inc.• Guida Surveying Inc.• Dyna Electric San Diego• Sunset Glazing• Bonelli & Brown Acoustics & Associates, Inc. • Johnson, Finch & McClure Construction, Inc.• Flody & Howerton Plumbing Inc.• Morrow- Meadows Corporation

Electrical/Datacom Contractors and Engineers• ABC Construction Co., Inc.• Bradshaw Engineer• NOVA• AAA Environmental Contracting Inc.• Audio Associates of San Diego• Onyx Building Group, Inc.• HMT Electric• Swinerton Builders• Brady SoCal, Inc.

20

Conclusion

Approval of PMPA as submitted

• Consistent with Coastal Act

– Consistent with public access policies

– Consistent with recreation policies

– Consistent with visual resource policies

21

S a n D i e g o U n i fi e d P o r t D i s t r i c t

Port Master Plan Amendment No. 47 (PMP-6-PSD-14-0003-2) East Harbor Island

California Coastal Commission Hearing - Item Th22d August 13, 2015

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Recent Coastal Development Permits

Project ConditionLane Field North(February 2013)

In-lieu fee:$30,000 per unit for 25% (100 units) of the number of high-cost overnight visitor accommodations, for a total fee of $3,000,000(prior to occupancy of the hotel)

Lane Field South(February 2013)

In-lieu fee:$30,000 per unit for 25% (100 units) of the number of high-cost overnight visitor accommodations, for a total fee of $3,000,000(prior to occupancy of the hotel)

Kona Kai Expansion(August 2013)

Comply with District's ordinance or program, if adopted -OR-

In-lieu fee:$30,000 per room for 25% (41 units) of the newly developed high-cost overnight visitor accommodations, for a total fee of $307,500(prior to occupancy of the expansion)

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Class Identification

– Luxury• Loews Coronado• Manchester Grand Hyatt

– Upper Upscale • Hilton Airport Harbor Island• Hilton Bayfront• Humphrey’s Half Moon Inn &

Marina• Marriott Coronado Resort & Spa• Marriott Marquis & Marina• Sheraton Hotel & Marina• Wyndham Bayfront

– Upscale • Bay Club Hotel & Marina• Kona Kai Resort & Spa

– Upper Midscale, Midscale, Economy• Best Western Plus Island Palms

Hotel & Marina• Best Western Yacht Harbor• Holiday Inn Bayside

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What are “lower cost” accommodations?

CCC Rate CategoriesSan Diego Region (2008-2013)

Lower <$108.35Moderate $108.35 to $159.46Higher >$159.48

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Alternative Methodology

AAA vs. ADR

San Diego County Market

Port Submarkets

Source: PKF Hospitality Research

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$0.00

$20.00

$40.00

$60.00

$80.00

$100.00

$120.00

$140.00

$160.00

$180.00

$200.00

$173.43 $166.85

$99.78

$134.03 $130.44

$65.87

$101.00

Ave

rag

e D

aily

Rat

e


San Diego Average ADR = $135.58

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2013 PKF Rate CategoriesSan Diego Downtown Submarket

Lower <$106.92Moderate $106.92 to $185.52Higher >$185.52



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Outstanding Issue• Reserve 1/3 of non-lower cost rooms on-site for lower cost visitor

serving accommodations.

– Historic CCC Formula

• If 500 rooms, add 25% as lower cost for mitigation

500 non-lower cost rooms + 125 lower cost rooms = 625 total rooms(or in-lieu fee of 125 x $30k = $3.8 M)

– CCC Staff Proposal

• Of 500 total rooms, 25% as lower cost (125 rooms)

500 non-lower cost rooms - 125 lower cost rooms = 375 total non-lower cost rooms



32

Calculation• Reserve 1/3 of non-lower cost rooms on-site for lower cost visitor

serving accommodations.

– Historic CCC Formula

• If 500 rooms, add 25% as lower cost for mitigation

500 non-lower cost rooms + 125 lower cost rooms = 625 total rooms(or in-lieu fee of 125 x $30k = $3.8 M)

– CCC Staff Proposal

• Of 500 total rooms, 25% as lower cost (125 rooms)

500 non-lower cost rooms - 125 lower cost rooms = 375 total non-lower cost rooms

33

CCC Staff Proposal Calculation

Outstanding Issue

• Reserve 1/3 of non-lower cost rooms on-site for lower cost visitor serving accommodations.



• Historic CCC Formula– If 500 rooms, add 25% as

lower cost for mitigation

500 non-lower cost rooms+125 lower cost rooms=

625 total rooms

• CCC Staff Proposal– Of 500 total rooms, 25% as

lower cost (125 rooms)

500 non-lower cost rooms-

125 lower cost rooms

=375 total non-lower cost rooms

34

Consistency with Coastal Act• As submitted and modified, PMPA is consistent with public

access/recreation and visual resource policies of Coastal Act: – Encouraging new overnight accommodations and public

amenities to serve visitors to the Bay;

– Providing public access to a previously inaccessible area of the Bay;

– Providing continuous, contiguous waterfront pedestrian access along promenade;

– Allowing shared/joint use parking to ensure adequate parking on East Harbor Island while providing a total of 15 public parking spaces across the hotels sites; and

– Reducing bulk and scale by allowing for hotel rooms to be sited in multiple lower profile structures throughout East Harbor Island.

