Hotel, shops to replace colorful coastal cottages in this SLO County beach town

A Morro Bay business owner is one step closer to transforming his property on the west end of the Embarcadero into a two-story hotel with restaurant and retail space.

“I’m excited, I think it’s a great project,” Associated Pacific Constructors Inc. owner and project developer Paul Gillen told The Tribune.

But securing the project approval hasn’t been easy.

In November, the Morro Bay Planning Commission struck down the project. The 22-foot-tall hotel exceeded the city’s building height limits, and the commission thought Gillen’s project didn’t offer enough community benefits to justify its height.

Gillen appealed the decision to the Morro Bay City Council with revisions to the project, including removing one of the top story hotel rooms to reduce the project’s impact on the view of the ocean.

On Tuesday night, the Morro Bay City Council voted unanimously to overturn the Commission’s decision and approve the new project design.

“I believe that we do have a better project,” Morro Bay City Council member Jeff Eckles said at the meeting.

If all goes according to plan, Gillen will start construction in about 14 months, he said.

First, he must apply to the California Coastal Commission for a coastal development permit and to the city for a building permit. Once those are awarded, he can start construction.

“This project will create a significant new visual and exciting draw of pedestrian traffic as they stroll south on the Embarcadero over the harbor walk, offering them place to stay, eat and socialize,” Gillen said at the meeting.

What will the hotel, retail space look like?

The property, currently known as Bayside Landing, includes an almost 25-foot-tall office building and three wooden cottages trimmed with teal and magenta paint.

The cottages were built in the 1950s and later acquired by the late local businessman and craftsman Reggie Whibley. Some people consider the houses a piece of local history. The cottages are now used as vacation rentals, while Associated Pacific Constructors operates out of the neighboring office building.

Gillen originally proposed to renovate the office building, demolish the cottages and build a two-story, 22-foot-tall building in their place that would include eight hotel units.

Gillen revised the project to remove one of the hotel rooms, so now there will be two on the top floor and five on the bottom, Morro Bay community development director Airlin Singewald said.

The new building will exceed the city’s 17-foot height limit, which meant the City Council could only approve the development if Gillen offered community benefits in his project.

For community benefits, Gillen offered to build a public viewing deck on the second floor of the building, a public restroom, a dock with room for a kayak rental business and a pocket park with a bike rack and benches. The 500-square-foot pocket park will overlook a bed of eelgrass where otters often play.

Some speakers at public comment questioned the benefit of a park so small, but Eckles thought it would function well as a viewing platform, noting that people often sit at a bench just south of the lease site to watch the otters.

“Adding more seating, just so folks can sit and look out to the water and the otters, is a benefit,” Eckles said. “This isn’t the type of pocket park where we’re going to have families having picnics and things like that. It’s really a viewing platform, as far as I view it, and it’s a benefit that way.”

The project includes a 420-square-foot retail building in the style of Reggie’s cottages beside the hotel to preserve local history, and a harbor walk that connects Mariner Park to Tidelands Park, Singewald said.

Meanwhile, the renovated, two-story office building will be converted into retail space and a marine research center on the first floor, with space for a restaurant on the second floor.

Gillen will also maintain the commercial wharf below the observation deck for marine construction and vessel loading.