Prolific Peninsula hotel developer pays city $4 million for San Bruno Marriott site

March 14, 2016

Prolific Peninsula hotel developer OTO Development is paying the city of San Bruno $4 million for a site where it plans to build a 152-room, upscale Marriott hotel.

The hotel will lie on 1.5 acres at a former U.S. Navy site called “The Crossing”, which is along El Camino Real next to highway 380 and the Shops at Tanforan. The Crossing includ es 12,500 square feet for retail space, 1,063 residential units, and a 4,000 square foot restaurant.

The project joins the boom in Peninsula hotel projects— including several already from OTO — as developers seek to capitalize on an increase in Bay Areas visitors, including more travelers landing at SFO.

Last year, OTO won approvals for a 185-room AC Marriott in South San Francisco on Oyster Point Boulevard, which is under construction. The developer also has a 177-room Courtyard by Marriott under construction in Redwood City, which will open late fall of this year. The developer has also proposed a 169-room Marriott in Belmont at the intersection of Shoreway Road and Cormorant Drive, which was approved. In addition, OTO opened A Hilton Garden Inn in Palo Alto in spring of 2015.

“San Bruno is a unique area in the Peninsula, particularly for an upper-end business class hotel,” said OTO spokesman Sam Singer.

The site is one overpass away from SFO and close to tech companies such as Youtube and Walmart’s e-commerce division.

OTO has agreed to invest $50 million in building the San Bruno hotel, which will have event space for 300 people. The agreement with the city is expected to result in $1 million a year in new taxes and add up to 40 new hotel jobs. The project still needs approval from the planning commission and the city council, which should vote on the details by the end of April.

“Nearby businesses, residents and visitors alike stand to gain from the presence of a high-end hotel and special event center at this site,” Mayor Jim Ruane said in a statement.

Although the mayor and other city officials have been optimistic about the project, some residents have pushed back against the plan, complaining that the sale of the property is a “sweetheart” deal. The price that OTO will pay the city was fair market value as assessed in an independent appraisal, city officials said. While OTO hoped for a city subsidy, officials turned it down.

In addition, some believe that OTO Development — a company based in South Carolina — isn’t invested in long-term outcomes for San Bruno since it’s not based locally and has a history of selling its assets to New York-based private equity giant Blackstone Group.

OTO said it’s confident that San Bruno is ripe for its investment.

“We are excited to have reached a tentative agreement with the City of San Bruno,” OTO Development CEO Corry Oakes said in a statement. “We look forward to continuing to work through the approval process and to becoming a part of the San Bruno community.”