|By Joshua Melvin, San Mateo County Times,
Calif.McClatchy-Tribune Regional News
April 16, 2011--Venture capital mogul Tim Draper has shown up at parties in a Batman costume and sent his DNA into outer space. Now, he owns a landmark Peninsula hotel that has sat virtually empty for the better part of a decade.
For someone else, that might seem crazy. For the head of Menlo Park VC shop Draper Fisher Jurvetson, it's business as usual -- and, possibly, spotting an opportunity others passed over.
San Mateo leaders are happy because Draper's purchase of the Benjamin Franklin Hotel could be a massive shot in the arm for the budget-troubled city.
The Ben Franklin on Third Avenue has been through a string of owners and concepts in the past decade. All that time, its nine floors and 99 rooms in the heart of downtown have been waiting for some kind of savior.
"It's great. It's about time," San Mateo Mayor Jack Matthews said Friday. "It's been sitting there vacant."
The last regular residents of the building, apart from the restaurant Astaria on the building's ground floor, were United Airlines staff. The air carrier housed flight attendants and pilots on layover stays there, but left in 2003 after filing for bankruptcy.
The exact terms of the deal, which became official Wednesday, weren't available Friday, but Draper's real estate broker, Kevin Deleahanty, said the price was less than $6 million. A search of San Mateo County property records didn't reveal the exact figure, which Draper or seller UBS bank may have asked to
be kept confidential.
The question nobody could answer is what the head of a venture capital firm that backed Hotmail and Skype is planning to do with the vintage-1926 hotel that was once a center for Peninsula society but has since fallen on hard times. Is he going to run it himself? Use it as office space? Convert it to condos, as a previous owner proposed?
Making it shine again
Draper didn't respond to a request for an interview, but he confirmed the sale late Thursday in an email. He said he will reveal his plan for the property at a later date.
"We bought the building. We are calling the project 'The Heart of San Mateo,' " Draper said. "We look forward to making the building shine again."
Draper added that he and his wife, who grew up in San Mateo, purchased the property together in a Dutch auction, in which the price of an item for sale declines until a buyer jumps in with an offer. "Kind of fun," he said.
Draper is already a backer of a luxury resort in Tanzania called Lupita Island, which has just 13 villas and welcomes no more than 28 visitors at a time. He could be looking to expand his spot in the world of high-dollar hospitality, one observer said.
Jamis MacNiven, owner of venture capital hangout Buck's of Woodside, said hotels are a logical step for Draper.
"It's so like him to go and buy something that nobody else wants and make it gold," he said. "He's very much the black sheep of the venture capital world, in the best way."
Local leaders were less concerned about the details of his plan Friday as they soaked in the idea that a well-known business leader with deep pockets had decided to snatch up the hotel. The deal comes at a time when San Mateo, similar to other cities around the Bay Area, is looking for ways to cover its bills.
Robert Edwards, executive director of the Downtown San Mateo Association, said a redone Ben Franklin running at 70 percent occupancy could bring in $500,000 in hotel taxes a year for the city.
"It's the only hotel downtown," he said. "They have no competition."
The trouble is the hotel has no parking garage or lot of its own, which leaves it to rely on paid spaces around it. That inconvenience helped undo previous efforts.
The Lembi Group, which owned the hotel until 2009, was undertaking a major renovation, including a plan to install flat-screen televisions in every room, when the real estate market collapsed. Lembi ended up turning the property over to UBS when it couldn't pay its bills.
Matthews said there's no easy fix to the parking problem. The city doesn't have money to build new spaces, he said, but officials will do what they can to make the new project work -- whatever it winds up being.
"We're glad somebody has actually bought the building," Matthews said. "They can maybe tell us what they need."
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Copyright (c) 2011, San Mateo County Times, Calif.
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