WEST PALM BEACH, Fla. — A second hotel next to the Palm Beach County Convention Center is moving forward after county commissioners approved a $26 million deal with Related Ross, setting the stage for what county leaders hope will eventually lead to a larger convention center and bigger events in Palm Beach County.
The agreement, approved in a 6-1 vote Tuesday, would bring a 400-room hotel to land adjacent to the convention center in downtown West Palm Beach.
WATCH BELOW: County approves $26M deal for 2nd convention center hotel
The hotel would be built on land currently owned by CityPlace South Tower II LLC, an affiliate of Related Ross, which negotiated the agreement with the county. Under the deal, the county would purchase the property and hotel and lease it back to Related Ross for operation under a long-term agreement that includes an initial term and renewal options that could extend for up to 97 years.
Supporters called the project a major economic development opportunity that could attract larger conventions, generate tourism dollars and create jobs.
During the meeting, county officials said the hotel could support about 650 permanent jobs, including roughly 255 hotel jobs and 400 additional jobs tied to increased visitor activity.
Staff also said the county has already missed opportunities because it lacks enough hotel rooms within walking distance of the convention center, citing an estimated 20,000 lost room nights and roughly $15 million in lost economic impact from events that chose other destinations.
Officials said the additional hotel inventory would help Palm Beach County compete for larger conventions that require hundreds of nearby rooms and could increase convention center economic output by an estimated 57%.
But not all were sold on the idea.
Residents and their representatives also took issue with how the item reached the commission agenda. Because the hotel agreements were added as an emergency add-on item, opponents argued the public did not have enough time to review hundreds of pages of documents before the vote.
Stanley Casey, an attorney representing the Grandview Heights Historic District Neighborhood Association, argued the project had been under discussion for years and should not have been considered under an emergency agenda process.
"The hotel project at issue has been under structural revision for at least two years, which on its face is not an unforeseen or emergency situation," Casey told commissioners.
Neighbors also voiced that they only had a notice of about five days before the county's vote.
County Attorney David Ottey pushed back, saying the county complied with Florida's public-notice requirements and actually provided more notice than required by law.
"The law only requires us to provide a minimum of 24 hours," Ottey said. "By providing it five days out consistent with our agenda process, it is not an issue."
County officials said the public-private partnership would generate more than $1 million a year in guaranteed rent, along with additional revenue from parking and hotel operations. Once complete, officials estimate the property would be worth nearly $350 million.
Commissioners repeatedly pointed to the project's financial structure as a major improvement over the agreement that brought the first convention center hotel to downtown West Palm Beach.
"I think you've given our taxpayers the best long-term economic benefit with the least risk," Palm Beach County Commissioner Maria Sachs said.
County officials said the county would initially provide a $5 million deposit, with the remaining $21 million paid later after the developer secures financing, permits and meets other construction milestones.
"You just go up to an average person, you go up to them, and you say 'I'm going to give you $21 million and you give me an asset worth $349 million,' just on the surface that is a no-brainer," said County Mayor Sara Baxter.
County says hotel is key to convention center growth
While much of the discussion focused on finances, commissioners and tourism officials repeatedly said the project is really about expanding Palm Beach County's ability to attract larger conventions.
Studies presented during the meeting found the convention center has lost business because of a lack of hotel rooms within walking distance. Officials said additional room inventory is needed before any future expansion of the convention center can move forward.
Commissioner Joel Flores said that the larger goal should remain the focus — to support the convention center operations.
Tourism leaders said the first convention center hotel transformed the facility's ability to compete for larger events.
"The first hotel was a game changer," Palm Beach County Convention Center General Manager Dave Anderson said. "I believe the second hotel is an opportunity to take the success to another level."
Anderson said before the first hotel opened, the convention center largely hosted smaller regional events. Once rooms became available next door, Palm Beach County began attracting larger national meetings and conventions.
"That changed when Related Ross opened the beautiful 400-room Hilton West Palm Beach in January 2016," Anderson said. "As soon as planners knew that the headquarters hotel was coming, the conversations changed."
Officials also pushed back on concerns that a larger hotel and future convention center expansion would automatically create significantly more traffic. Anderson told commissioners that many convention attendees fly into Palm Beach County, take ride-share services to their hotels and spend several days walking between the convention center, hotel, restaurants and nearby attractions.
"The amount of traffic is often a misconception," Anderson said.
He argued that convention visitors typically stay in the area for several days rather than driving in and out each day, making them different from attendees at many local and regional events.
Vice Mayor Marci Woodward agreed, saying these visitors are often "locked into that local space" for several days while attending meetings and events.
Tourism officials said the project could eventually help attract organizations that currently bypass Palm Beach County because they require hundreds of hotel rooms within walking distance of convention facilities.
Neighbors worry about parking and construction impacts
Margaret Frazzini, president of the Grandview Heights Neighborhood Association and a representative of the West Palm Beach Neighborhood Alliance, said nearby residents remain concerned about how the project could affect surrounding neighborhoods.
"This particular project has been weighing on the hearts and minds of my neighbors for two years," Frazzini told commissioners.
One of the biggest concerns is parking, with residents worried that people attending events, staying at the hotel or working during construction could choose to park on neighborhood streets rather than pay to use the garage.
Frazzini told WPTV that residents are frustrated by what they viewed as continued pressure from development around historic neighborhoods, without listening to their constituents.
"The residents are no longer going to stand for it spilling over onto their streets, particularly for the historic districts which have special designation, special protections and the stewards of the homes in these districts are required to treat their homes in a special way, which costs more dollars more investments," she said. "So if we are truly the stewards of historic and the city itself wants to say the historic districts are the crown and jewels of the city then we should be treated as such, not like parking lots and dumping grounds."
County Commissioner Gregg Weiss was the only one in opposition, supporting concerns from residents.
He also questioned the project's tax structure. Because the county would ultimately own the hotel property, Weiss argued the development would not generate traditional property-tax revenue that would otherwise go to entities such as the School District, Children's Services Council, Health Care District, the city and other taxing authorities. During the meeting, county staff estimated the property would generate about $1.649 million annually in property taxes if it remained privately owned.
Supporters of the deal countered that county ownership allows it to receive lease payments, parking revenue and a share of hotel revenue, creating a larger economic return than traditional property taxes alone.
Stephen Ross responds
After the meeting, WPTV reporter Joel Lopez pushed Related Ross Chairman and CEO Stephen Ross for answers about concerns raised by neighbors.
Lopez asked Ross what message he had for residents worried about parking and construction impacts.
"Well, we will do everything during construction to try and alleviate it the best we can," Ross replied.
Ross also argued the convention center garage has enough capacity to accommodate both hotels and convention visitors.
"The garage is so underparked, and the uses when there are people coming and using the hotel are probably going to be at different times than when the convention center is," Ross said. "People are always worried about things, and they take care of themself; I mean we certainly aren't going to encourage parking and discourage parking outside (of the garage)."
County officials similarly argued the garage can accommodate future demand and that convention attendees typically fly into town, use rideshare services and remain within walking distance of the hotel, convention center and nearby attractions for several days.
Convention Center General Manager Dave Anderson told commissioners that "the amount of traffic is often a misconception" and said many convention visitors generate fewer daily vehicle trips than regional events where attendees drive in and out each day.
What's next?
County staff said construction could be completed within three years.
Officials also said they expect to release preliminary renderings for a future convention center expansion by the end of the year.
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