Monterey could see its first major development in more than 40 years after a passed economic incentive agreement

MONTEREY, Calif. (KION) - On Tuesday, in a 5 to nothing vote, the Monterey City Council passed an economic incentive agreement with Lakshmi Hotel Partners. The proposal will create a new 42-room hotel on North Fremont Street. 

The project site hasn't seen a new major development in over 40 years; the city hopes this new hotel will be a kick start to the street's revitalization. 

"The idea is to infuse mixed-use development and encourage redevelopment of our hotels along the street," said Kimberly Cole, Community Development Director for Monterey.

In the North Fremont Business District, the current location consists of an already closed restaurant (Caruso's Corner Family Restaurant) and motel (Casa Verde Inn).

"The site's fairly derelict right now. And the proposal is to demolish all of the buildings on the site and construct the new hotel on the property," added Cole.

The new proposed hotel would help revive the area, creating several new jobs and generating more than $18 million in tax revenue for the city over 40 years. 

"An opportunity to actually raise additional money for library services, police services, fire services, recreation services that really don't raise enough money to support themselves. So we have to look to a hotel tax, which is our primary general fund contributor," continued Cole.  

One public member who voiced concern said that revenue from visitors coming to the peninsula is not guaranteed, and hospitality jobs don't pay enough. "These are low-income wages for most workers in the hospitality industry. There is no protection and no housing dedicated for hospitality workers, and during the off season, they are often homeless. They cannot afford the rents in this area that are rising rapidly." 

The purpose of Tuesday night's city council meeting was to look at approving an economic development incentive for the site. That proposed incentive wouldn't kick in until the hotel is constructed and operational. 

"The idea of the incentive is that in year one after the city had received a $125,000 worth of TOT, which is the hotel tax, we would then any money above that we would remit back to the applicant $100,000 in year one and $75,000 for a year or two through seven," Cole.

The agreement amount would not exceed 550,000 or 2% of the total project, and the city wouldn't be writing a check in this amount to make this project happen because this is future credit towards a future hotel. Still, those who call Monterey home say that money could go to other needs.  

"What about affordable housing that we might have? That would be apartments, just like the apartments right next door. There are other things you can do with this property," mentioned a Monterey resident who called in during Tuesday's city council meeting.

An additional public speaker added, "Money is money. Whether it's an incentive, whether hand is a deduction, or whether it's paid out directly in a check, it's still money, and it could substantially help with terrible issues locally with affordable housing and with renters and their situation."

But, there are different objectives for different areas. The North Fremont Street site is privately owned, and the city is working on affordable housing at locations that are city-owned. 

"This is property is located in the visitor accommodation zone. It's not possible to build anything other than a visitor accommodation without a ballot initiative. So it's not it's an alternative discussion about what some alternate use might be of the property would, of course, isn't really relevant to a property that's designated in the visitor accommodation zone in the city of Monterey," said a Representative with Lakshmi Hotel Partners, during Tuesday's meeting.

The next step for this proposed project is to prepare an environmental impact report, get a third party's review, and then recommend the Planning Commission and City Council on the project.