Time For Timeshare?
Yay- and nay-sayers debate the impact of Highlands Inn conversion plan.
Thursday, August 20, 1998
Hotel or timeshare? That''s the choice that will come before the board of supervisors later this fall, when supervisors consider the final Environmental Impact Report (EIR) on the proposed conversion of the Highlands Inn''s 143 hotel rooms to timeshare units.
Last Dec. 2, the board ordered a focused EIR on the project to investigate the impact on local traffic, water use and sewage systems if the hotel went timeshare.
The public may submit written comments on the EIR (available from county planners or local libraries) until Aug. 31. County supervisors will consider the final EIR in late September or early October, says associate county planner Wanda Hickman. "The supervisors will make a final decision before the end of the year," she predicts.
The major thing standing in the way of the Coastal Hotel Group, which purchased the Highlands Inn and put forward the conversion plan, is the Committee to Save the Highlands Inn, a group of 12-15 Highlands residents who are determined to keep timeshares out of their neighborhood. The committee has signatures from more than 200 other Highlands residents, virtually the entire neighborhood, on its petition to stop the project, according to committee member Bernard Egerter.
The Highlands Inn project may be the last timeshare conversion local leaders will have to consider. Carmel, Pacific Grove and Monterey all passed ordinances in the early ''80s banning timeshares, citing loss of TOT (transient occupancy tax levied on hotel rooms) revenue and negative impact on their cities'' "quality of life" as prime factors in their decisions.
Last Dec. 9, county supervisors declared a county-wide moratorium on new timeshare conversion proposals, good through the end of this year, to give staffers time to evaluate their real impact on county coffers and the environment. Supervisors have the power to make that moratorium permanent, Hickman says. (Supervisors are not commenting on the project or the EIR until they meet formally to evaluate it.)
But the Highlands Inn proposal snuck in just before the moratorium was declared last year. It must now be judged on its merits, irrespective of any new laws or prohibitions.
Opponents of the conversion plan cite environmental and financial concerns if the Highlands Inn goes timeshare.
The proposed conversion will, they say, bring increased numbers of people to the Highlands, which cannot help but place greater pressure on the area''s already overtaxed roads, water supply and sewage system.
It will also hurt the county financially, they claim, to the tune of more than $1 million per year in lost TOT after the conversion process is completed in five years. That means less money going into the county general fund, and less disbursed to groups such as the Cultural Commission of Monterey County, the Monterey County Travel and Tourism Alliance (MCTTA), the Monterey Film Commission and the Economic Development Corporation, which all depend on TOT for their operating budgets.
The Highlands Inn, points to the draft EIR, which predicts minimal or no adverse environmental impact if the proposal goes through. "We are pleased the EIR concludes what we have contended all along: that water, sewage and traffic will decrease under the conversion," says Highlands Inn owner representative Mark Solit.
Egerter isn''t surprised by the EIR''s conclusions. "Not a single person who objected to the project was interviewed," he says. "The EIR ignored all our objections."
Even using the applicant''s own figures--which project an increase from the Inn''s current 80 percent occupancy rate, with an average of 2.2 persons per unit, to a 90 percent occupancy rate and three persons per unit when the conversion to timeshare is complete-- Egerter says there will be a 53 percent increase in the number of people occupying the facility on any given day.
Using figures supplied by other travel organizations, such as the Alliance for Timeshare Excellence, an alliance of timeshare organizations considered an authoritative statistical source, Egerter comes up with a projected 94 percent increase in the Inn''s daily occupancy rate when timeshare conversion is complete.
"To say you''re going to save water and put less effluent into the sewage system, when you''re going to have 53 percent to 90 percent more people there, means you have to suspend common sense," he says.
When it comes to projected financial loss to the county general fund, the numbers are more slippery. In a memo last Nov. 18, county treasurer Lou Solton predicted that the county would lose about $1.3 million over five years if the timeshare conversion went through--that''s his estimate of the loss of TOT revenue, even when that loss is offset by an expected increase in property tax revenue (That increase would come when the units are converted to timeshare properties and owners pay their required property taxes to the county.)
Solton says those figures have to be readjusted now, in the wake of El Ni¤o. Hotel occupancy rates were down this spring, meaning that the county collected $400,000 less in TOT than it expected for April, May and June. Also, construction of 133 new hotel units in the unincorporated areas, which Solton figured into his November estimation, have been delayed because of rains.
That just means, Solton says, that his original estimates of revenue loss to the county will start accumulating next year, rather than this year. If the conversion plan is approved, he says, the county will lose between $60,000-$80,000 in TOT from the Highlands Inn this fiscal year, but will gain about $30,000 in new property taxes. "The impact will be minimal this year," he says. "The TOT loss over five years will be more dramatic," probably even exceeding the estimate he made last November.
But, Solton insists, the county won''t really be losing money. "Other factors will be found to offset it," he says. "With inflation, new rooms, and the fact that a lot of the TOT revenue that comes in goes back to the MCTTA for promotion of tourism, in the big scheme of things, it won''t make a whole lot of difference. We''re still going to make money, maybe not as fast, or at the high rate we''ve been used to."
Egerter counters Solton''s optimism. "What Lou has done is say that at the end of the five-year conversion period, we lose $1.3 million," he points out. "But the effect is cumulative. From that point on, we''d lose $1.3 million each year. And the [Coastal Hotel Group] stands to make $50 -$70 million in overall profit. "
The Committee to Save the Highlands Inn is prepared to fight the conversion plan all the way. "[The applicants are] assuming they''ve won the fight," Egerter says. "But if the supervisors approve the EIR, which we think is a total whitewash, it won''t be over until it goes to the Coastal Commission." cw