Item #08
Date: September 15, 2026
To: Mayor and City Council
From: Dan Flores, Assistant City Manager / Community and Economic Development Director Jim Schaad, City Manager
Subject: Amendment to Development Agreement with B St Hotel LLC for the Hyatt Studios Hotel Project
Recommendation:
Adopt Resolution No. 2026-XX approving a four-year transient occupancy tax reimbursement for the Hyatt Studios hotel project and approve the related amendment to the Development Agreement with B St Hotel LLC, subject to final approval as to form by the City Attorney; and authorize the City Manager to execute the amendment and any related documents necessary to carry out the City Council’s action.
Background:
B St Hotel LLC proposes to develop and operate a 114-room Hyatt Studios hotel in Marysville. The project is governed by an existing Development Agreement between the City and the developer. The developer has requested that the agreement be amended to include a limited transient occupancy tax reimbursement during the hotel’s initial operating period. The proposed reimbursement is intended to assist the project during its ramp-up period while preserving a substantial share of all new transient occupancy tax revenue for the City.
Discussion:
The proposed amendment provides a four-year reimbursement funded solely from transient occupancy tax generated by the hotel. During the first two years, the City would reimburse three percentage points of the 10 percent tax collected, and the City would retain an effective rate of 7 percent. During years three and four, the City would reimburse two percentage points and retain an effective rate of 8 percent.
The hotel operator would continue to collect and remit the full 10 percent tax to the City before any reimbursement is paid.
The reimbursement is also conditioned on the developer commencing vertical construction on or before December 31, 2026. The amendment will define commencement of vertical construction and establish the procedures for calculating, documenting, and paying any reimbursement. The reimbursement is payable only from transient occupancy tax actually collected from the project and does not create a general obligation or indebtedness of the City.
Item #08
Legal Review:
The City Attorney has reviewed and approved the agreement and related documents as to form.
Fiscal Impact:
The project site does not currently generate transient occupancy tax revenue. If the hotel is completed and operating, the City will receive 7 percentage points of the 10 percent transient occupancy tax collected during the first two years and 8 percentage points during the third and fourth years. After the reimbursement period ends, the City will retain the full tax collected, subject to the Municipal Code then in effect. The total dollar amount of the reimbursement will depend on actual taxable room revenue and occupancy and cannot be determined at this time. No reimbursement will be paid unless and until the City receives the corresponding tax revenue from the project.
Environmental Review:
This action concerns the financial and contractual terms associated with the previously approved hotel project and does not independently authorize additional physical development. The City Attorney will confirm the appropriate environmental determination before the City Council takes final action.
Attachments:
1) Resolution 2026-XX
2) 3
rd Amendment to Development Agreement with B St. Hotel LLC