The Montgomery Hotel was initially slated for demolition to makeroom for a 264-room annex for the new Fairmont Hotel, but San JoseMayor Ron Gonzales persuaded the City Council to approve itsrelocation. The city has since spent $12.7 million to seismicallyupgrade the Montgomery Hotel and relocate the circa 1911 structuresome 186 feet further down South First Street.

In June, Redevelopment Agency director Susan Schick said thatfurther city funds would not be necessary to complete the project.On Tuesday, Schick got tentative City Council approval of anadditional $6.1 million for the hotel's refurbishment, after sayingthat Divco West requires more money than originally anticipated inorder to refurbish the hotel.

That additional money, Schick has said, goes directly to DivcoWest Properties and its development partners, who are paying for$14.6 million worth of work on the building. Divco, a major SiliconValley development presence, is also a partner in software giantCisco Systems' proposed 688-acre campus in the North Coyote Valleyarea.