2017-10-19 / Front Page

84-Room Hotel on Waterfront Approved

By James Merolla

Despite one board member vehemently scoffing at the proponent’s traffic study while calling the intersection a “traffic nightmare,” the Newport Zoning Board of Appeals voted 4-1 to approve a new, three-story, 48,000-square-foot building on America’s Cup Avenue to be constructed over the next two years.

In a packed chamber at City Hall, the board’s approval opens the way for an 84-room “boutique” hotel to be constructed on the site of the former Newport Yachting Center. The decision has been delayed several times. Scott’s Wharf LLC, purchased the property from the Newport Harbor Corp. three years ago.

The mixed-use project was approved with special variances and some relatively minor changes that will only alter the original proposal slightly. It will not change the overall size of the building, its hotel, the proposed 166 parking spaces, a 5,500-square-foot restaurant, 3,000 square feet of retail space and the 2,485 square feet of office space. The expanded used of the marina and commercial parking lot will also remain the same, while the skating rink will be moved closer to The Smokehouse Restaurant.

The Peregrine Group acquired the property in December 2014.

Friends of the Waterfront, a non-profit citizen group that has long advocated for the preservation and enhancement of public access to Newport's waterfront, went on record as being opposed to the project and objecting to the license agreement as the means to preserve access.

Board member Robert Buzard read a long list of objections before casting the lone dissenting vote, but was primarily concerned about traffic patterns. Buzard was incredulous when “experts,” representing the Peregrine Group, the owners of the property, stated that the new project would have minimal effect on traffic, after citing only six hours of traffic patterns observed over two separate, cold foggy June days on off-peak driving hours.

“I spend a great deal of time there. That intersection is a nightmare,” said Buzard. He questioned whether the final plan was in harmony with the surrounding area, along with the variances and the special use permit to make the lot and rooms conform.

Buzard asked whether the owners might consider just 58 rooms while charging slightly more to book each room to make up for lost revenue, or a fewer number of rooms rather than the 84 the owners said they would need to make the project return what they called the narrowest of profits.

“I am voting against this,” said Buzard. “We have only one chance to get it right.”

Board member Christopher Kirwin voted in favor, with certain conditions: that the project be “substantially completed within two years of the date of the decision,” with greater public access to the walkway on the west side of the site (something denied the public now), and that the future leases, agreements and/or licenses regarding public access be subject to ongoing city approval “perpetually.”

Chairwoman Rebecca McSweeney said she rued the day the property was sold, ending the entertainment that filled the former yachting center. She said the new project appeased those in the neighborhood who wanted something

“quieter,” that brought in fewer people.

McSweeney added the condition that the public have waterway access from June 1 to Oct. 15, 8 a.m. to 5 p.m., dawn to dusk. In favoring it, she called the property “unique,” and said that the plan was compatible with the surrounding areas.

“[The owners showed] a concern for the safety and welfare of those people entering the property,” she said. “In keeping with the area, and it will have a positive influence on the area, I believe this is a responsible project.”

She said it was reasonable that the owners, in building 84 rooms, would want a variance to make each room 230 square feet, rather than 300. Although McSweeney said she is not a fan of smaller rooms, she did not want a larger building. “From what I hear, it’s a very reasonable return on investment,” said McSweeney of weeks of testimony that insisted the profit margin on the property would be minimal over the long term.

“While I do have concerns with this site and this proposed project, when I look at the criteria, I have no choice but to approve the project,” said board member Charles Allott.

Board member Wick Rudd said he agreed with many of Buzard’s objections, but he voted for the new building on the waterfront, saying, “I take great stock in people coming up and objecting. There were none,” he said. “A lot of the expert testimony was very compelling. Rooms get smaller. I think that’s a good thing on this property. Owners are bending over backwards to give public access. There is no public access right now.”

The owners’ attorney, Neil Galvin, argued earlier in the evening that reducing the number of rooms from the desired 84 to 58 would give the investors “A negative return. It doesn’t provide any [financial] return at all.”

Colin Kane, one of the developers, in a final presentation before the vote, added that building the hotel with 84 rooms would cost about $34 million, $2 million more than the 58 rooms, but the profit margin, even over many years, would be virtually non-existent.

“We are looking for a long-term enhancement,” said Kane. “With 84 rooms, it [profit] is tight, but it’s certainly feasible. Returns on 58 rooms doesn’t work. We literally won’t get our money back. At 84 rooms, at the rate of return we estimate, we get closer.”

He admitted that operating costs for either size hotel was about the same. He and Buzard had a discussion about compensating for fewer rooms with higher room rates, but, ultimately, Kane said the numbers will not make the project solvent.

Buzard argued that revenue could be made up in other areas, through restaurants, retail, parking and the marina.

“It’s a generational asset, over time,” Kane said. “We truly believe we are making the right investment in the city.”

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