Jun. 30, 2003 - It seems the groundbreaking scheduled this summer for the Four Seasons Hotel in East Palo Alto may take place in a different season. 

Construction on the 10-story, five-star hotel, which was supposed to begin Tuesday under the agreement between Four Seasons and the city, is being delayed, according to acting city manager Ted Gaebler. 

"They have no intention of meeting their July 1 deadline," Gaebler said. 

The city's redevelopment attorney, Karen Tiedeman, said the project's developers have asked the city for a 90-day extension. 

"I think they are asking for a start date of Sept. 30," she said, adding that the city council could be asked to approve the extension at its July 15 meeting. 

The project's developers, LD Rivera, did not return calls seeking comment, but city officials said they told them that the developer's attempts to redesign the hotel to bring costs down has caused some of the delay. Developers have also had trouble getting building permits signed off by the fire department, Tiedeman said. 

There have been other troubles. The swanky hotel and the city's sanitary district are in a legal fight over sewer hookup fees. The project must secure sewer permits before construction can begin. 

City officials began to worry that the project wouldn't start on time several weeks ago when they failed to see the telltale signs of a site being readied for construction: bulldozers or other heavy equipment being moved in, workers in hard hats. 

Instead, the site, located in the University Circle complex along University Avenue near Highway 101, remains quiet, the dust undisturbed. 

The lack of activity led city finance director Sandy Salerno in June to declare during budget deliberations that the city shouldn't count on millions of dollars in hotel taxes anytime soon because it looked as though the hotel was behind schedule. 

The hotel has been scheduled to open by 2004. When city officials approved the project in 2001, they promised it would bring between $2 million and $3 million annually in hotel occupancy taxes to a city that is perpetually short of cash. 

They pinned other hopes on that money: Last November, voters approved a ballot measure to dedicate 10 percent of the anticipated hotel tax to programs for the young and the elderly. 

Gaebler, who came on as acting city manager four months ago, said he is not surprised or dismayed by the Four Seasons' delay; it's what happens with development, he said, particularly in economic times like these. 

"My job is to deal with what is," he said. "I don't spend money I don't have, and I don't lust after money I can't get." 

Experts say the hotel industry is holding its own, but construction in general has slowed. Gary Carr of PKF Consulting, which works with researchers to assess trends in the hotel industry, said several hotel projects are on hold, most notably in San Francisco. 

"You have to be able to run a hotel for 12 to 24 months knowing you are not going to make a profit," Carr said. "That's in the best of times. In the worst of times it may take two years, three or maybe more, and people are ready to sit still for now." 

Carr said he is not familiar with the particulars of the East Palo Alto project, but noted that while Four Seasons opened a hotel in San Francisco in 2001, plans for that project were well under way when the economy soured. 

"It's one thing to finish something in a bad economy that you've started in a good economy," he said. "It's quite another to start a project from scratch in a bad economy. That doesn't make sense. If they can wait, they are probably better off waiting." 

Across the bay in Fremont, Catellus Development recently scrapped plans to include a hotel in its massive Pacific Commons development, saying vacancy rates are too high. 

East Palo Alto city officials say they still believe the hotel will be built. 

"I'm going to assume it's a minor delay and not that important in the grand scheme of things until I hear otherwise," said council member Duane Bay. "I still believe it's a great location for a hotel." 

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