Jane MusgravePlan to build 18-story edifice enriching the county by billions is approved, but residents sue.
In an effort to stop development giant Related Ross from building a second 400-room convention center hotel that they claim will destroy a historic neighborhood, a group of West Palm Beach residents on Wednesday sued the city to block the construction project.
The suit came a day after the Palm Beach County Commission signed off on a complex deal with Related to build the 18-story hotel that commissioners lauded, saying it would pump billions into county coffers and the local economy over the next century.
“Everyone is going to benefit from this, the city, the residents and them — all the way around,” County Mayor Sara Baxter said. She called the deal a “no-brainer.”
The estimated $349 million hotel required the approval of the county and West Palm Beach. City commissioners had to change zoning rules. They did so on Aug. 31.
Meanwhile, because the county owns the convention center and the garage where hotel guests will park and controls the 1.8-acre hotel site, it negotiated a 97-year lease with the company owned by billionaire Stephen Ross, owner of the Miami Dolphins.
Talked about for years, the second hotel would help the long-struggling convention center on Okeechobee Boulevard attract large national and even international events, commissioners said.
“We’ve been trying to land this hotel for years, and we’re finally here,” Commissioner Joel Flores said.
Enough notice for the meeting?
In a last-ditch attempt to stop the commission from taking the final step to make the hotel a reality, residents on Tuesday appealed to county commissioners to delay the vote.
Attorney Steven Casey, who represents residents of the historic Grandview Heights neighborhood and others who live nearby, said the commission violated its own rules by giving residents only five days’ notice of the meeting.
County Attorney David Ottey disagreed, saying the notice was legally sufficient. County Administrator Joe Abruzzo agreed that the county followed the law. But, he later said that the meeting was scheduled, in part, to accommodate Related and protect the county.
With construction and supply costs rising, the company wanted to break ground by the end of September, he said. If it didn’t get county approval by the end of the month, it said it would be forced to renegotiate what he described as an extremely lucrative deal for the county.
“They said it would cost the county $1.6 million for every month past Sept. 30,” Abruzzo said. “We verbally agreed to do it in September.”
However, city officials said Related hasn’t gotten permits to begin construction. The plans, they said, are still under review.
But, promises and potential penalties aside, it was clear the commission had no appetite for a delay.
The lone holdout was Commissioner Gregg Weiss, who is running for mayor of West Palm Beach. He raised questions about the deal and ultimately voted against it.
Flores scoffed at Casey when the lawyer said nearby residents were deeply concerned that their lives would be upended during the roughly 2½-year construction project and by noise and traffic generated by the 204-foot-tall hotel that will loom over their homes and apartments.
Flores reminded Casey that unless the commission allowed Related to build the hotel, a parking garage to serve Related ‘s adjacent 400-room Hilton convention center hotel would be built on the vacant land.
“You’d rather have a parking garage over a hotel that brings economic prosperity to the region?” Flores asked.
Casey didn’t respond. But later, Margaret Frazzini, president of the Grandview Heights Neighborhood Association, said residents felt “steamrolled” by the city, the county and Related.
“This is a shining example of what is wrong with the planning and development process in this city and how it makes residents feel unheard and invisible,” she told commissioners.
West Palm didn’t do water, sewage studies
Using similar allegations that Casey leveled against county commissioners, the lawsuit accuses West Palm Beach of violating its own rules.
Before the City Commission approved the hotel, it didn’t do studies to determine whether water, sewer and drainage could accommodate another 400-room hotel that will have two restaurants and nearly 21,000 square feet of event space.
“The city’s code required the commission to determine, before it approved the amendment, whether the project would exceed the capacity of public facilities,” New York City attorney William Brewer and Casey said in the lawsuit filed in Palm Beach County Circuit Court. “The commission made no such determination.”
Officials from the city and Related declined to comment on the lawsuit.
According to the lawsuit, commissioners also ignored traffic concerns voiced by residents of Grandview Heights and CityPlace Tower South, a roughly 420-unit high-rise condominium immediately north of the planned hotel site.
Rosemary Avenue, which separates the existing hotel and the proposed one, is a popular walking path and the main road to the convention center garage. Along with convention center-goers, valets will use the garage to park the cars of guests of both hotels.
A counter residents placed along the road showed that as many as 600 people use the walkway daily. That number increases to 1,000 during the winter season, they said.
Residents worried that increased traffic — coupled with speeding from money-focused valets — would endanger pedestrians.
While Related told residents that it would install traffic-calming devices and blinking lights to slow traffic, those promises weren’t turned into requirements when city commissioners approved the project, according to the lawsuit.
Instead, city commissioners agreed the safety measures would be considered as part of the permitting process, according to the suit.
