Pismo BeachWalk Hotel will pay less to mitigate lack of low-cost accomodations 

With two major obstacles now out of the way, plans to build the BeachWalk Hotel on the shores of Pismo Beach can once again move forward. As a bonus, the withdrawal of a challenge to the project’s developer, Palm Springs-based Nexus Development, will pay far less to mitigate the planned 128-room hotel’s lack of low-cost lodging. 

In the wake of a recently withdrawn appeal of the project to the California Coastal Commission, reports obtained by New Times indicate that Nexus will pay up to $1.4 million less under the city’s low-cost accommodation conditions than those proposed by the commission.

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• PHOTO BY DYLAN HONEA-BAUMANN
• SUN, FUN, CONSTRUCTION: This site will be home to the 128-room BeachWalk Hotel. The project’s developer, Nexus, will pay $200,000 to mitigate the project’s lack of low-cost lodging.

The California Coastal Act requires that low-cost visitor and recreation facilities located at the state’s coastal areas be protected, with a preference of having those low-cost and recreational lodgings included within proposed developments. However, the act clearly states that the Coastal Commission is forbidden from requiring privately owned hotels, motels, and similar facilities to offer accommodations and fixed rates. With many resort hotels unable or unwilling to offer lower-rate rooms in their planned developments, the common fix for the problem has been to require the developers to chip in funds to mitigate their project’s impact and meet the requirement. That money is then used to build or add beds to hostels or to build or improve campsites.

Such is the case with the BeachWalk Hotel. Under the city of Pismo Beach’s initial conditions for the project’s approval, Nexus has to pay $200,000, which would be used to build or expand low-cost accommodations somewhere in the city. That condition, and others, were approved by the city’s planning commission, and upheld by the City Council after the project was appealed by a group of individuals concerned with the proposed hotel’s impact on the ocean views, traffic, and Pismo’s drought-strained water supply.

Those same individuals, many of them Pismo residents, then appealed the project to the Coastal Commission. While that appeal was eventually withdrawn, there was still time for the commission staff to work up a report on the project. The report did recommended that the commission allow the project to move forward, but it also recommended its own conditions, including asking Nexus to pay up to $1.6 million toward the low-cost accommodation requirement, far more than the amount proposed by the city. 

“Although staff appreciates the applicant’s proposal, including as it is intended to provide on-the-ground, in-kind mitigation, staff does not believe that it appropriately offsets the lack of on-site lower-cost units consistent with Coastal Act requirements,” the report stated.

According to the report, the Coastal Commission estimated that about 25 percent of a proposed development’s total rooms should be designated as “low cost.” In the case of BeachWalk, that would mean about 32 rooms. But in the original plans, Nexus would pay for just nine low-cost accommodations off site. The recommended suggestion in the report was to give them credit for the nine off-site locations, but also make them pay a mitigation fee equivalent to the remaining 23 not accounted for. If, the report went on, developers weren’t able to find a location for the nine off-site low-cost accommodations, then Nexus would have to pay a mitigation fee of $1.6 million. The money would be handed over to the California Department of Parks and Recreation to help a fund a low-cost cabin project in Big Sur.

However, because the appellants withdrew their appeal, the issue never made it to the commission for consideration or a vote on the matter, and the conditions Nexus hammered out with the city, including the much lower cost to mitigate the affordable accommodations issue, stand as is.

The BeachWalk appeal wasn’t the first time the Coastal Commission scrutinized a development’s mitigation efforts in the area of low-cost accommodations. In August, the commission rejected plans to build up to three large hotels planned for construction on public tidelands in San Diego. The commission’s major sticking point, according to the staff report on the item, was again the lack of developers chipping in to pay for low-cost lodgings.

There is no groundbreaking date for the BeachWalk Hotel, and it has yet to be decided just how the $200,000 from Nexus for low-cost accommodations will be used.

Staff Writer Chris McGuinness can be reached at [email protected], and on Twitter @CWMcGuinness.