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Recession Slows Seaside, California's Hotel and Commercial Development to a Trickle

By Claudia Melendez Salinas, The Monterey County Herald, Calif.McClatchy-Tribune Regional News

Jul. 27, 2009--Call it a case of arrested development.

Less than a year ago, before the stock market crashed and the effects of the real estate bubble bursting were fully felt, Seaside was riding high on a wave of development.

The grand opening of the City Center was celebrated with the announcement of a major tenant, a conference center with a 252-room hotel was the talk of the town, and a Marriott hotel was in the pipeline for Del Monte Boulevard.

Fast forward to 2009 and development in Seaside -- along with the worldwide economy -- is limping along: The City Center is struggling to find tenants, a proposal to build a luxury auto center withered and, at a recent request for proposals, no serious contenders emerged to build a 95-room hotel in the site where the Marriott was once proposed.

"The economy has reduced the sense of urgency for development projects," Assistant City Manager Jill Anderson said. "We're moving forward, but very slowly."

Of eight major developments listed in the city's plans, two have faltered in the last month, one has been completed and the one fully built is hobbling along. Three projects continue to move through the development process, but at a decidedly slower pace, and city administrators are waiting to receive proposals for the parcel adjacent to the Central Coast Veterans Cemetery.

Commercial construction

The numbers reflect the reality: New commercial construction has completely dried up in Seaside, going from

$800,000 in the first six months of 2008 to zero in the same period this year, according to the Construction Industry Research Board. In 2007, new commercial construction totaled $337,000 in the same six months.

But Seaside is not alone. Commercial construction in Monterey County has practically evaporated, with only Marina and unincorporated areas registering any activity in the first six months of 2009.

Marina had $4 million of commercial construction from January to July, down from $10.5 million in 2008 and $23 million in 2007. Total new construction values in Monterey County stand at $7.9 million so far this year, compared with $26.8 million in the first six months of 2008, and $49 million in the same period 2007.

By last Monday's deadline, no bidders had accepted the city's invitation to renovate the property at Monterey Road and Coe Avenue in Seaside.

No completed applications were filed before proposals were due for a 95-room hotel just south of Del Monte and Canyon Del Rey boulevards, so administrators are evaluating what to do next. They could request proposals again, or re-consider if a hotel is the ideal project for the 2.23-acre site.

"It's a constrained site. It's a small site for a hotel ... ," Anderson said. "Anything is possible at this point."

Luxury auto center

The meltdown of the car industry has forced a similar fate on a 26-acre parcel south of Lightfighter Drive. Years ago, Arizona businessman Richard Cartell saw the need for a second site in the city -- one with easy freeway access -- to accommodate luxury automobiles.

Cartell analyzed the site of the Seaside Auto Center and determined there was no room to expand, so he began analyzing other options. In October, Cartell and car dealership owner Peter Blackstock entered an exclusive negotiating agreement with the city to look at the feasibility of building a luxury auto center, a place where upscale vehicles could be on display.

The recession forced Cartell and Blackstock to let the agreement expire early this month. Depending on the state of the economy, they may be in a position to return with a proposal in 2010.

"Our best guess is, after the first of the year we would come in but we don't know if it's in January or at the end," said Cartell, who has been involved with the city in the redevelopment of the Auto Center. "It heavily (depends) on economic conditions."

City Center woes

Even before losing Starbucks, his most visible tenant, City Center developer Patrick Orosco had been hard at work trying to lure in more businesses.

He expects to announce another tenant within the next few weeks, although he has no tenants waiting in line. Still, signs of increased activity in other properties he leases throughout California give him hope, he said.

Meanwhile, retailer Fresh and Easy Neighborhood Market, which signed a lease to open a 14,000-square-foot store last July, has not made an appearance in Seaside. The 25-year lease is signed, the building has been designed, all the permits have been secured and store representatives have applied for a liquor license. Still, there are no signs of Fresh and Easy beginning construction.

"The entire development community is wondering what they're up to," Orosco said. "They've continued their expansion in Southern California, (because) they can be served by their existing distribution center. But their distribution center in northern California is not done or has been delayed ... all developers who signed leases are waiting for them."

City property

With the grim economic outlook, one observer said Seaside should rethink what properties it puts on the market.

"The market is very down in all commercial property, and I think the focus should be in Seaside, in its inner core and all the people who are here," Seaside property owner Nelson Vega said. "I understand progress, but to spend millions in a subdivision in an outlying area -- it's like kids who never had dessert before having dessert and not realizing they're gonna get sick."

But with a shrinking budget, city officials are looking at all options to ease their financial woes. For Councilman Dennis Alexander, selling or leasing city's properties is still necessary to return to previous levels of revenue.

"If that means we have to (sell) different parcels of land for one use or another use, we may have to do that," Alexander said.

Slow progress

While several projects have come to a standstill, there are others still plodding along.

City officials continue to negotiate a possible conference center with a 252-room hotel at Canyon Del Rey and Del Monte boulevards and a revised environmental impact report for the Projects at Main Gate is expected to be released later in the year.

And even though development of The Fairmont hotel at the Black Horse-Bayonet Golf Course is on hold due to lack of financing, the residential development portion of the site is moving along.

This lull, Assistant City Manager Anderson said, is giving city officials a chance to prepare for the next burst of activity. Those officials remain committed to these projects.

"The priorities are still there," Mayor Ralph Rubio said. "We're very positive about those projects. ... The economy is part of the equation, but once (there's recovery) we'll be in place to capitalize on those projects."

Claudia Melendez Salinas can be reached at 753-6755 or cmelendez@montereyherald.com.

Seaside major development projects 1. City Center Shopping Center: Struggling to lure in tenants 2. West Broadway Urban Village: Draft environmental impact report for the specific plan is available for public review. Project scheduled to be approved October. 3. Del Monte Boulevard hotel. No qualified bids were presented by deadline. 4. Seaside Auto Center Revitalization: Complete 5. The Seaside Resort (Fairmont Hotel): On hold due to lack of financing. Residential development is proceeding with preparations for the site. 6. Concourse Luxury Auto Center: The meltdown of the car industry, coupled with the bad economy, has put this project on the back burner. 7. The Projects at Main Gate: A draft environmental impact report is expected to be released later in the year, although no developer is connected with the project. 8. Surplus Planning Area II: 90 acres of vacant and "underutilized" land with no specific plan yet. 9. Central Coast Veterans Cemetery. The sale of two 30-acre parcels will be used to generate endowment for the cemetery. Deadline for proposals is Wednesday. 10. Seaside east: City officials exploring the possibility of building a trade center. Decision expected around November. ------

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To see more of the Monterey County Herald, or to subscribe to the newspaper, go to http://www.montereyherald.com.

Copyright (c) 2009, The Monterey County Herald, Calif.

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