Proposed BART Hotel Lacks City’s Support

The City of Millbrae would forfeit millions of tax dollars if a hotel project that the BART board approved three weeks ago comes to fruition.

BART board members voted 6-2 in favor of the hotel, even though the development is unfeasible unless its exempted from paying Millbrae any transit occupancy tax for 10 years, according to a study commissioned by BART and the City of Millbrae. TOT is a 12 percent tax on each room’s rate, that currently all Millbrae hotels and motels pay to the city.

Over the span of 10 years, Millbrae would forgo $8 million in TOT to the hotel owner, according to the study.

Although BART approved the project, Millbrae city council will need to authorize it before construction begins. And, it’s unlikely that any hotel will be built at all.

“City council would not support waiving TOT,” said Mayor Dan Quigg. “And, we don’t want to create more competition for our other hotels.” 

When BART presented the hotel plan to city council in , all council members questioned the need for another hotel, especially without any clear revenue stream for the city.

“There’s already an oversupply of rooms,” said Millwood Inn & Suites owner Vijay Patel. With an occupancy rate of about 60 percent in winter and 80 percent in summer, he estimates that room rates would drop significantly if another hotel came to Millbrae. 

“I don’t see any reason why the city should give them any concessions,” he said. “If they’re going to give them a break, they should give all of us a break.”

On the other hand, Travelodge owner Barry Ongerth is not entirely opposed to another hotel, as long as the city collects TOT and developers build a four or five star hotel that is not in direct competition with most other hotels in the city, which are three stars.

However, he remains doubtful. “If the economy got bad, in order for the four star hotel to stay in business, they would have to compete in our territory.” 

The city also stands to lose more money, as the new hotel would presumably attract patrons from other Millbrae hotels that do pay TOT.

Both Quigg and Vice Mayor Marge Colapietro said they prefer a mixed-use development that incorporates retail and office space. But, they’re open to other ideas as well.

“If the city wants to attract young people, with all these condos its developed, it needs to create something for people to do,” Patel said. 

Patel lamented the fact that there was no longer a movie theatre or a bowling alley. He thinks an entertainment venue near BART would also attract people from other cities.

“We need a development that’s going to help our city,” Colapietro said. “I’d like to see something that’s going to get people off 101 and into our community.”

So, why did the BART board approve a project that’s not beneficial to Millbrae, and without the city’s support?

The San Francisco Chronicle and the Bay Citizen scrutinized the deal because of the hotel developer’s friendship and financial contribution to BART Director James Fang.

BART may also lose money from a hotel development. The hotel project would need the land for free, while an office developer would pay BART between $300,000 and $700,000 every year to lease the land, according to the Bay Citizen. The board, faced with two other projects, chose the hotel over an office development.

The city has not scheduled a date to review the proposed hotel plan, but city staff is currently in discussion with BART on the future of the development site.

“If BART is smart, they’ll run it by us first. Either we bless it, or we curse it,” Quigg said.