Residence Inn San Jose

Environmental & Social Review Summary

This Environmental and Social Review Summary is prepared and distributed in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board of Director’s decision. Board dates are estimates only.
Any documentation which is attached to this Environmental and Social Review Summary has been prepared by the project sponsor and authorization has been given for public release. IFC has reviewed this documentation and considers that it is of adequate quality to be released to the public but does not endorse the content.

Project number	26553
Country	Costa Rica
Sector	Accommodation & Tourism Services
Department	Global Manufacturing & Services
Company name	Inversiones Hoteleras CH de Escazu S.A.
Environmental category	B
Status	Active

Date ESRS disclosed	September 26, 2007

Previous Events	Invested: May 5, 2008 Signed: December 7, 2007

View Summary of Proposed Investment (SPI), click here

Overview

Category & Applicable Standards

Key Issues & Mitigation

Community Engagements

Client's Documentation

Overview of IFC's scope of review

IFC review of this project consisted of appraising technical, environmental and social information submitted by the project sponsor Courtyard Caribe [Caribe] including a review of the following documents.

- Estudio de Impacto Ambiental, Trejos Monte Alegre IV Etapa, Expediente Administrativo No. 850-2002 SETENA, June 2003.

- Informe Anexo al Estudio de Impacto Ambiental, Proyecto Trejos Montealegre IV Etapa, Exp. Admin.850-2002, Jan. 2004.

- Resolución No 821-2004 SETENA, Proyecto Condominio Trejos Montealegre IV Etapa, May 31, 2004; (Approval of EIA for original project concept).

- Proyecto Condominio Trejos Montealegre IV Etapa, Wastewater Treatment Plant Design Calculations, August 2005.

- Modificaciones al Proyecto: Trejos Montealegre IV Etapa, Exp. Admin.850-2002 (Revised EIA analysis incorporating modified project scope to include Residence Inn 109 room hotel development).

- Resolución No. 708-2006 SETENA, Proyecto Condominio Trejos Montealegre, 19 April 2006
(granting SETENA approval of EIA for revised Project scope incorporating hotel development).

- Promoter Completed IFC Environmental and Social Information Questionnaire.

Project description

Caribe Hospitality S.A., a hotel development company focused on Central America and the Caribbean and an existing IFC client, is developing, through subsidiaries, six mid-tier business hotels under the Marriott "Courtyard" and "Residence Inn" brand names over the 2007-2011 period. Two hotels are being implemented (in Costa Rica and Barbados), while others are in evaluation stages and are expected to be located in Costa Rica, Jamaica and Nicaragua. The San Jose Residence Inn is one of these six hotels. The project concept for individual hotel development relies on streamlining and repeating development work for each property further supported by Marriott-prepared market research and feasibility studies. All architectural design, final construction and outfitting of the properties are approved by Marriott. Marriott also applies its strict fire, life and safety codes and requires that the properties be managed in an environmental and socially responsible manner. The sponsor carefully manages construction and land acquisition costs in order to build in the region of $90,000-114,000 per room, a realistic target in light of the sponsor's past experience. The Caribe Hospitality S.A. hotels are often built on sites adjacent to shopping arcades, and benefit from the resulting synergies.

The Residence Inn will be a 109 room property located in a commercial mall in one of the busiest areas of San Jose. The approximately 30,000 square foot (3,000 m2) site is located within a large mixed use project under development by the sponsor’s other real estate company. The overall development comprises the Residence Inn, leased office space, residential condominium towers, a medical center, a health club and movie theaters. The site is directly opposite the Courtyard San Jose built by the sponsors in 2002, and adjacent to the IFC financed CIMA hospital. Site preparation work has already started, the project having been approved by SETENA, the relevant environmental authority, and hotel opening is planned for spring 2009. Residence Inns are extended stay facilities for guests spending five nights or longer, and are designed per the efficiency apartment concept with fully equipped kitchens.

Identified applicable performance standards

While all Performance Standards are applicable to this investment, IFC’s environmental and social due diligence indicates that the investment will have impacts which must be managed in a manner consistent with the following Performance Standards. Caribe is required to comply with all of IFC Performance Standards as and when they become applicable. At appraisal, the following performance standards are applicable to this project:

- PS1: Social and Environmental Assessment and Management Systems
- PS2: Labor and Working Conditions
- PS3: Pollution Prevention and Abatement
- PS4: Community Health, Safety and Security

The project appraisal also reviewed the applicability of the following IFC Performance Standards:

PS5: Land Acquisition and Involuntary Resettlement: There was no resettlement or compensation involved in the acquisition and development of the hotel site.

