Berkeley hotel plans halted pending initiative vote

The developer for a downtown Berkeley hotel proposal at Shattuck and Center said his plans are on hold pending November's election. Image: JRDV Urban International
The developer for a downtown Berkeley hotel proposal said his plans are on hold pending November’s election. (Click the image to see the December 2013 submission from the project team.) Image: JRDV Urban International

A proposal for a downtown Berkeley mixed-use high-rise hotel, which had begun working its way through the city’s approval process, is now on hold pending the outcome of November’s vote on an initiative that would significantly change the city’s zoning process and requirements.

A representative from the development team for the Berkeley Place project, where the Bank of America currently operates on Center Street, announced that decision before the Berkeley City Council in July and confirmed it in the middle of the month.

But the city official who represents downtown Berkeley, and who has been a main proponent behind the new initiative, has questioned the claims that the project has truly been halted. Councilman Jesse Arreguín said developers are using the specter of the initiative to scaremonger, and are using it to make a political point.

The proposed 180-foot-tall complex would be located at 2129 Shattuck Ave. It is set to include ground floor commercial space including a restaurant or bar, three floors of office space and 12 stories containing nearly 300 hotel rooms. Eighty parking spaces are planned on an underground level. Developers said they plan to pay to use another 120 spaces in the city-owned garage — slated for demolition and reconstruction — on Center Street across Shattuck.


The city’s Downtown Area Plan, which was adopted in 2012 after Berkeley voters overwhelmingly endorsed its concepts in 2010, allows for the construction of three 180-foot-tall buildings in Berkeley’s downtown core, and two 120-foot-high buildings. (UC Berkeley has the right to build two more 120-foot structures.)

Read more about tall buildings proposed in Berkeley in past Berkeleyside coverage.

The hotel project was proposed by Jim Didion and Center Street Partners LLC, and received feedback from the city’s Design Review Committee and Zoning Adjustments Board in March and April.

Berkeley’s , set to come before voters in November, would change the existing approval process such that the zoning board would no longer be able to grant special permits for projects that don’t comply with existing rules about height and setbacks. (Learn all about the initiative here.) The hotel project, as currently designed, does not comply with the city’s zoning laws and would need to seek exemptions from those rules.

Proponents of the downtown initiative said it will bring more benefits to the community and increase sustainability for project construction.

Developers for two other tall building projects in Berkeley said they are moving ahead with their plans and are confident the initiative will fail. (See the text of the initiative here.)

Didion said in mid-July that he’s not willing to take that risk.

“You just can’t move forward with planning with this kind of uncertainty,” he said. “If that resolution passes, it kills downtown high-rise development, period.”

How does LEED certification fit in?

Didion described two pieces of the initiative he said would be most problematic: that the zoning board could no longer grant use permits, and that tall buildings would have to conform to a LEED Platinum standard, rather that the LEED Gold standard currently required. He said LEED Platinum would “up the costs” significantly.

LEED certification is based on a point system tied to a range of criteria related to location and transportation, materials and resources, and much more. LEED Gold projects must tally up 60-79 points, while Platinum projects must get 80 more.

According to Jacob Kriss — a spokesman for the U.S. Green Building Council, which oversees LEED certification — approximately 5% of the nearly 22,700 LEED-certified commercial projects nationwide have achieved the Platinum level since the rating system launched in 2000.

Kriss said LEED “can and has been successfully applied to buildings of practically every type, at all certification levels.” He said the council doesn’t track projects specifically by height, but provided several examples of projects in the range of those under consideration in Berkeley: a 15-story office building in Minneapolis; Ameritrade’s 12-story headquarters in Omaha; and a 12-story university law center in Baltimore.

Nearly 250 commercial or institutional projects have been certified LEED Platinum in California since 2000, but only a fraction of those projects — Berkeleyside estimated several dozen — are new construction in the Bay Area. Of that fraction, a significant number appear to be in the public realm or to have received public subsidies: school facilities, museums, learning centers, city government buildings and the like. Many also appear to be shorter buildings, but there is no readily available way to analyze the list by height. (Download an Excel spreadsheet of those projects.)

