Residents are concerned about parking, traffic and historic preservation. The hotel's owner, Destination Development Corp., a subsidiary of Lowe Enterprises, has warned it may sell the property if the city does not cooperate.

Destination Development bought the 113-year-old hotel in 1997. The firm has already spent $55 million on seismic upgrades and public areas.

The commissioners voted this week to reject the environmental report. The city council will consider the matter Sept. 18.

The plan includes a 20,000-sf conference center and a spa and fitness facility, along with the restoration of original architecture.