Further, while Related officials said the increased traffic from the second hotel would add only three seconds to the wait time at the traffic light at Rosemary Avenue and Okeechobee Boulevard, that finding was based on a 2019 traffic study, the suit says.
Residents of CityPlace Tower South, which joined Grandview Heights in the lawsuit, worry that traffic tie-ups will turn simple outings into nightmares.
Promises weren’t mandated
Many of the concerns of residents simply weren’t addressed, the suit claims.
They asked that steps be taken so music and lights from a rooftop bar and restaurant and parties on the 23,000-square-foot second-floor pool deck don’t keep them up at night. Related promised it would institute a 10 pm curfew.
But Brewster and Casey said they again found no evidence that the curfew was mandated by the city.
Residents also asked the city to take steps so construction workers, those eating at the future hotel restaurants and others don’t park on their streets. No efforts were made to address those concerns, the lawsuit says.
At the commission meeting on Sept. 29, West Palm Beach Mayor Keith James praised county commissioners for paving the way for the construction of the second hotel.
“This is a great deal for Palm Beach County,” he said. “It confirms that the county has become a destination. The city is so confident in this deal that we have agreed to forgo all property taxes over the term of the lease.”
Property taxes waived
Related won’t pay any property taxes on the estimated $349 million hotel because it will be owned by the county.
As part of the complex deal, the county will pay Related $26 million for the 1.8-acre site that two independent appraisers valued at roughly $43 million. Because Related has agreed to spend $5 million to retire a debt on the garage, Abruzzo said the county will pay only $20 million for the land.
Related will then pay the county $1.17 million a year to lease the property. That amount will increase by 3% a year.
Over the 97-year lease, Related will pay the county an estimated $719 million in rent payments alone, Abruzzo said.
That doesn’t include the nearly $397 million it will pay to rent 509 spaces in the convention center garage or the $7.48 billion it would pay as part of a revenue-sharing agreement. It also doesn’t include the $7 billion it would pay in bed taxes.
In total, the deal would bring in $8.5 billion, Abruzzo said, not including sales and bed taxes or the estimated $55 million in jobs, retail sales and other economic activity it will generate annually.
“The only downside is if for some reason the board doesn’t close on the deal,” he told county commissioners.
But, Weiss said, the picture that was painted was overly rosy. He pointed out that if the commission invested $26 million at 5% interest, it would earn $2.95 billion in 97 years.
Further, he said, projections don’t take into account the loss of roughly $1.6 million in annual property tax revenue — money other taxing districts, such as the School Board and the Health Care District, will have to live without.
Weiss further questioned whether the county would ever share in any of the hotel profits. A similar provision was part of the deal the county struck with Related to build the first hotel, which opened in 2016. The county has never received a dime, Abruzzo said.
The county would get a cut of the profits only if the hotel makes more than $77 million the first year. That threshold would increase 3% each year. County staff estimates that hotel revenues would grow 5% annually.
Weiss called that kind of steady revenue growth over 97 years unrealistic. “That’s not how the economy works,” he said. “There are ups and downs.”
If the assumption is incorrect, it is unlikely the county would get the projected $7.48 billion cut of hotel profits, he said.
‘Where are the cars going to go?’
He also voiced concern about the number of parking spaces Related is renting in the garage.
With 200 employees at both hotels, that would leave only 390 for guests renting 800 rooms, not including those who may be eating or attending events at the hotels.
“Where are the cars going to go?” he asked. “What is the protection for the neighborhood?”
Abruzzo and other commissioners dismissed Weiss’ concerns.
Even if the county never shares in hotel profits, the other payments — annual rent and parking — are guaranteed, Flores said.
Other commissioners agreed
“It appears for the people of Palm Beach County this is a good deal,” Commissioner Maria Sachs said. “It’s not just a good deal. It’s a great deal.”
Plan for bigger convention center
Bruce Barber, a resident of Grandview Heights who was unable to juggle his work schedule to attend the County Commission meeting, said he wasn’t surprised the deal was approved.
“I wasn’t shocked, maybe a little disappointed,” said Barber, who made numerous suggestions at city meetings to try to protect his neighborhood. “This was going to pass no matter what.”
Now, he said, it will be up to the courts to sort it out.
He said he is all-too-aware that the hotel is just the beginning of the challenges facing his neighborhood.
By the end of the year, Abruzzo said he will present the commission a plan to more than double the 350,000-square-foot convention center to as much as 750,000 square feet.
That construction project will also have an enormous impact on those living nearby, Barber said.
But, he said, he is hopeful that the lawsuit he and his neighbors filed against the city will get the city’s attention and also inspire others whose lives have been impacted by the rapid redevelopment of the city — much of it by Related.
“Maybe this will get them to slow down a bit and look at the impacts of what they’re doing,” he said.
