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REDEVELOPMENT AGENCY OF THE CITY OF SAN LEANDRO STAFF REPORT APPROVED AND FORWARDED TO REDEVELOPMENT AGENCY DATE: November 20, 2006 TO: John Jermanis, Executive Director FROM: Luke Sims, Business Development Manager~ BY: Cynthia Battenber~sistant to the City Manager SUBJECT: RESOLUTION APPROVING AMENDMENT NO. I TO OWNER PARTICIPATION AGREEMENT WITH STAN BOERSMA AND AMIN- CONCORD LLC FOR 524-526 LEWELLING BOULEVARD, ASSESSOR'S PARCEL NUMBER 412-0011-001-07 SUMMARY AND RECOMMENDATION The Redevelopment Agency entered into an Owner Participation Agreement (OP A) in 2000 for the development of a hotel and self-storage facility at 524 and 526 Lewelling Boulevard. The OP A included a provision that all occupants be considered transient. This provision limited the hotel's ability to compete for long-term airline contracts. Following a temporary pilot program in which the hotel was allowed the Transient Occupancy Tax (TOT) exemption for long-term occupancy, staff is recommending an amendment to the OP A to eliminate the requirement that all occupants are considered transient and to waive future development incentives payments in lieu of the foregone TOT revenue owed to the City. Staff recommends Agency adoption of the Resolution Approving Amendment No. I to Redevelopment Agency of the City of San Leandro Owner Participation Agreement for 524-526 Lewelling Boulevard. BACKGROUND In July 2000, the Redevelopment Agency entered into an OPA with Stanley Boersma and Amin- Concord LLC to develop a hotel and self-storage facility at 524 and 526 Lewelling Boulevard. The Agency agreed to provide development incentives in an amount not to exceed $210,000 to support the construction and operation of high quality development and employment in an undeveloped area. The end result of the OP A is the Hilton Garden Inn and Allsafe Self-Storage facility which included restoration of the Captain Roberts house. In an effort to maintain the quality of the hotel, two key requirements were placed on the developer in the OPA: (1) that the property maintain an Auto Club three diamond rating; and (2) that all occupants of the hotel be considered "transient" and therefore pay the City's 10% TOT.