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Ocean Properties Ltd. Receives Nod to Build a 400-room
 Hotel and Condo Next to Palm Beach County
 Convention Center;
Taxpayers to Front Subsidy of Approximately $14.5 million
By Tom Stieghorst, South Florida Sun-Sentinel
Knight Ridder/Tribune Business News

Jun. 2, 2004 - Ocean Properties Ltd. got the nod Tuesday to build a 400-room hotel and condo project next to the Palm Beach County Convention Center, but rival developer CityPlace Partners again charged the selection process was "rigged" and vowed to block the project.

The Palm Beach County Commission ranked a plan by Delray Beach-based Ocean as the most desirable of four presented at a special meeting on Tuesday. The proposal by CityPlace was picked as a fallback if county staff can't negotiate a final deal with Ocean.

"It's going to cost the county $9 million more," an enraged Steven Ross, New York principal of CityPlace Partners shouted at commissioners after the 7-0 vote.

The hotel would be directly to the east of the convention center, which opened last December, and is meant to make the center more attractive to meeting planners. But it will cost taxpayers an upfront subsidy of $14.5 million, according to Johnson Consulting, which advised the county on the plans.

All four of the projects sought public subsidies, which are typically needed to get such risky projects done, principal Charles Johnson said.

An analysis by Johnson projected that at the end of 30 years, the net cost to the county would be $3.9 million for the CityPlace project and $12.6 million for Ocean Properties.

But commissioners liked the fact that Ocean Properties would start paying $500,000 a year in rent immediately, that it promised to complete construction in 18 months, that it would create less residential traffic, and that it would build a 901-space parking garage on site.

"I like the smaller number of condos and the extra parking," said Commission Chairwoman Karen Marcus.

The Ocean project would include 104 condominiums projected to sell for about $380,000 each, compared to 255 condos selling for $240,000 a piece in the CityPlace plan.

Financing would come from Ocean's controlling shareholders, the Walsh family, and Bank of America. Ocean was the only one of the four developers not to name a hotel operator. "At the appropriate time, if selected, we feel we can get whatever brand is required," said Ocean Properties vice president Tom McMurrian.

Johnson agreed it shouldn't be an issue.

What could muddy the waters is a history of bad feelings surrounding the hotel site. CityPlace Partners owns the land, but has failed for several years to develop it as a hotel. At one point, the county contends, CityPlace was going to give the land to the county for free.

Under an option agreement, the land will revert to the county, but the two are in litigation over the price, which CityPlace values higher than the county.

After the commission meeting, Ross passed by officials from Ocean Properties and commented, "You'll never get the land, so it won't matter."

In an interview, Ross said the commission identifies CityPlace Partners with the city of West Palm Beach in the ongoing site dispute and that "they still feel they should have gotten that land for free.

"There's no way we are going to convey that land to them," Ross said. "They can look for a long, drawn-out court battle," he said.

CityPlace has developed an enormous residential, retail and entertainment project near the convention center north of Okeechobee Boulevard.

Two other firms presented proposals. Austin, Texas-based Faulkner USA teamed with Hyatt Hotels, and Florida Realty Investments, a West Palm Beach developer, proposed an Embassy Suites.

Before the commission picked a developer, it approved, by a 5-2 margin, a motion saying the developer and organized labor should "endeavor" to reach a labor peace agreement that would set ground rules for organizing the hotel's work force of several hundred people. Commissioners Marcus and McCarty voted no.

The cost for Ocean Properties to build the hotel was projected at $157,000 per room, well below the other three plans, which ranged from $183,000 to $201,000 per room. In all, Ocean expects to spend $100 million on the hotel, the condo tower and the parking garage.

-----To see more of the South Florida Sun-Sentinel -- including its homes, jobs, cars and other classified listings -- or to subscribe to the newspaper, go to http://www.sun-sentinel.com.

(c) 2004, South Florida Sun-Sentinel. Distributed by Knight Ridder/Tribune Business News. For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail reprints@krtinfo.com.

 
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