Palm Beach County approves convention hotel deal again

Palm Beach County commissioners approved the second convention center hotel deal with Related Ross for a second time Monday. The vote was 6-1, the same as in September.

The Board of County Commissioners took up the deal again after two West Palm Beach neighborhood groups sued. They said the public had too little notice before the first vote on Sept. 29. Monday’s approval replaces that one.

Commissioner Gregg Weiss, whose District 2 includes the site, voted no on every motion. The purchase needed five of the seven votes.

The votes are on the county’s video of the Nov. 10 meeting, which runs about six and a half hours. The hotel item starts about two hours and 17 minutes in.

Why the board voted twice

An attorney from the county attorney’s office told commissioners that “legal claims were raised” about when the agenda and its supporting papers went public. The county “is not conceding that it did anything that violated the law,” she said. She said the county stopped carrying out the deal as soon as the claims were filed.

The county then advertised the item again and put out the full agenda and documents on time. Commissioners could approve the deal, change it or reject it, she said. A yes vote would be “a new authorization” that supersedes the first one.

The Sept. 29 agreements had already been signed by the mayor Oct. 1, according to the Nov. 10 agenda (PDF). Two new letter agreements, one for each hotel, cancel those signed contracts once the new ones are signed. Commissioners approved both letters 6-1 as well.

The lawsuit, filed Oct. 14 in Palm Beach County Circuit Court, asks a judge to void the September vote. Our report on the suit sets out its claims. The groups’ lawyers had posted no response to Monday’s vote on their firm’s news page by Wednesday.

What the county approved

The main terms are the same as in September, according to the agenda for item 5E-1:

• The county buys about 1.80 acres at 940 South Rosemary Avenue from CityPlace South Tower II, a Related affiliate, for $26 million.
• A Related affiliate finances, builds and runs an 18-story, 400-room hotel on the site, now a surface parking lot for the Hilton.
• The county pays the $26 million as deposits toward construction and takes title to the finished hotel and land.
• The county leases the hotel back to the developer for 33 years, with renewals that could stretch the term to 97 years.
• Rent starts at $1,117,000 a year and rises 3% a year. The county also gets 6% of gross revenue above $77 million a year.
• The two hotels lease 590 spaces in the convention center garage: 335 for the new hotel and 255 for the existing Hilton. Together they pay $708,000 a year in parking rent, plus $5.1 million up front.
• The $26 million comes out of General Fund reserves.

County staff told the board the hotel would be a full-service Curio Collection by Hilton with about 20,800 square feet of meeting and ballroom space.

The county’s case for the deal

Staff said the new hotel would bring the rooms next to the convention center to 800. Of those, 640 would be held for convention bookings. The agenda says an expanded convention center needs about 600 more nearby rooms.

Staff also presented long-range projections over the 97 years. They are the county’s estimates, in future dollars, not adjusted for inflation or present value:

• a hotel and land worth $349 million, bought for $26 million
• $1.1 billion in base and parking rent
• up to $7 billion in revenue-share rent, if hotel revenue grows 5% a year
• 320 ongoing jobs, 255 of them at the hotel

County Administrator Joseph Abruzzo said he and his chief deputy negotiated with Related Ross for six to eight weeks “to get the billion dollar guarantee.”

Why Weiss voted no

Weiss said he was not against a second hotel. “I think we need this hotel,” he said, and called the deal better than the one for the first hotel.

He said 590 garage spaces were “absolutely not enough” for two hotels. County ownership takes the hotel off the property tax rolls, he said, and that costs other taxing bodies, including the city, the Health Care District and the Children’s Services Council. He also said the county could have done more to protect the neighbors who live next to the site.

About 15 people asked to speak, and the board gave each three minutes. Some speakers opposed the deal. One said the new vote was meant to make the lawsuit “go away.”

What it means for you

• The hotel deal is back in force. The county can now sign the new agreements and move ahead with the purchase.
• No construction date has been set. The agenda does not give one. The city approved the hotel’s design Aug. 31, and the neighborhood groups have a separate suit pending over that approval.
• To watch the debate, the hotel item on the county’s video starts about two hours and 17 minutes in. The votes come about four hours and 54 minutes in.