Jan. 15, 2010--WATSONVILLE -- A labor group has dropped its objections to a proposed five-story Holiday Inn near Highway 1.

The Coalition for Working Families of Monterey and Santa Cruz counties had appealed to the City Council to overturn an Oct. 6 Planning Commission approval of the 106-room hotel proposed for Technology Drive.

The group, sponsored by Unite HERE! Local 483, the hospitality workers union, said more study was needed of the potential impact on traffic, air quality and views. But worker pay and benefits were at least as central to the group's concerns.

Thursday, Unite HERE projects coordinator Mark Weller said the group dropped the appeal after city planners said it could air concerns at a city economic development strategy session planned for the spring, and that the City Council would consider an ordinance requiring an economic impact study on future projects.

"I am pleased all sides were able to reach a resolution so that this project could move forward," said Mayor Luis Alejo. "The Holiday Inn project is important for our city to bring in needed jobs and increase hotel occupancy tax revenue."

At the same time, the city needs to focus on attracting well-paying jobs with benefits, Alejo said.

Representatives of the developer, San Jose-based Lotus Management Inc., have said the economics of hotel management would preclude the company from offering health benefits.

The proposed Holiday Inn would be the city's first full-service

hotel, and would include a restaurant, an indoor pool and a small conference facility. The developer expects to hire 30 or more people to run it.

It's unclear when the hotel would be built now that the developer has cleared permit hurdles.

Lotus has won approval for two other projects in Santa Cruz, and is searching for financing and completing design work for its priority, a Courtyard Marriott in Beach Flats.

Financing also needs to be secured for the Holiday Inn and a Fairfield Inn, which is proposed for Santa Cruz's Westside.

Lotus previously said the Holiday Inn franchise agreement expires in 2011 unless ground is broken, but the contract could be extended up to two years due to economic conditions.

"At least the appeal has been revoked so things are working in our favor right now," said Lotus regional manager Janki Patel.

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