Exactly what went wrong in the City Council's long series of closed session negotiations is uncertain -- Google says it was a disagreement over "business terms."

The goal of negotiations between the city and Google was to build a hotel and conference center on nine acres of the city-owned "Charleston East site." As part of the agreement, Google would build the hotel and hire an operator. The city has wanted a hotel and conference center on the Bayshore site for years, but has not been willing to subsidize a hotel as other cities have.

"It just didn't work out," said Jay Bechtel, Google's real estate and construction manager. "We couldn't come to an agreement [with the city on terms -- and we're disappointed."

The proposed 200-room hotel with a 30,000-square-foot conference center, to be built and operated by Google on city land, appears to have failed before it could begin.

In February, the local chapter of UNITE HERE rallied in front of the Googleplex, demanding that the company enter negotiations for a labor peace agreement. Owen Li, a UNITE HERE organizer, said earlier this week he thought economic factors played a hand in talks breaking down.

When asked if the deal fell through over such an agreement, Duggan declined to comment, saying that revealing details could affect future negotiations for the site. He did say, however, that there was more than one unresolved issue.

One issue that came up in the past is a "labor peace agreement," whereby a hotel service workers' union, UNITE HERE, sought a guarantee that Google would not stand in the way of union organizing at the hotel and allow an independent arbitrator to come up with the first contract. In exchange, the union would agree never to picket or strike there.

"We had good negotiations with them," said city manager Kevin Duggan, "but we had not gotten to a point where both sides felt all the issues were resolved."

The site is an open lot just east of the so-called Googleplex, on the corner of Shoreline Boulevard and Charleston Road, and has been used for parking at Shoreline Amphitheatre. The northern half of the site will soon be a 310,000-square-foot Google office building, for which the company is paying the city $1.7 million a year in a land lease. Construction is expected to start this year, and will be the first building Google has built in the city.

A similar breakdown occurred in 2001, after a hotel operator could not be found for the same 18-acre site. At that time, the City Council rejected the plan after Hyatt asked for a $19 million subsidy as the hotel market slumped nationwide.

For years, city leaders have believed Mountain View needs a world-class hotel and conference center for large events, and attempts to build a hotel for that purpose have failed in the past.

"It was hard to tell how much Google wanted [the hotel in the first place," Li said. "The city may not be able to get interest anymore. With the credit crunch it may be harder to get financial support. Nationwide, the hotel market in general is sort of at the tail end of a building boom, but opinions are mixed on that."

"Right now we are collecting our thoughts on what the next steps would be," he said.

But Bechtel said Google was not interested in continuing negotiations, and the city is now looking for other options for the site. One option would be to continue the quest for a willing hotel operator, Martello said.

Google hotel falls through

Negotiations break down for long-sought conference center on Charleston Road