San Jose approves permits for boutique hotel near Santana Row

While the economy has slowed Silicon Valley hospitality establishment projects, one developer is bucking the trend and moving forward with plans for a boutique hotel near Santana Row and Valley Fair.

San Jose signed off Wednesday on the special use permits for KT Urban’s seven-story, 85-foot tall, 176-room project named the Olin Hotel, replacing a gas station at 425 S. Winchester Blvd., but not without the neighboring homeowners expressing their longstanding gripes against the proposal.

“There was no community outreach on this project and it was literally rammed down our throats,” said resident Dave Duquette.

KT Urban initially purchased the property four years ago with plans to build a 65-foot-tall, mixed-use development combining housing, retail and office space.

While San Jose approved the initial vision, the COVID-19 pandemic changed market conditions through higher interest rates and material costs, forcing developer Mark Tersini to pivot from those plans and find another use that was financially feasible.

Tersini said that for the project to generate a return on investment, the proposed hotel needed to be 20 feet higher than the mixed-use development plans, which required the approval of the City Council. With the project adjacent to a residential neighborhood, KT Urban redesigned the building to create a larger setback from homes.

Throughout the planning process, however, neighbors raised concerns about traffic, their privacy and changes to the height limits established in the 2017 urban village plan.

During a Planning Commission meeting last year, Winchester Orchard Neighborhood Association President Daphna Woolfe said that allowing the project would contradict the city’s long-term planning mission, which called for integrating new developments without compromising existing neighborhoods.

“To simply ignore the work of the planning department and these task forces sends a clear message to the citizenry: don’t volunteer because your work and voices will not be honored,” Woolfe said.

Although it had no sway over the final decision, the Planning Commission was torn last year about the changes to the project and could not come to a consensus on whether to offer a recommendation. The council ultimately approved modifications to the height allowances but still required the city’s planning director to decide whether to issue the permits.

In planning documents filed with the city, KT Urban estimated that the project would take 21 months to complete. The city has also agreed to allow extended construction hours on Saturday from 7 a.m. – 7 p.m.

Tersini said he asked for Saturday construction approval to finish the project as quickly as possible but added that the bulk of the work would be for the interior. He also agreed to community members’ requests to provide notice of when the developer intends to pour concrete.

While city staff members tried to address a few of the concerns, they said some of the issues voiced could not be factored into the project’s permit evaluation.

“There are certain purviews of what staff can and cannot do,” said John Tu, the hearing officer who approved the permits.

Despite plans for the Olin Hotel moving forward, market conditions have hampered the hospitality industry, forcing the sale of two of San Jose’s most well-known hotels and delays to several already approved Silicon Valley projects.

Last year, the City of Santa Clara Planning Commission granted Mogul Capital LLC a two-year extension to build its six-story, 396-room hotel just south of the Norman Y. Mineta San Jose International Airport.

Two upscale Cupertino projects, including Kimco Realty Corp.’s five-story, 185-room boutique hotel across from Apple Park, also received three-year extensions.

In Downtown, the Signia by Hilton San Jose sold its 264-room South Tower last year to Throckmorton Partners as part of a student housing partnership with San Jose State University that opened earlier this month. The university said last year that it intends to purchase the tower at the end of its lease agreement.

The Mercury News also reported last week that an offer to purchase the historic Hotel De Anza is on the table well below its pre-pandemic valuation.