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Menlo Park asks, 'When is a hotel not a hotel?'
• Council studies impact of converting senior home to extended-stay hotel.

by Sandy Brundage

The 23 senior residents remaining at Casa on the Peninsula are OK with finding new homes, according to corporate executive director Ann Villapando, but they do need to know whether they'll have to.

The Menlo Park City Council wants answers to its own questions first before the seniors get theirs.

Speaking before the council on Oct. 30, Ms. Villapando said 57 other tenants have already moved on, after rumors about the property's possible sale began swirling in August. The rest are waiting to see if the city will support the sale.

Sand Hill Property Co. proposes buying the 125-unit senior residential property at 555 Glenwood Ave. and converting it to a 138-room hotel, according to representative Reed Moulds. Branded as a Marriott Residence Inn, the hotel would provide extended-stay accommodations, with about one-quarter of guests projected to stay more than a month. That puts a dent in the amount of transient occupancy tax (TOT) the city would collect, as the tax excludes stays of 30 days or longer.

Thus the existential question of the evening: What is a hotel? The council discussed whether an extended-stay facility like a Marriott Inn meets the definition of "hotel," given the projected percentage of 30-day stays, and if so, whether to limit the number of extended stays allowed.

Complicating the question is whether the city would consider available rooms permanently contracted by a company such as Facebook to be extended stays regardless of how long individual guests remain.

Mark Lin, a hotel specialist speaking on behalf of the applicant, said that Marriott doesn't dictate the 23 percent ratio, but it does roughly require that at least 40 percent of stays last longer than four nights.

Sand Hill Property's economic review concluded the hotel would add about $660,000 annually to city revenue at the current 10 percent TOT, or $770,000 if voters approve a tax increase — from 10 percent to 12 percent — on Nov. 6.

The revenue from longer-term stays would add $163,000 to $196,000 if not excluded from the tax. Sand Hill Property based its calculations on the performance of the Marriott Residence Inn in Los Altos.

"TOT is important, but it's also the definition of what is a hotel," Mayor Kirsten Keith said, and noted that she found the projected percentage of tax-free stays problematic.

"What could you limit it to?" she asked later. "Five percent?"

"We'd like to discuss that with you," Mr. Lin answered, adding that the discussion should be based on "what the market really needs."

The council suggested further directions for research to city staff and the applicant.

"Parking is the huge issue here, I think," noted Mayor Keith.

The specific plan requires 173 off-street parking spaces for a hotel of this size. However, the applicant proposes 117 spaces — 78 on site and 39 spaces on Garwood Way currently used by the senior home, but within the public right-of-way.

"I know you're requesting the 39 spots go to Marriott," the mayor said. "Which I'm not comfortable with."

She suggested partnering with Zip Car, Caltrain and the new owners of nearby 1300 El Camino Real instead to mitigate the amount of parking needed — an approach that found support with other council members, including Rich Cline, as well as the applicant.

Another conversational gambit delved into whether the conversion would impact Menlo Park's frantic search for increased housing capacity, particularly affordable and senior housing.

In a word — no. Since the units sit on private property, Associate Planner Thomas Rogers explained, owners have a right to sell or shut down their businesses without the city's permission. Since the rooms were leased at market rate, the conversion should not lead to the state's asking the city to provide zoning for an equivalent number of affordable housing units elsewhere as part of the next housing plan update cycle.

Mr. Lin pointed out that some long-term Marriott Residence Inn clients are seniors who don't need medical assistance, drawn by getting a free breakfast and other benefits of hotel living.

The proposal is expected to return to the city for formal submission and review in upcoming months.