March 15, 2011--SANTA CRUZ -- Investors are seeking city approval for a 111-room Hyatt Place Hotel at the site of the Unity Temple at 407 Broadway, a few doors away from Ocean Street, the gateway to the beach.

"We don't know when and if we'll move forward," said Tejal Sood, representing the investors, California Coastal Resorts of Los Gatos. "So many things need to happen. We hope the economy will get better."

Sood said the investors are based in Santa Cruz but are not the same group that built the Hampton Inn on Ocean Street, for which she is the property director.

The plans call for demolition of the church buildings and construction of a four-story hotel, 42 feet high, with a 119-space underground garage. Other features would include a pool, bar and dining area, an exercise room and 1,650 square feet of meeting space.

The hotel would sit between a Victorian-style home and the three-story Pacific Terrace condos, built in 1982.

It would be first in the county with the Hyatt name, bearing a brand launched four years ago for travelers with a 24/7 lifestyle. Sood described it as "upper to mid-scale lodging."

The architect is Peter Bagnall of Santa Cruz.

The project requires design, planned development and administrative use permits. The environmental analysis prepared by city planning staff found the hotel could potentially have a significant impact on soils, hydrology, air quality and noise, but that those concerns could be mitigated.

Comments on the report, known as a mitigated negative declaration, must be submitted in writing by April 4 to senior planner Don Lauritson. Tentative public hearing dates are April 7 before the Planning Commission and May 10 before the City Council.

The investors bought the church, which sits on nearly an acre, for $1.85 million two years ago when the congregation was at risk of foreclosure.

Members planned to expand but encountered problems with soils and financing. Now they rent with a lease renewable by the year.

"We are open for business," said Mike Ellison, Unity Temple's executive director.

Ellison said the group is developing a strategic plan and looking at other spaces but doesn't see urgency to move.

"It could be a couple of years," he said, noting the review process and financing challenges.

"While this isn't a top-of-the-line Hyatt, it is an excellent product," said Bill Tysseling of the Santa Cruz Chamber of Commerce. "There is a good deal of evidence that we have unmet market opportunity for upscale rooms."

Several city-approved lodging projects have stalled, including a 155-room Courtyard Marriott at 313-321-325 Riverside Ave., an 86-room Fairfield Inn at 2956 Mission St., and the 82-room Indigo planned for 555 Pacific Ave.

But renovation at the Beach Street Inn and Suites is due for completion April 1. Co-owner Scott Pinheiro said 10 ocean-view rooms at the motel formerly known as Terrace Court were gutted and redesigned. Instead of a king bed with a kitchen, they will have two queen beds and a larger bathroom.

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