Construction will begin this year on Ballard's first hotel, which the city planning department approved to be built on land zoned for industrial businesses.

The project, a 170-room, six-story Silver Cloud hotel, was approved with a number of conditions attached, such as the hotel must serve primarily people who work in the industries that it will surround.

The hotel will be built on property adjoining the site of the old Yankee Grill restaurant, along Shilshole Avenue Northwest in the Ballard Interbay Northend Manufacturing and Industrial Center, one of two industry-preservation areas in Seattle.

Hotels are permitted on industrial land as long as the developers can demonstrate it's meant for users in that area.

The Silver Cloud must get at least 60 percent of its business from people in the marine or industrial fields. Silver Cloud will also have to create a marketing plan to demonstrating how that will be accomplished.

"It will very likely involve submitting monitoring info to (the planning department), but we will have to work out the details," said Alan Justad, a spokesman for the city.

Ed Linardic, lead architect for the hotel project, said most of the guests at the Silver Cloud hotel in Capitol Hill come from the hospital industry or people visiting patients at nearby Swedish Hospital and Medical Center. He expects a similar trend to happen here.

Two marketing studies conducted by the hotel company found industrial users in Ballard would use it. With limited guest services, this kind of lodging isn't thought to be very attractive to tourists. The new Ballard hotel will include 1,900 square feet of conference space, a pool and exercise facilities.

The hotel chain claims to obtain about 75 percent of their customers from businesses close by.

One basis for allowing the development is that it won't displace any existing industrial use. The site, now a parking lot, is considered by the planning department to be underutilized.

But there is a concern that allowing a hotel could contribute to a rise in property values on industrial land, pricing out industrial uses. Some say that is already happening and is a severe threat to business vital to Seattle's economy.

Though land in this area is supposed to be preserved for industry businesses, the city decided a hotel would be a better fit than other potential non-industry uses.

"Adjacent users think that occasional guests would be better able to cope with high noise levels than constant daytime users, such as office leasees," said Justad.

The development was approved days before a new city ordinance goes into effect that would have halted the project, said Linardic.

The law drastically reduces the amount of commercial and retail development permitted on industrial property to strengthen zoning protection for industry and manufacturing in Seattle. On most industrial land here 100,000 square feet of commercial and 75,000 square feet of retail space is permitted. The new law, which went into effect Jan. 19, caps both at 10,000 square feet.

Through meetings with the community, several changes were added to the design to alleviate noise and lighting concerns, said Linardic. Initially, some business owners felt there would be conflicts between hotel guests and noise created by industry business operations, which often go late into the night.

Triple-paned glass and blackout curtains will be installed to windows facing Pacific Fisherman, a ship and yacht repair yard several yards to the west of the hotel site.

The original plans were also redrawn to move the hotel's main entrance from 24th Avenue Northwest, directly across from Pacific Fisherman's entrance, to Shilshole, to alleviate potential conflicts between the shipyards' large trucks and hotel traffic.

The property owners will have to sign a contract that acknowledges the surrounding environment is predominately industrial and that those uses cannot be considered nuisance.

Linardic said the project is seen as a positive addition to the area by most nearby businesses.

More than $30,000 has been added to the project's budget for structural and aesthetic improvements. A cul-de-sac with sidewalks and landscaping will be built north of the site at the end of 24th Avenue Northwest where the road meets the Lake Washington Ship Canal.

A crosswalk is proposed across 24th, connecting with the existing sidewalk and crosswalk across Shilshole.

The city study showed that parking demand would be greater than what was required. Silver Cloud Inn added 60 stalls to meet that need.

A total of 211 parking spaces are included; 103 will serve the hotel and108 are set-aside for the future tenant of the Yankee Grill building. A catering business is currently operated out of the old restaurant.

Silver Cloud Inns and Hotels are located in western Washington and Oregon. There are nine in the Seattle area.

Appeals of this decision must be received by the Seattle Hearing Examiner no later than Jan. 24; 684-0521, or http://www.seattle.gov/examiner/.

Rebekah Schilperoort may be reached at 783.1244 or rebekahs@robinson.com