More hotel details emerge

Two big-name hotel developers refined their pitches last week for a Palm Avenue facility.

Representatives of Sarasota-based Floridays Development Co. and Atlanta-based Jebco Ventures Inc. held their second meeting with members of a city committee Feb. 10. That committee has been charged with making a recommendation to the City Commission.

The hotel site is directly beside the Palm Avenue parking garage, on North Palm Avenue at Cocoanut Avenue.

“We believe the right kind of hotel for downtown Sarasota is an arts-related, boutique hotel that will act as a tourism spending generator and an economic magnet,” said Floridays President Angus Rogers.

Floridays estimates it will cost $24.7 million to construct a 10-story, 180-room hotel with an average rate of $205 per night, Rogers said. The firm has scrapped plans for any residential units on the top floors, he added.

Jebco Ventures Inc. President Jim Bridges presented an Embassy Suites portfolio to the committee for a 175-room hotel, but he said he wouldn’t be able to confirm that franchise arrangement until after the city selected the firm.

Nonetheless, Bridges told the committee he never would consider building a hotel on the property without such an arrangement.

“The frequent travel programs of Hilton will drive a lot of traffic here with their powerful reservation system,” Bridges said.

However, Rogers pointed out that his independently operated hotel in Orlando is ranked No. 1 over the numerous franchise hotels that compete with it.

Bridges estimates it would cost $23.5 million to construct his hotel. His company would invest $7 million to $8 million in the project.

He added that Jebco and its partner, The McKibbon Group, could finance the hotel through regional banks if the city were willing to lease the land for 25 years. The group would pay the city 2% of its gross revenues for use of the hotel property and Palm parking garage spaces.

Bridges estimated that would give the city an income stream of about $120,000 to $140,000 per year.

“As revenues go up, the city’s revenues would go up,” Bridges said. “That’s what we can afford to pay, and we can start this project this year.”

Jebco’s plans call for a first-floor restaurant and 5,000 square feet of meeting space.

Floridays has proposed paying $3.8 million in cash for the site at the closing. However, according to terms it has outlined, city officials must agree to sign a credit-tenant lease that would allow the developer to use the city’s credit rating to get a lower interest rate on a loan for construction. City staff has voiced concerns about the risks.

To assuage those concerns, Rogers announced his company was willing to put up $9 million in cash in “firewall protection buffers.” This means the city would have sufficient funds to make payments on the loan for a year, if the hotel operator ran into financial difficulty.

“For this to work, we really want to be open in 2014,” Rogers said.

Floridays estimates the firm would hire 120 employees in the off-season and add 22 or more jobs during season.

The company also is working on an agreement that would enable hotel customers to use the Lido Pool and the nearby beach.

Rogers said his hotel would have an economic impact on the city of between $500 million and $600 million over the next 10 years. He promised it would be one among the top 10 hotel destinations in the state.

The proposal includes 12,000 square feet of meeting space, a hotel spa, a restaurant, display spaces for artwork and collaborations with several downtown businesses and organizations.

Floridays also has exclusive rights to purchase a 5,418-square-foot Cocoanut Avenue parcel, where an antiques store stands.

While Bridges admitted his company is not in a position to negotiate for that Cocoanut Avenue property, he said that fact “doesn’t adversely affect the economics of what we propose.”

City staff, however, seemed intrigued by the prospect of a hotel with a more visible entrance on Cocoanut Avenue.

The only point both company presidents agreed upon was a request that the committee allow them to make their pitches directly to the commissioners.

“We feel strongly taking proposals to the commission for only a few issues is frustrating for commissioners and is a disservice to the applicants,” Rogers said. “Unless they hear an entire proposal, it’s hard for them to put their arms around our entire proposal. We suggest the commission hold a preliminary negotiation session with each team.”

City Purchasing Manager Mary Tucker said the committee members had been struggling over making a recommendation to the City Commission.