Berkeley currently has two LEED Platinum buildings: The David Brower Center and the YMCA Teen Center. In El Cerrito, both the municipal recycling center and the former location of the Windrush private school are LEED Platinum. Oakland has the Alameda County Waste Management facility and a Mills College science building.

“It’s the rarest by design,” Kriss said. “It’s an incredible mark of distinction.”

He said that, with an experienced project team and the right planning, LEED Platinum certification might not necessarily even cost more than the other standards. He estimated that, overall, additional costs related to LEED certification generally make up 1% to 5% of a large project’s budget, with some of that to be recouped in energy and water savings within a few years.

Mayor Tom Bates. March 5, 2013. Photo: Emilie Raguso
Mayor Tom Bates. Photo: Emilie Raguso

Mayor Tom Bates said LEED Platinum certification would be a significant challenge, however. He said there have been only two LEED Platinum hotels built in the United States. They are both boutique hotels.

He said demand for a second downtown hotel is high, and that he’s been told Hotel Shattuck Plaza lost half a million dollars last year because it didn’t have enough room for all the business that was interested in securing bookings there.

Bates said, too, that the initiative to change downtown zoning does not represent a majority opinion in the community. He cited a private poll related to the state of downtown Berkeley that found that 65% of respondents believe the city is on the right track. He said the initiative backers are a minority group that is out of line with the interests of most Berkeley residents.

“It’s a group of people who want to stop progress. Call them progressives, call them NIMBYS, call them preservationists,” he said. “They are about 30% of the population. They want things to stay the same. They just don’t go away. They just keep trying.”

Bates said the LEED Platinum requirements and the other benefits proposed under the initiative will simply never come to pass because they set the bar too high for developers, who will turn away from Berkeley if voters approve the measure.

“With the requirements that are getting piled on, nothing is going to be built,” he said. “It’s all empty promises.”

Consultant: “The existing rules do a good job of balancing things”

Didion, the hotel developer, said his team had been prepared to pay prevailing wages to construction workers on the Berkeley Place project, one of the requirements in the initiative for buildings over 60 feet. He said that, in itself, was not an obstacle: “We were prepared to be a union shop,” he said.

He said the delay in the project time line is “frustrating,” having spent several years on the hotel project already. It was a challenge to reach an agreement with Bank of America, and Didion said he has spent significant money on the endeavor up to this point.

Bates said he has spoken about the hotel project’s financing with Didion, who told him it has been hampered by the November ballot measure: “He says there’s not a lender around who will lend to him because of this thing hanging over him.”

See the Berkeleyside downtown initiative cheat sheet.

Consultant Matthew Taecker, who had been hired by Didion to help with the city approvals process for the hotel, addressed the Berkeley City Council in early July to outline the problems he sees with the initiative. Taecker used to work for the city of Berkeley, and helped craft its Downtown Area Plan, which is a blueprint for growth in the city’s downtown core.

Taecker told council he was no longer being paid by Didion, but that he wanted to speak to officials as a private citizen and Berkeley resident who is concerned about the initiative’s impact on the city’s future.

“I remain personally interested in attracting a high-rise hotel because of the extraordinary benefits it would bring,” he told the council. Taecker told the Zoning Adjustments Board in April that the project would bring more than an estimated $2 million in transient occupancy taxes each year to the city’s General Fund, along with the payment of other significant fees.

Taecker explained to council that one of the most problematic pieces in the initiative, from his perspective, is a requirement related to shadowing. He said proposed limitations on the allowable size of shadows cast by tall buildings would make the hotel project financially infeasible.

Taecker told council the initiative “contains excessive and costly requirements which — on top of high construction costs and existing fees — would push any hotel project into the red.” (See a chart he created of how he believes the initiative would change the city’s existing zoning rules.)

He later added: “The existing rules do a good job of balancing things. The rules in the initiative are just over the top.”

