During a recent government meeting, significant concerns were raised regarding a proposed hotel development project in Morgan Hill, particularly about the financial implications and the transparency of the estimates involved.

Council member Joe expressed skepticism about the rationale behind the project's estimated net operating income, questioning the lack of footnotes and visibility regarding the consultants' estimates. He emphasized the need for clarity on the confidence intervals of these financial projections, suggesting that the community's expectations for the Hotel MOHAI's pricing were misaligned with the budgeted assumption of $118 per room night.

Miguel Jimenez, another speaker at the meeting, echoed these concerns, highlighting the challenges of evaluating the proposal within a limited timeframe, as it was only made available to the public shortly before the meeting. He pointed out the need for a comparative analysis between the proposed agreement and the existing hotel incentive policy, which traditionally allows for a city contribution of up to 50% for off-site public improvements. In contrast, the new proposal seeks a 100% rebate of the transient occupancy tax (TOT) to the developer after a base level.

Jimenez also noted the substantial financial request associated with the project, which includes a rebate of nearly $10.5 million in TOT. He reminded attendees that any proposal exceeding $100,000 should be reviewed by the city council, raising questions about the appropriateness of the current proposal's structure.

A critical point of contention was item 4b of the proposal, which suggests that the developer requires financial assistance to achieve a return on investment of 8%. However, this provision could potentially allow for unlimited financial gains beyond that threshold, raising concerns about the fairness of the deal for the city and its residents.

The discussions highlighted a pressing need for further deliberation and transparency regarding the financial aspects of the hotel project, as community members and council members alike seek to ensure that any agreements made are equitable and beneficial for all stakeholders involved.