|By Douglas Hanks, The Miami
HeraldMcClatchy-Tribune Regional News
Mar. 26, 2008 - Broward County had hoped to use hotel taxes to secure a $415 million loan for a headquarters hotel at its convention center. But with that strategy facing legal hurdles, county negotiators think they've come up with a new source of funds: the convention center itself.
Under a plan presented to commissioners Tuesday, Broward would pledge rental revenues from the convention center as a backstop against financial shortfalls at the hotel. Should the hotel not generate enough money to cover loan payments, the convention-center revenue would go to lenders.
"This is a substantial change," Commissioner Ilene Lieberman told county finance chief Michael Geoghegan. Geoghegan's team has been scrambling to rescue the hotel plan after an unexpected warning from county lawyers last month that Broward couldn't use countywide hotel taxes to build a headquarters hotel.
The tentative strategy outlined in a March 7 memo by tourism director Nicki Grossman calls for pledging convention-center dollars and some hotel taxes to the project's estimated $25 million in annual loan payments. Geoghegan will seek approval from the Florida attorney general's office for the new plan, which would limit hotel taxes to parts of the new hotel servicing the convention center, such as meeting space and a connecting walkway.
The county's financial projections call for the 1,000-room Hilton to generate enough money to pay debt service and deliver profits to the county, but Wall Street firms are demanding pledges of government dollars in case those forecasts prove faulty.
Last year, the convention center listed $7.5 million in costs and $7.9 million in revenues, so there is little profit to pledge to the hotel loan.
Commissioner John Rodstrom suggested the new plan mainly amounts to a bookkeeping shift, since the excess hotel taxes originally pledged to the loan now would be used to subsidize the convention center in case of a shortfall at the hotel.
"Really, it's subterfuge," he said. "How long do we keep kind of forcing this unless this commission is willing to take general funds to support this hotel?"
But Commissioner Stacy Ritter warned against letting the hiccups scuttle a project sought by county leaders for years. "I would hate for us to say that even though the winds of the market have changed, we're not going to at least try to make this deal work," she said.
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