Another issue, raised by Taecker after the meeting, is that the initiative would limit the consideration of applications from developers hoping to build one of the city’s five tall buildings to one a year, to be submitted in May. The hotel project has not officially been submitted to the city; if the initiative passes, Taecker said it would not be allowed to come to staff until May 2015. If another application beats it to the punch, it would have to wait even longer.

“Development projects can’t wait a year,” he said. “When the time is right you have to strike.”

As it was proposed earlier this year, the hotel project would require some kind of special approval from the city — such as a use permit — because it was designed to be wider than is allowed under city code. Taecker said this would require some level of flexibility from the city’s zoning board, flexibility that would be taken away if the initiative passes. (Ironically, it was Taecker who proposed the current width restrictions when he was working as a planner for Berkeley.)

The hotel development team proposed a tower width as broad as 220 feet, while the code allows only 120 feet. City staff said in a report to the zoning board earlier this year that the board could ultimately grant a use permit to allow that width if proper findings are met. Developers said they have included ample setbacks along three sides of the property and included less “bulk” in other parts of the project to try to compensate for their request. Taecker told the board that, without the extra width, the project would not pencil out financially.

Read about the project’s zoning board pre-submittal review in April.

report by consulting firm AECOM — which was hired by the city to evaluate the initiative from a non-partisan perspective — also concluded that the new rules would make it financially infeasible to construct anything higher than 60 feet in Berkeley. The report concluded that 1,300 fewer housing units would be constructed if the downtown initiative passes, and that the city would lose millions in expected fees.

Councilman Arreguín has called the report “publicly paid political propaganda,” and said it lacks the data to back up its conclusions.

The other “tall” projects: Condos on Shattuck; mixed-use building on Harold Way

Early drawings, which are set to change, of a 120-foot condo project in the works at Shattuck Avenue and Berkeley Way. Image: The Bay Architects
Very early drawings, set to change, of a 120-foot condo project in the works at Shattuck Avenue and Berkeley Way. Image: The Bay Architects

Representatives of two other project teams seeking approval to build tall buildings downtown have said they are confident voters will “see through” what they believe are the initiative’s true intentions: to halt development over 60 feet altogether.

But they also said, if the initiative does pass, neither project will be built.

Jim Novosel, of The Bay Architects, is working on a condominium project on Shattuck Avenue and Berkeley Way. Novosel said the voters have already spoken, with Measure R in 2010, and that the new initiative is just “muddying the waters.”

“It’s a spoiler initiative put forth by people who never wanted to have the downtown plan in the first place,” he said. “It’s clearly a monkey wrench initiative put together by some people who are trying every way they possibly can to thwart the will of the majority.”

As submitted, the condominium project would include a percent-for-art program, up to 25% public open space on the property, a new storm water filtration system and more. There will also be transit passes, affordable housing on site or paid for in fees to the city, and other benefits that are built into the Downtown Area Plan.

Novosel said significant projects like his will not get built if the initiative passes, which means that money from development fees will stop flowing into city coffers to help address needs such as affordable housing and public works improvements. His team would have to make significant changes to the plans if voters approve the downtown initiative, he said.

“We would have to redesign the whole project: get more units on the site, get more commercial space on the site, eliminate the open space, eliminate the art. We would really have to re-look at it,” he said, to see if some form of the project could be salvaged.

Novosel said his team will resubmit new drawings to the city in the next month or so, and hopes to go before the city Design Review Committee by November, then before the city Zoning Adjustments Board in early 2015. Groundbreaking could happen in mid- to late 2016 if the initiative fails and if those approvals go smoothly, he said.

New plans were submitted in July for 2211 Harold Way. Image: MVE Institutional
New plans were submitted in July for 2211 Harold Way. Image: MVE Institutional

The other tall building project seeking approval from the city would be located at 2211 Harold Way, with frontage on Shattuck Avenue and covering most of the block where Landmark’s Shattuck Cinemas currently operates. (Hotel Shattuck Plaza at 2086 Allston Way would remain standing during demolition and construction of the rest of the property.)

