California’s coast is a popular tourist destination that attracts visitors globally year-round, making it a lucrative hospitality market. But hotel investors and developers considering projects along the California coast should do their homework before entering this market.
California is well-known among developers for high barriers to entry, which include local government entitlement and permitting timetables that can hold up projects for a couple of years or more. But developing in coastal zones adds another layer of scrutiny and bureaucracy that increases the time and cost of projects, as they are subject to restrictions, requirements and approval by the California Coastal Commission (CCC).
The CCC is an independent, quasi-state agency established in 1972 by a voter initiative to plan and regulate water and land use in the coastal zone, as well as to ensure coastal access to all residents, regardless of their economic means. The CCC is responsible for overseeing and enforcing the Coastal Act, which broadly defines development activities, including construction of buildings, divisions of land and activities that change the intensity of land use or public access to coastal waters.
With the high cost of financing and construction right now, fees and other requirements of local jurisdictions and the CCC pose a heavy financial burden for hotel developers.
Read the full article on our sister site, Hospitality Investor.