35

Proposed PMPA• Existing Development: Restaurants, marina and parking,

promenade along bay

• Current Port Master Plan:

– One 500-room hotel

• Proposed Port Master Plan Amendment:

– Up to three hotels totaling 500 rooms instead of a single hotel

– Extension of the public access promenade

– Realignment of the traffic circle

36

LocationEast Harbor Island San Diego

37

Coastal Act Section 30213 Lower cost visitor and recreational facilities; encouragement and provision; overnight room rentals

Lower cost visitor and recreational facilities shall be protected, encouraged, and, where feasible, provided. Developments providing public recreational opportunities are preferred.

The commission shall not: (1) require that overnight room rentals be fixed at an amount certain for any privately owned and operated hotel, motel, or other similar visitor-serving facility located on either public or private lands; or (2) establish or approve any method for the identification of low or moderate income persons for the purpose of determining eligibility for overnight room rentals in any such facilities. [Emphasis added]

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Island Prime Restaurant

39


40


41


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• Proposed Port Master Plan Amendment language:

“The extended promenade…will be located immediately adjacent to the shoreline except at the southeast end of the peninsula where it moves inland briefly due to an existing restaurant structure. At such time when the cumulative redevelopment of the restaurant structures exceeds demolition or relocation of more than 50% of the major structural components including exterior walls, floor and roof structure, and foundation (excluding maintenance and repairs), the promenade will be relocated adjacent to the shoreline.”

• Public access available along shoreline, except for 170 feet

• Requires promenade to be extended along waterfront when restaurant relocation/reconstruction occurs

Promenade on Restaurant Parcel

43

PMPA Timeline• 2008 – Commence environmental review• June 14, 2011 Port Board meeting

˗ Option Agreement, EIR, PMPA, Concept Approval

• July 2011 to April 2012 - CEQA lawsuit by Unite HERE˗ EIR analysis adequate for Sunroad Harbor Island Hotel˗ Additional CEQA review needed for PMPA

• August 14, 2012 Port Board meeting˗ Rescind approvals for EIR, PMPA, Concept Approval

• 2013 – Revisions to Draft EIR prepared• March 2014 – Port Board meeting

˗ Approval of Revised Final EIR, draft PMPA, concept approval

• July 2014 – CCC Hearing

44

Sunroad Hotel CONCEPT APPROVAL

45

• Proposed PMPA language: “For each development or redevelopment on the western half of East Harbor Island, completion of the public bayside promenade along that development or redevelopment site will be required by the Port. On each hotel project site, the shoreline promenade will be a minimum of 10-feet wide and that respective portion must be fully completed prior to the completion of any new structure requiring issuance of a final Certificate of Occupancy on that hotel project site.“

• Requires hotels to construct the promenade as leaseholds are developed and redeveloped, rather than requiring the entire promenade to be constructed with development of the first hotel, despite the absence of the required “nexus” or “rough proportionality.”

Timing of Promenade cont’d

46

Issues with CCC Staff Language• “Lower cost” is not defined in PMPA.

• Would require that room rates be fixed, which is prohibited by Section 30213.

• Presents enforcement issue for Port to regulate room rates.

• Preempts study that is currently underway to identify where lower cost accommodations could be sited; policy anticipated to be considered by Port Board late 2014.

47

Existing Promenade

Proposed Promenade

Proposed 175-room Hotel

Public Promenade

48

Supporters

• Kevin Faulconer, Mayor, City of San Diego

• Ron Roberts, San Diego County Supervisor

• San Diego State University, Hospitality & Tourism Management

• San Diego Lodging Industry Association

• San Diego Port Tenants Association

• Swinerton Builders

49

NORTH

HARBOR ISLAND DRIVE

Port Master Plan Amendment Area w/175-room Hotel

*175-room hotel is part of 500 total hotel roomsPort Master Plan Amendment Area

50

Public Promenade

Existing Promenade (2,200 ft)

Proposed Promenade (3,655 ft)

Proposed 175-room Hotel


Marina

Other Hotel(s)

Restaurants

Sunroad Restaurant

51

CCC Staff Issue Port Staff Response

Outstanding Issue

• Reserve 1/3 of non-lower cost rooms on-site for lower cost visitor serving accommodations.



• Developer to provide lower cost accommodations or in-lieu fee as condition of CDP pursuant to study.

– Same language approved by CCC for Hilton Expansion in October 2013.

• Request for Proposal (RFP) for remaining 325 hotel rooms to specify:

– No less than 25% of hotel rooms will be midscale or economy;

– Developer will be required to include amenities that lower cost of stay.

Include summary bullets re: each hotel

53

San Diego Unified Port Act

• Governing legislation that details Port’s responsibilities

• Directs Port to manage San Diego Bay and the Tidelands (consistent with principles of Public Trust Doctrine)

• Promote commerce, navigation, recreation and fisheries

• $1.7 billion reinvested into Tidelands since 1963

– Parks, piers, infrastructure, coastal access, maintenance

• Port is a landlord and needs to achieve a rate of return on land through rents to remain self-sustaining and support reinvestment initiatives.

1 August 13, 2015 Update on Port of San Diego Lower Cost Overnight Accommodations Study.

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Transcript of 1 August 13, 2015 Update on Port of San Diego Lower Cost Overnight Accommodations Study.