Former city planning staffer Mark Rhoades, who now runs a development consulting firm, said, for him, there are two deal breakers in the initiative that independently could sink any project: the LEED Platinum requirement, and how it would increase construction costs; and that affordability requirements would increase to cover 30% of a project’s units (from 10% now). In addition, the ability to pay into a municipal fund rather than build affordable housing on site would be more restricted than it is currently.

Add to those the increased parking requirements, a rule to allow public access to restrooms — which the city attorney found to be illegal — and the movement toward decreased flexibility for the zoning board and council, as well as the other changes in the initiative: “All of them together are too much for the project to bear.”

Rhoades said the project cannot be built if the initiative passes.

But he said the Harold Way project team is “confident that the Berkeley public who supported Measure R will see through what it is that the initiative would do and will vote down the initiative so that the downtown can continue to improve.”

As to its current status, Rhoades said the project has been reviewed by the Design Review Committee and that a draft environmental review document will be available for public review in the near future.

Downtown councilman: “It’s a PR move”

Councilman Jesse Arreguin. Photo: Emilie Raguso
Councilman Jesse Arreguin. Photo: Emilie Raguso

Councilman Jesse Arreguín, one of the main proponents of the downtown initiative, said he’s not convinced by the assertions that have been made by consultants and developers for the tall buildings planned in downtown Berkeley.

“It’s a political move. It’s a PR move,” said Arreguín, who represents downtown Berkeley on the council. “They’re saying this to try to cast a cloud of concern and confusion to undermine the initiative.”

He said he’s been presented with no actual data to prove the projects would become financially infeasible if the initiative passes, and that there isn’t enough transparency to know whether the assertions are accurate, or just empty threats.

“It’s to their advantage to say these things whether or not they’re true,” Arreguín said. “What we get is these unproven claims, which frankly I think are designed to drum up opposition to the initiative.”

Arreguín said he very much wants to see a new hotel in downtown Berkeley, and that he’s been trying to find a way to ensure a project like that can happen, whatever the outcome is in November’s election.

In July, he tried to win support from council for a potential amendment to the zoning code that would allow for a variance for a tall hotel downtown that would reduce the setback requirements, meaning the hotel could be closer to the sidewalk and property line than would otherwise be allowed.

Council members in July expressed confusion about the goal of Arreguín’s proposal, in that it seemed to be at odds with the downtown initiative itself, which makes setback rules more rigid. The city attorney said — if the initiative succeeds — it would take precedence over Arreguín’s proposal and render it moot.

Arreguín said he disagrees with the city attorney’s interpretation and plans to bring back his proposal in September for a second look.

It’s not the only disagreement that’s come up between the city and the measure’s proponents. Arreguín said he is planning to file a lawsuit this month against the city to push for different ballot language than council adopted in June.

Arreguín likened the current debate over the impact of the downtown initiative to the arguments that came up when the city was discussing the adoption of a new minimum wage earlier this year. Business owners said they were concerned the city’s plans to raise the minimum wage would cause them to close and be too much for many local businesses to bear. Arreguín said those fears have not proven out.

“Once again, people are making unsubstantiated claims,” he said. “I don’t want to see the hotel not proceed, which is why I’m committed to finding a way for it to work.”

For details and images of many of the new building projects underway in Berkeley, check out Berkeleyside’s recent real estate articlesVisit the hotel project website here, and see a presentation from the April zoning board meeting with project specifications. (The large PDF may take time to load.)

Related:
Wording of Berkeley ballot initiative headed to court (07.31.14)
City Council member says Berkeley’s ballot is biased (07.23.14)
At B-Side: Implications of downtown Berkeley initiative (07.22.14)
Would new green initiative kill 2 downtown high rises? (05.14.14)
See plans Tuesday for new downtown Berkeley hotel (04.14.14)
‘Explosive’ downtown Berkeley housing boom under way (01.14.14)
New 16-story hotel proposed for downtown Berkeley (12.19.13)

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