Cupertino hotels face more delays

Cupertino officials had hoped to see revenues funneling in from two hotels — instead they found themselves approving permit extensions.

The Cupertino City Council on Wednesday unanimously extended the development timeline for two upscale hotels by three years, due to a dip in tourism, rising building costs and a slow recovery from the pandemic. The De Anza Hotel and Cupertino Village Boutique Hotel have been in the pipeline for four and five years, respectively. The two hotels are estimated to bring in about $2.2 million annually through hotel occupancy and property taxes. But it’s unclear when construction will begin on either project.

Councilmember Hung Wei said she hopes the city can maintain a balance between building homes and commercial buildings to uplift its economy, while also attracting more residents.

“We have to do parallel development,” she told San José Spotlight. “We have to develop our economic development with our small businesses, big businesses, with our hotels, but also we need to build more residential areas so that we can bring residents back into Cupertino.”

Los Altos-based developer De Anza Properties received an extension through April 21, 2028 to complete the De Anza Hotel project  — replacing a Goodyear Tires next to a shopping center — with options for additional extensions if certain benchmarks are met. The seven-story, 155-room hotel will include amenities such as a rooftop bar, shuttle service and restaurant, and is planned for 10931 N. De Anza Blvd. on 1.29 acres.

The Cupertino Boutique Village Hotel project was extended to Nov. 19, 2027 and will be developed by New York-based Kimco Realty Corporation. It first received approval in 2019. The five-story, 185-room project is slated for 10801 and 10805 N. Wolfe Road on 1.46 acres, and could replace a beloved pub, The Duke of Edinburgh.

The city will have to wait roughly three to four more years for the hotels to help reduce its budget shortfall. Cupertino is anticipating a $15 million deficit for fiscal year 2024-25, largely due to a loss in Apple sales tax.

Jean Bedord, a Cupertino resident for more than 30 years, said she’s a proponent of the hotels as a boost to the economy, especially in what she views as an ideal location near busy roads and shopping centers.

“I’ve been concerned that because of the economic climate, (council) would just abandon the projects. What I’m hearing from them is commitment,” she told San José Spotlight.

The developments come at a time when the city is struggling to get its state-mandated housing plan certified more than a year past the deadline, laying out how it will accommodate more affordable and market-rate housing to meet its community’s needs.

The hotels could funnel a combined total of roughly $3.8 million in taxes and impact fees into Cupertino’s affordable housing fund. Last month, the city found more than $100,000 from its below-market housing rate fund was misallocated to legal fees associated with a housing lawsuit for its noncompliant housing plan.

In addition to revenue from hotel taxes, The De Anza and Cupertino Village projects could also pay the city up to $500,000 and $1.85 million respectively in community amenity funding. Cupertino could use that for things it deems a benefit to residents and visitors, such as transportation and local art.

Bedord said she is optimistic about the hotels as the developers look toward the future.

“I’m hoping that the economic environment improves, that we start having more people coming back to the city, spending money in the city,” she said. “It’s just been slower than any of us expected.”

Contact Annalise Freimarck at [email protected] or follow @annalise_ellen on X, formerly known as Twitter.