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Towers of Power

Montgomery Hotel
Christopher Gardner

The Montgomery Hotel could be the next of San Jose's historic landmarks to fall, as the Fairmont plans to erect a twin tower

By Michael Learmonth

NEXT YEAR, if things move according to Redevelopment Agency plans, San Jose's historic Montgomery Hotel will be photographed for posterity, pilfered for its ornate interior decor and flattened in a cloud of asbestos dust. In its place, a 15-story, 300-room twin tower for the Fairmont Hotel will rise.

How quickly things change.

A mere six years ago, the Redevelopment Agency had a grand design for the 86-year-old hotel. The agency spent $600,000 to study the rehabilitation of the hotel and budgeted $6 million to renovate the building--with stores on the ground floor and offices above. The agency touted the Montgomery in a 1991 pamphlet, raving about the fact that its Mission Revival architecture gave it "charm that can't be found in newer suburban communities."

"The Montgomery was considered one of the most elegant hotels on the West Coast in its heyday," the pamphlet gushed.

This year, the agency did an about-face on the Montgomery. Now, instead of "venerable" and "timeless," the Montgomery is referred to in an agency report as "vacant" and "deteriorating."

Until fiscal year 1995-1996, the Redevelopment Agency budget included money for "Montgomery Hotel rehabilitation." The following year that line item morphed into "Montgomery Hotel security and improvements as needed," a telling change that reflects the old hotel's new fate.

That fate is ironically linked with that of its neighbor across Paseo de San Antonio. The Fairmont and the Montgomery hotels represent parallel times in San Jose history. In 1911, T.S. Montgomery took a chance on downtown San Jose by building the hotel where there were few amenities. Seventy-seven years later, developer Kimball Small and the late Swig brothers took a chance on downtown San Jose by building the Fairmont Hotel as the cornerstone of a new downtown before the convention center, arena or transit mall had been built.

The Montgomery operated successfully for 36 years as a hotel for business travelers and families before downtown began to decline. The Fairmont, which celebrated its 10th anniversary on Tuesday, survived the lean years and was bought by developer Lew Wolff and a member of the Saudi royal family shortly before downtown San Jose came into its own as the convention hub of a revitalized valley.

When Small and the Swigs built the Fairmont Hotel in 1987, hotel, retail and office-space markets were soft. At 535 rooms, the San Jose hotel was one of the smaller Fairmonts, says Chuck Harper, SJSU professor of finance. Today, as Santa Clara County adds 40,000 jobs a year--and recently overtook New York City as the nation's largest exporter--the economy has outgrown the 15,000 hotel rooms available in the county. Now that the market is there, the Fairmont wants to spread out.

"They were never really excited about the size of [the Fairmont,]" Harper says. "The economics are [such that] they want it bigger and think they can rent the rooms out."

The need for additional hotel rooms in downtown San Jose has been well documented and several available sites have been identified, including the earmarked hotel site on the east end of the convention center. The environmental impact report for the Fairmont Hotel expansion identifies two other possible locations for the tower--one directly behind the Montgomery on the site of the 25-year-old Chamber of Commerce building, and the other on the south side of the hotel, now a parking lot.

Over its 10 years of operation, the Fairmont Hotel has sucked up $38 million in city subsidies, including subsidies that keep the doors open in the ground-floor retail stores.

There are more public giveaways in the offing. In the proposed deal to build a twin tower, the Redevelopment Agency promised to reimburse the Fairmont $1.5 million of its predevelopment costs if the deal falls through. It also wants to sell the Montgomery to the Fairmont for $4 million--with the stipulation that the bill won't come due until the hotel turns an 18 percent profit.

CENTRAL TO THE Redevelopment Agency's argument for Fairmont expansion is its assertion that the Montgomery Hotel is too small and quirky to be profitably reborn as a functioning hotel.

But Jim Salata, president of Garden City Construction and former chair of the city's historic landmarks commission, says the agency has no basis for making such an argument.

"It's not fair for anyone to say it won't work until a study has been done," Salata says. "In this market, given the need for hotel rooms and the popularity of boutique hotels, the chances it would work are about as good as when the hotel was first built."

San Jose preservationists, many of whom have been paying more attention to the Jose Theater than the Montgomery of late, bristle at the idea that the Montgomery is obsolete.

"They say that whenever they want to tear a building down," Karita Hummer says. "The boutique hotels are sought after by so many people. Those are the ones I want to stay in."

San Jose has two successful boutique hotels--the De Anza and the Sainte Claire. The Kimpton Group, a hotel developer in San Francisco, operates 14 historic hotels there, including the 417-room Sir Francis Drake and the 165-room Carlton Hotel. Even large hotel chains such as Hyatt and Marriott are investing in boutique hotels.

George Forbes is manager of the Governor Hotel, a 100-room boutique hotel in Portland that was refurbished for $15 million in 1992.

"Your business traveler more and more gravitates toward boutique hotels," Forbes says. "I can certainly vouch for boutique hotels being successful."

If it is built, the Fairmont annex would expand Silicon Valley's stock of hotel rooms by 300, while a refurbished Montgomery would bring only 70.

"The Fairmont deal is so attractive that it makes almost anything else seem unattractive," San Jose City Councilmember Trixie Johnson says.

But not as attractive as some other options, she adds. In the next few months, the council will have to simultaneously consider whether the Montgomery should get city landmark status and whether it should be torn down.

"I'm leaning toward voting for landmark status and against development," Johnson says. "It will look very strange if we have a discussion of landmark status and then tear it down."

In the wake of the very public and acrimonious fights over the Jose Theater and the Montgomery, Johnson has proposed some new rules for the Redevelopment Agency negotiators that she admits may "cramp their style."

"The public still has the perception that [historic] buildings don't have a fair shake," Johnson says. "Essentially the Redevelopment Agency goes out and makes deals, and we put few restrictions on them."

Johnson proposes to construct a list of historic sites and then prohibit any negotiations over those sites until a public hearing has been held.

She believes that would avert the ethically gray situation of starting the development process before a building's landmark status has been determined.

"Predevelopment agreements cast a shadow over the entire process," says Tom Simon, a board member of San Jose's Preservation Action Council.

Inside the Montgomery Hotel on the first floor, the coved ceilings and Corinthian capitals are bastardized by drop-ceilings and heating and cooling ducts. The hotel was the first in the area to be built with reinforced concrete, made to resist earthquakes and fire. It was the first in San Jose to have electric fixtures, and it was designed so that every room has a window that receives natural light.

The hotel lobby was remodeled once in the 1930s when, historian Jack Douglas notes, spittoons were replaced with ashtrays.

In the hotel annex, which was added in 1917, there is an ornate ballroom with chandeliers and relief sculpture on the walls and around the light fixtures.

Mary Jo Cohen manages the Edgefield, a 100-room historic hotel outside Portland, and says guests today love such features.

"Historic properties have so much more appeal than build-to-suit," she says. "If there are visionaries in San Jose, they need to step forward."

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From the Oct. 9-15, 1997 issue of Metro.

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