Pending the outcome of a ballot initiative, and a future hotel, Sand City might be in the catbird seat.

Development of any kind on the Monterey Peninsula has become exceedingly rare, as getting a project over the finish line often involves several permitting hurdles and, quite often, the lack of a legal water supply.

Sand City, at least on the water side, is a local outlier – it owns its own desal plant, which it leases to Cal Am – and as soon as next month, but maybe January, EKN Development is planning to break ground on a four-floor, 215-room hotel on the site known as South of Tioga, which is also planned to have two residential apartment buildings with 356 total units, 52 of which are slated to be affordable. One building will also include a rooftop restaurant.

The site name comes from its location with respect to Tioga Avenue, but for most locals, perhaps a more apt description is south of Costco, east of Highway 1.

The project, which is expected to be completed in early 2025, appears to be coming to fruition at a critical time for Sand City: In June, the city received its last $850,000 payment from Cal Am to lease the city-owned desal plant. Going forward, Cal Am will only owe the city $7,000 annually through 2039, when the lease expires.

That’s in part why the City Council put an initiative on the ballot in the Nov. 8 election to increase its transaction and use tax from 1 percent to 1.5 percent – it’s essentially an increase in sales tax in the city – which is expected to generate about $1.4 million annually, and more than make up for the loss of the desal revenue.

If and when the hotel happens, the projected windfall is somewhat of an unknown, but EKN estimates that in the first year, the revenue for rooms alone will be over $12 million. Given that Sand City’s transient occupancy tax is 12 percent, it’s expected to add more than $1.5 million annually to the city’s coffers once it’s up and running.

Ebbie Nakhjavani, CEO of EKN, says work will begin as soon as the property closes escrow, and he doesn’t anticipate any complications. The hotel is slated to be Marriott-branded, and its restaurant and bar will be centered around a courtyard with a pool area.

“What we do at all of our properties, we’re always programming for something to be happening there,” says Nakhjavani, whose company has developed a handful of other hotels. “Whether it’s local arts shows, small wine tastings, we’re always going to have events happening there at the bar.”

Nakhjavani also hopes the hotel will be a force multiplier for the region.

“Our hotel will put the whole location on the map. I’m very positive on the future of the area,” he says, adding, “We’re going above and beyond the typical hotel standards.”

As far as what Sand City would do if the city found itself with a revenue windfall, City Manager Vibeke Norgaard says that will be up to the City Council.

One option, of course, would be investing in affordable housing, because the city would suddenly have things no other city on the Peninsula does: extra money and water.