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Citing Frozen Lending Markets, Richard Kessler Asks St. Peterburg, Florida for 3 More Years
 to Break Ground on the Long Delayed Grand Bohemian Hotel
By Steve Huettel, St. Petersburg Times, Fla.McClatchy-Tribune Regional News

February 27, 2009 - The developer of the long-delayed Grand Bohemian Hotel in downtown St. Petersburg can't make a looming deadline to start construction and wants three more years to turn the first shovel of dirt.

Citing frozen lending markets, Kessler Enterprise of Orlando is asking city officials to push back the April 30 deadline to September 2012.

The company probably won't need that much time but can't be sure how soon financing for lodging projects will loosen up, said senior vice president Brian Py. Kessler remains committed to building the luxury hotel beside Progress Energy Florida's headquarters, he said.

"Our focus is on this property and completing this project," Py said. "This is the right opportunity and the best site in the market."

The delay is a blow to Mayor Rick Baker. He signed the deal in 2004 for the city to sell the old Maas Brothers department store site to Kessler and Progress Energy. The developer needs more time to find financing, he said. He wouldn't say if three years is too much.

"I do believe we will have the hotel," Baker said. "We've just got to be a little more patient."

Kessler Enterprise is owned by Richard Kessler, a hotel veteran who ran Days Inn of America for a decade. When the founding family sold the chain in 1984, Kessler got $50 million. He launched into building, operating and owning luxury hotels, stocked with art and artifacts he buys worldwide.

His Orlando hotel company, Kessler Collection, consists of 10 four- and five-diamond hotels operating or in development.

The original St. Petersburg project was largely residential, with 82 condos atop 166 hotel rooms. In mid 2006, representatives of Kessler told the city they were worried about selling enough units to finance the project. As condo sales swooned, Kessler kept redesigning with fewer residences and more hotel rooms. In August, the company asked the city to eliminate residences completely.

The City Council approved the change and moved the deadline for starting construction to April 30. Plans now call for 200 to 275 hotel rooms, plus a restaurant, spa and fitness center, and up to 23,000 square feet of meeting rooms.

Many lenders, including the one Kessler lined up for the Grand Bohemian, have stopped financing hotel projects "without any ability to prognosticate when they maybe able to lend again," wrote Day Dantzler, chief financial officer of Kessler Enterprise, in a letter to the city on Monday. He requested that the council consider changing the construction deadline at its March 19 meeting.

If Kessler fails to meet the deadline, the company has two options. It can sell the property and give the city any profit over the $3.3 million purchase price. Or it can sell the land back to the city for either its current appraised value or the purchase price plus project development costs.


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