PS6: Biodiversity Conservation and Sustainable Natural Resource Management: Based on the assessment, the Project does not involve adverse impacts to significant biodiversity resources.

PS7: Indigenous Peoples: Based on the assessment, the Project does not involve contact with, or displacement of, indigenous peoples.

PS8: Cultural Heritage: The Project does not involve impacts to cultural heritage.

Environmental and social categorization and rationale

The project involves the construction of a hotel in an urban area of San Jose, Costa Rica. Environmental and social impacts include management of materials and wastes during construction and operation, including dust emissions; management of wastewater; occupational health and safety during construction; and community health and safety concerns related to life and fire safety. Environmental impacts will be controlled through effective use of available pollution control technologies and practices for construction projects. Occupational and community health and safety concerns will be managed through implementation of procedures to reduce and control identified risks, including improved occupational health and safety training and use of personal protection equipment, in addition to implementation of life and fire safety precautions and emergency response plans.

This is an environment category B project, according to IFC’s Procedure for Environmental and Social Review of projects, because the project has limited adverse social and environmental impacts that are relatively few in number, generally site specific, largely reversible, and readily addressed through appropriate mitigation measures, as described below.

Key environmental and social issues and mitigation

The project sponsor has presented plans to address environmental and social impacts to ensure that the proposed project will, upon implementation of the specific agreed measures, comply with the environmental and social requirements of host country laws and regulations, the IFC Performance Standards, and the World Bank Group EHS Guidelines for Tourism and Hospitality Development and relevant aspects of the General EHS Guidelines.

- PS1: Social and Environmental Assessment and Management Systems:

In accordance with Costa Rican legal requirements, Caribe has prepared an Environmental Impact Analysis (EIA) for the project which was reviewed and approved by SETENA (National Environmental Technical Secretariat) in April of 2006. The EIA describes the main impacts associated with the hotel development, the key mitigation actions, and the responsible parties and schedules for implementation of these actions during both construction and operational phases. The EIA forms the basis of the environmental management program (EMP), the implementation of which will be handled by Residence Inn management and a retained environmental consultant. Residence Inn management will employ the Marriott International system for small hotel management and environmental, health, and safety compliance. The implementation of the EMP will be monitored through periodic site visits by regulatory authorities and the retained environmental consultant, in addition to bi-monthly reporting to SETENA and the developer.

- PS2: Labor and Working Conditions:

The permanent workforce for the hotel has not yet been established, as the hotel is currently in the construction phase. Once fully operational, the hotel will employ between fifty and sixty staff members. Caribe will implement a version of the Marriott human resource policy suite adapted to the requirement of the Costa Rican Ministry of Labor and IFC PS2. There is currently no collective bargaining arrangement in place with prospective Residence Inn staff. The terms and conditions of employment, in accordance with Costa Rican laws and Marriott corporate policies, will be defined in each employee’s employment contract. The grievance mechanism will be an informal open door policy with management. Occupational health and safety hazards common to civil work construction projects will be managed according to international practices for workplace safety and Costa Rican requirements. Construction workers will be required to wear appropriate personal protective equipment. Periodic inspections of both the construction site and hotel operations will be undertaken as part of the monitoring program implemented by the retained EHS consultant.

- PS3: Pollution Prevention and Abatement:

The hotel will have limited adverse environmental impacts. Sewage and wastewater generated by hotel operations will be treated at a centralized plant which will serve the hotel and the adjacent commercial and condominium complex. The discharged water will meet IFC Guidelines for effluent quality. Air emissions will be limited to occasional use of a back-up diesel generator during power cuts, and use of liquid petroleum gas (LPG) to power the water heaters. Air-conditioning will be provided for guest rooms and common areas using approved non-ozone depleting refrigerants. Potable water for the hotel will be sourced from the municipal water system, and electrical power requirements will be supplied from the national grid. Hazardous materials stocks onsite include LPG and diesel, which will be kept in storage tanks with secondary containment systems and protection barriers. Solid waste will be separated into plastics, bottles, glass, aluminum and other recyclables and non recyclables, as per municipal ordinance requirements. Waste collection will be undertaken by a private waste management contractor, with disposal at approved municipal landfills and recycling facilities.

- PS4: Community Health and Safety:

The hotel design incorporates life and fire safety codes in accordance with U.S. National Fire Protection Association (NFPA) specifications, as well as design precautions to manage seismic risks present in the area. An Emergency Response Plan for the hotel will be prepared in accordance with Costa Rican regulations and IFC requirements.

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