The following comment letter has been submitted to the Corte Madera Planning Commission in anticipation of their hearing on Tuesday, June 13, 2017 on the new proposal for the Corte Madera Inn Rebuild project.
Dear Corte Madera Planning Commissioners:
The Town of Corte Madera is continuing to process the Corte Madera rebuild application as if it exists in a vacuum where the decision criteria are solely dependent upon the representations made by the applicant and the opinions of staff. However, the current application still fails to address a number of requirements under CEQA (impacts assessment) and under the 401 permitting guidelines (on and off-site alternatives, acceptable off-site mitigation, etc.), all of which have been enumerated in exhaustive detail in our comment letters, the comment letters of independent experts and RWQCB over the past two years (incorporated herein by reference).
I strongly urge you to research these requirements carefully and to review again the commentary by CVP, RWQCB and others, in detail. These outstanding legal issues are significant and impinge on your prerogative on the matters before you. I would respectfully ask that you not ignore them.
In addition, the applicant continues to argue his case on the basis of unsubstantiated financial claims and to proffer solutions that are both illogical and unsupported by facts. It is of great concern to us that the Planning Commission has so quickly accepted self-serving arguments by the applicant, as facts.
I ask you to please consider the following:
Applicant Claim #1: Wetlands replacement
That a viable alternative to the existing wetlands habitat can be created by replacing the existing pond in its entirety, with a new pond that is 1/3 its size and positioned right up against Highway 101, with minimal trees and buffer zones.
The “Disneyland-esque” version of a pond proposed by the applicant is without evidence of viability or efficacy. Biologically and ecologically, scale is a significant factor in assessing habitat viability and ecosystem capability to support flora and wildlife. Further, there is no evidence that this new “theme park” version of a wetland pond, which is more akin to large decorative fountain, will attract wildlife populations, or that these species will in fact, ever return after the existing pond is completely destroyed to make way for its replacement.
The information provided by Zentner and Zentner, with all its detailed planting lists and pump specifications, in no way addresses the requirements for assessment and mitigation of significant environmental impacts, under CEQA.
Further, there is no evidence or analysis presented, regarding how the proposal for a new mini-pond will impact a variety of hydrological concerns, including but not limited to pollutants in runoff and flooding control.
Applicant Claim #2: Luxury hotel desirable
At the last hearing, the applicant stated that they chose to (“must”) work with Marriott Corporation and pursue the dual-branded Residence Inn – Springhill Suites development, because they need to go after the “luxury market” for hotel space in Marin. The applicant has also claimed that aligning with a known “chain” brand will support profitability and therefore, financial feasibility.
This explanation makes no sense. Residence Inn – Springhill Suites is not Marriott’s luxury product brand. It is their mid-range product that competes in locations next to airports and shopping malls all across the country.
However, in Marin, there is clear evidence that stand-alone, uniquely designed and branded, hotels are the more profitable choice for luxury lodging, and that hotels in that category command the highest room rates, by a wide margin. In addition, local STR reports on actual hotel revenues (not projections by a hotel marketing consultant) show that chain hotels in Marin consistently underperform and are less profitable than unique, boutique hotels in every metric category.
The applicant stated that his projected room rates for his preferred proposal were based on the CBRE report, which primarily relied on ADRs in Marin County (ADR average of $175.98 for 2016). This data has no bearing on actual rental rate potential in this location with its unique amenities. Again, it obscures the clear facts about hotel rates in Marin, which is that uniquely designed, non-chain type hotels command significantly higher published room rates and therefore actual rental rates.
Consider the following published room rates of uniquely designed, local Marin hotels, which was previously noted in “Exhibit 5 – Best Western Corte Madera Inn Redevelopment: Market Study & Financial Feasibility Evaluation - Comment Letter by Community Venture Partners, Inc. to Army Corps Public Notice 2000-255330N, dated 06-16-16,” and which was submitted with our comment letter to the Town of Corte Madera on January 3, 2017, and which is now more than a year old (rates have gone up).
In Marin, the highest average per night, room rates are all attributed to uniquely branded, boutique luxury hotels.
Inn Above the Tides $500
Cavallo Point Lodge $492
Casa Madrona Hotel $279
Mill Valley Inn $269
Lodge at Tiburon $269
Waters Edge $299
The Gables Inn $259
Hotel Sausalito $245
These facts defeat the applicant’s contention that he must build generic, dual-branded, mid-market Marriott hotels on the site, to maximize profit.
Applicant Claim #2: Financial Feasibility based on property value
At the last hearing, the applicant said they arrived at their property value by “asking a couple brokers,” but did not name them or provide any written proof of that valuation.
The only way to value income property and businesses is by obtaining a certified appraisal from a licensed real estate appraiser, based on comparable sales and bona fide revenues (STR reports). No such document has been submitted by the applicant.
Applicant Claim #3: Financial Feasibility Analysis
The applicant continues to submit and the Town of Corte Madera continues to accept without question, novel, self-serving documentation, which the applicant and his consultants have label “financial feasibility” analysis.
As we have previously and exhaustively commented, the applicant’s analysis is not an actual financial feasibility in terms of how the investment community would evaluate this project. CBRE’s so-called “financial feasibility” study is in fact a “market” study. Its reliance on ADR figures generalizes the data to the point of being meaningless.
Again, industry standards and methodologies for financial feasibility for a real estate development investment were described in detail in “Exhibit 5 – Best Western Corte Madera Inn Redevelopment: Market Study & Financial Feasibility Evaluation - Comment Letter by Community Venture Partners, Inc. to Army Corps Public Notice 2000-255330N, dated 06-16-16,” which was submitted with our comment letter to the Town of Corte Madera on January 3, 2017.
How is financial feasibility actually determined?
For reference and to help explain, I’ve attached an example of a financial feasibility for a project that CVP is currently undertaking. Please see:
The “Example-Project Financial Feasibility Analysis” begins at the top of the page with “Annual Revenues Net Operating Expenses.” The analysis that follows demonstrates some of the considerations that are typically involved in any normal investment pro forma. Note that rough estimates of rates of return shown (“Investor Cash on Cash Return - approx.. 10%, Depreciation Adjusted Return on Cash, Return on Risk Capital, and Estimated Internal Rate of Return) vary significantly. It is in fact, the final figure, Internal Rate of Return (based on discounted cash flow), which is truly important.
And, as you can see, the IRR for this example project (25% return) is 2 ½ times the simple cash on cash annual return. Similar methodologies applied to an analysis for a new hotel at the Corte Madera Inn site would produce much more favorable, potential operating profitability projections than the applicant has shown.
As I noted in our last comment letter, you have before you a great deal of complex documentation, research, commentary and other information, regarding the proposed Corte Madera Rebuild. However, the question you need to resolve is relatively simple:
Has the applicant provided sufficient and accurate evidence that their proposal and mitigation measures are legally adequate and that no other practicable, less environmentally destructive alternatives exist that are financially feasible?
The answer to that question remains “no,” because that evidence does not exist.
Bob Silvestri - President
Cc: Adam Wolff, Corte Madera Town Council