Hilton and Developer Partner Faulkner
USA Win Crucial
Vote to Build a 1,000-room
Hotel Next to the Broward Convention Center in Fort Lauderdale, Florida
|By Douglas Hanks, The Miami
HeraldMcClatchy-Tribune Regional News
Nov. 2, 2007 - Hilton won a crucial vote Thursday evening in its bid to build a 1,000-room hotel next to the Broward convention center in Fort Lauderdale.
In a 6 to 4 vote, a panel that included all but one of the nine county commissioners recommended picking Hilton over Marriott in the contest for the prime real estate.
The decision moves Broward a step closer to the convention-headquarters hotel tourism officials have sought since the center opened two decades ago.
"This has been missing from our location since 1989," said Broward tourism director Nicki Grossman, who served as chairwoman of the selection committee.
But big hurdles remain. The county staff must negotiate with the Hilton team over contentious issues including ground rent, financing details, a detailed site plan and construction timetables. Fort Lauderdale would also need to give zoning approval for the proposed 32-story hotel, which commissioners warned could be an uphill battle.
The vote followed lengthy sessions with both teams, who proposed similar hotels but different ways to pay for them. Both wanted about $400 million from tax-exempt bonds Broward would authorize, but would be paid off using revenue from the hotel.
While Marriott requested no public backing of the bonds, Hilton wanted a $6 million pledge of hotel taxes each year as a guarantee against missed loan payments. Broward County also would be responsible for debt service on the bonds if the hotel failed.
But Hilton offered a big carrot given Wall Street's current credit crisis: Its team, backed by JP Morgan, would buy all $398 million in bonds in its deal, while Marriott would need to find buyers in the credit market.
"In these uncertain times, you need to remove the middle man," said Christopher Romer, executive director of JP Morgan Securities. "We are your investor. We're going to buy your bonds."
The Hilton plan calls for Broward to receive about $4 million a year in rent, plus $71 million over 10 years in profit sharing from the hotel. County negotiators likely will try to boost those figures, or use them as leverage to secure more discounted rooms for groups booking in the county-owned convention center.
Hilton proposed an undulating glass hotel built on the water by the 17th Street bridge, with a roof designed to resemble waves on the adjoining Intracoastal Waterway. An elevated walkway would connect the hotel's 74,000 square feet of ballrooms to the convention center.
Marriott offered a more elaborate presentation than Hilton, with architectural models of the site, computerized animation and a production aide signaling to speakers when they were straying from the schedule. Marriott also had locked up rights to buy the adjoining Portside retail site for $34 million, land it pitched as key to modernizing the convention center's look and function.
Mark Schultz, president of Faulkner USA, the Texas developer behind the Hilton plan, told a Broward staffer before the vote he expected Marriott to win. After his side won, Schultz declared: "I'm shocked."
The site would give Hilton a sprawling convention hotel to replace the Fontainebleau, which it ran since the 1970s until Turnberry bought the 1,200-room Miami Beach resort three years ago. And it would hand Blackstone, which recently bought Hilton, a hub for its large portfolio of Fort Lauderdale hotels, including Pier Sixty-Six, Bahia Mar and the nearby Fort Lauderdale Grande.
Grossman cast her vote for Hilton, citing delays in a Marriott convention-center hotel planned in Washington, D.C. The county's paid negotiator on the project, Mark Tobin of Hospitality Real Estate Counselors in Connecticut, urged the panel not to hold the Washington project against Marriott, saying politics were the biggest cause of the problems there.
The full County Commission still must endorse the panel's vote, with a final terms sheet due by Feb. 1. Should the two sides fail to reach a deal, the county could turn to Marriott as the panel's second choice.
Hilton's team expects to spend $298 million building the hotel, which would open in early 2011. Room rates would top $248 a night after its fifth year in operation, slightly less than the $282 Marriott forecast. Marriott also would have spent more on construction, with a budget of $355 million. But Marriott's promise to shield Broward from exposure to the ups and downs of the hotel business appealed to some commissioners, who were leery of pledging hotel tax to back the project.
"I just don't want the taxpayers of Broward County to be on the hook for any amount of money on this hotel," said Commissioner Josephus Eggelletion Jr., who voted for Marriott and also serves as the county mayor. "I don't want to risk taxpayer money on this deal at all -- not one dime."
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Copyright (c) 2007, The Miami Herald
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