Estimated $334K in tax revenue could be even greater with visitor spending taken into account, some suggest

At a special meeting of the City Council to discuss a fiscal report on the proposed hotel, some members said in-town spending by hotel guests and the ?domino effect? of restoring a historic building could easily net the city more than the $334,000 a year estimated in the study.

?This is a blight in the community right now, but it?s a blight that presents an opportunity to hit a home run,? Councilmember David Glass said of the silk mill building, a two-story brick factory built in 1892.

A Fiscal and Economic Impact Assessment issued for the project this summer found that Petaluma could absorb the additional 95 hotel rooms at the silk mill, noting that the city hasn?t added any lodging since the Sheraton was completed in 2002.

?The county and Petaluma?s lodging markets have shown strength,? said Simon Alejandrino of Bay Area Economics, the consulting firm that prepared the FEIA.

Even in the current recession, local hotels have performed ?reasonably well,? he told the council.

He acknowledged concerns by some council members that the FEIA doesn?t evaluate spending on shopping, restaurants and entertainment by prospective hotel guests that could bring sales tax in Petaluma. Most of the $334,000 estimated in the report would come from transient occupancy taxes, or bed taxes, collected on the rental of hotel rooms.

Visitor spending at existing restaurants and businesses ?is certainly a fiscal benefit associated with having a hotel in your town,? Alejandrino said.

The silk mill FEIA is the third such report prepared for large projects under a city policy adopted last year, and some council members have said the reports aren?t detailing all the information they are seeking about those projects.

Glass said he would have liked to see an estimate of how restoring the silk mill could add to a revival of the area, saying the city?s investment in restoring the railroad depot did the same thing.

?That is a positive impact, but I don?t see it addressed here,? he said.

Vice Mayor Teresa Barrett also said that the report should have evaluated whether a portion of the city?s limited water supply is best allocated to a hotel or to other types of development.

?What is the benefit of using the water that would be used by this project in terms of what it brings to Petaluma?? Barrett said. ?You?re asking us to make a decision about using the resources of our city for people who don?t live here ? they?re coming to visit us. We have to make sure the benefit is there.?

The silk mill proposal by Bay Area hotelier B.B. Patel calls for 70 rooms inside the silk mill and another 25 in a new building on the property, built as a second phase.

The ivy-covered factory, which is on the National Register of Historic Places, would undergo minimal changes to preserve its historic status, project backers said.

?Every design decision we?ve made on this has been made with the intent of preserving as much of the building as possible,? architect Thom Jess said.

He said the hotel would meet green-building goals and utilize water-conserving plants and appliances to reduce its water use.

?We have great anticipation of what this project can do,? Jess said.

Hearings on the project itself have not been scheduled, but could take place before the end of the year, a city planner said. Jess said if the project is approved at that time, it could open in late 2010.

?The ownership is eager to get this thing going,? he said.

(Contact Corey Young at corey.young@arguscourier.com)