WATSONVILLE—A group of neighbors is again fighting the construction of a hotel in the heart of downtown, this time claiming the City of Watsonville has for years worked with a company that is currently suspended by two state agencies.
AARAV Hospitality, LLC was penalized and suspended by the Secretary of State (SOS) office in November 2016 for not filling its bi-yearly State of Information (SI) document, and the following year it was also suspended by the state’s Franchise Tax Board, according to SOS officials.
But Kamalesh Patel, the owner of AARAV Hospitality, LLC, told this publication on Wednesday that his company was suspended because of a clerical mishap, and that he has filed paperwork to fix the issue. The suspension should be lifted in roughly 10 days, he said.
“I’ve already submitted the forms, but, unfortunately, these things take time,” he said.
Patel said he can legally continue to operate his business despite the suspension, a claim supported by SOS officials. A suspension, however, could lead to a business losing many of its powers, rights and privileges within California. SOS officials said a suspension should serve as a “red flag” in potential business deals.
City Manager Matt Huffaker said the City was made aware of the suspension roughly a week ago by a representative from the Watsonville Neighborhoods Association (WNA). He and Community Development Director Suzi Merriam told this publication on Thursday that the City has no authority to halt the permitting or entitlement process of a project, no matter the company’s standing at the state level. It can, however, make a decision of whether it will conduct business with a company when it applies for a business license.
“There is no action the City can take at this time,” Huffaker said.
City records show planning department staff working with the company on plans for a new hotel at 1 Western Drive, a project that has drawn the ire of nearby neighbors and WNA since it was first introduced in late 2015.
The dialogue between the city and that company continued through early 2018, including on a memorandum issued from Merriam that recommended the approval of a “minor modification” to the plans approved by City Council in 2016. Those changes, which were approved shortly after, included a different exterior design and the addition of four suites and three parking spaces.
The hotel was originally approved as a 75-room La Quinta Inn but changed to a Hilton Home2 Suites in 2018.
Other planning documents, however, show the City working with AKS Hospitality, LLC, another company under Patel’s name that is in compliance with the state.
In an email obtained by this publication, Peter M. Radin Jr., a lawyer representing WNA, said Merriam in an Oct. 29 phone call confirmed the hotel application was under AARAV Hospitality, LLC.
A yearly franchise disclosure document from Hilton also lists the company as the lead agency behind the hotel.
Patel confirmed on Wednesday that AARAV Hospitality, LLC is the lone company working with the City on the project, and said the inclusion of AKS Hospitality, LLC could have been a result of a simple oversight.
WNA is also calling foul on an extension granted to Patel from Assistant Community Development Director/Building Official Rob Allen. According to City documents, Allen met with Patel on Sept. 3 and OK’d a six-month extension. There are few details of this meeting, however, as the official City document shows a computer screenshot only stating that it indeed happened and the extension was granted.
WNA alleges the extension was granted after the approval had already expired.
Allen said he has the authority to grant an extension under the City’s building code, so long as a developer gives a valid reason for being a few days late.
“He’s having challenges finding a contractor,” Allen said. “There are a lot of projects going around the area at the moment.”
Patel said once his company is back in compliance he will hire a contractor. He is also awaiting an inspection from Pacific Gas and Electric Company to continue the project.
At Tuesday night’s Planning Commission meeting members of WNA peppered the commissioners and staff with questions on various topics of the proposed hotel, which they said has undergone enough changes since its 2016 approval to require a public hearing.
Merriam, however, said the planning division had the right to approve minor changes thanks to the municipal code, and that staff would provide City Council with an update on the project at a future meeting.
Santa Cruz County Supervisor Greg Caput spoke as a member of the public at Tuesday night’s meeting. He disagreed with Merriam and said the City could potentially find itself in a legal fight over the project because of the approved changes.
“You can’t bring up an old approval of a plan and say, ‘look, this old plan that expired is now OK and we’re going to give it to the Planning Commission and say it’s OK,’” Caput said. “It’s a completely different proposal.”
The original proposal was heavily criticized by neighborhood residents for its size and its possible impact on traffic and parking. It was delayed twice before the Planning Commission recommended its construction by a 4-3 vote, and the Council gave final approval via a 6-1 decision.
Jean Haduca, who lives down the street from the project, was a vocal opponent of the original proposal, and on Tuesday voiced her concerns to the Planning Commission of how the hotel would impact her one-way-in, one-way-out community. She said the neighborhood is not against the construction of a new hotel, but they would like a project that better fits the area.
She also said she was disappointed with the lack of communication between City staff and residents.
“The lack of transparency has been our biggest problem,” Haduca said. “We’re not getting the answers we’re looking for.”
Patel said the ongoing resistance to the project has been disheartening. The project would revitalize the half-acre lot currently occupied by National 9 Motel and bring in much-needed tax dollars for the City, he said.
“I truly believe that this is a good project for the community,” he said. “I wish people could see that.”
