Who's going to win convention center pot?

[retorsky]

Who's going to win convention center pot?

County Commission may be ready to gamble on high-stakes project

By Daphne Sashin

Sentinel Staff Writer

May 15, 2005

The Osceola County Commission is set to meet Monday afternoon to discuss two proposed deals for a convention center-hotel on Osceola Parkway. This could be the culmination of a high-stakes contest to build a county-owned convention center and attract more business travelers to West U.S. Highway 192.

Or maybe not.

It's shaping up to be something like a high-stakes poker game. The players have come and gone and come back again, the marketplace isn't showing its cards, and some officials still question whether there's enough money in the pot to support the project.

In 15 years of delays, missed deadlines and financing deals gone awry, the commission has reached this point before and made no decision. Late last week, Gaylord Entertainment and FaulknerUSA were revising their numbers, and county auditor Kathy Wall was analyzing the impact of each deal on the tourism budget.

One commissioner, Atlee Mercer, predicted the board won't be ready to pull the trigger Monday.

"This is a very important decision," he said.

The decision comes down to whether the county can afford to be in the convention center business.

The convention center would be funded with the proceeds from the county's 6-cent Tourist Development Tax, which is levied on each dollar spent for short-term accommodations. The county began collecting the sixth cent last year to save for a convention center.

The hotel tax brings in $30 million a year and funds the Kissimmee Convention & Visitors Bureau's operating and advertising budget, maintenance of the county's new baseball and soccer fields, the operation and debt payments on Osceola Heritage Park and other contracts.

It remains unclear whether the county can give up one or two pennies of the hotel tax for a convention center and pay for its existing projects, let alone any future opportunities.

"The question I have to answer is: Do I have to cut one or more of those to live within four pennies?" County Manager Ed Hunzeker said Friday. "I think so, but I don't know how much."

If so, a likely victim is the visitors bureau's $10 million advertising and marketing budget -- because the county cannot default on its commitments -- but Hunzeker will lay out more details when he presents his proposed budget to commissioners this month.

The commissioners last summer asked Wall to study how the convention bureau spends its money and whether the county's agreements for Osceola Heritage Park need fixing. But that study remains to be done.

The deals

Faulkner. The county has spent more than two years negotiating with Texas-based FaulknerUSA for a $350 million mid-size convention center and Sheraton hotel at Osceola Parkway and State Road 535. The hotel would bring in enough money to cover operating losses of the convention center and still turn a profit, Faulkner officials said.

Faulkner's 30-year deal requires the county to earmark about two pennies from its bed tax, though the second cent would come back to the county each year if it wasn't used. The county would also contribute $14 million from its tourist tax reserves.

Faulkner would give the county 70 acres and chip in $18.5 million, while Starwood Hotels -- Sheraton's owner -- would guarantee a $20 million line of credit to cover debt-service costs if the hotel doesn't generate enough income.

The county would be left owning a hotel and convention center that it could sell as early as 2021.

Gaylord. Gaylord Entertainment is asking the county for a $103 million incentive to help expand its posh Gaylord Palms Resort into a 1.1-million-square-foot convention center that would rival nearby Orange County's. Gaylord would own the project, but add Osceola to the resort's name.

Under Gaylord's plan, the county would pledge one bed-tax penny over 30 years. Gaylord also would get $30 million from the county's tourist tax reserves.

The Osceola County Convention Center at Gaylord Palms, as it would be called, would attract larger groups, anchor future commercial development on Osceola Parkway and send overflow business to nearby hotels, said John Caparella, senior vice president and general manager at Gaylord Palms.

The company estimates the expansion would generate 465 jobs and $128 million in taxes for the county during the next 30 years.

The county in 1998 struck a 30-year deal to give Gaylord $90 million in tax incentives to build its original hotel. That money, which comes from tourist taxes collected by the hotel, is being used for construction and marketing to promote the county and the hotel.

Some county officials suspect Gaylord has achieved such success with its Osceola property that it would build the expansion with or without county money.

The players

Commissioners. Only four of the five commissioners will participate in Monday's discussion. Commissioner Ken Shipley was forced to recuse himself because his private-sector employer, Sprint, does business with Comcast, which has a business relationship with Faulkner.

Commission Chairman Paul Owen said Friday that he is ready to vote for Faulkner.

He is adamant about owning the convention center, saying he can't justify giving Gaylord $100 million "and not having anything in return."

Despite concerns about the county's tourism budget, Owen said Faulkner's plan is a workable deal.

"We only invest $14.5 million, plus we're going to pledge assets of the fifth and sixth penny, but someone else is going to run this facility, operate the facility and someone else is going to make the payments," Owen said Friday. "At the end of 30 years, the county is going to have an asset that someone else has paid for."

Commissioner Mercer said he is leaning toward Faulkner for the same reasons, but wants to see CVB projections for tourist-tax collections to make sure the county can afford its existing projects.

"I don't want to rob Peter to pay Paul," Mercer said.

Commissioners Ken Smith and Bill Lane are the wild cards at the table. Smith has voted against Faulkner in the past. Lane has wondered whether the time for a convention center has passed. At a recent commission meeting, both seemed eager to put the issue behind them.

Tourist Development Council. The TDC is a nine-member advisory board that recommends how the commission spends hotel-tax proceeds.

The council last week narrowly recommended that the county pursue negotiations with Gaylord because that deal ties up less tourism tax dollars and appears to be less risky. Its recommendation is not binding.

The industry. Hotels on West U.S. 192 have asked for a convention center for years, lobbying the commission to raise Osceola's hotel tax to 6 percent to build it. Most of them -- 85 of about 107 -- signed a petition asking the commission to vote for the Faulkner project, Mercer said.

"The vicious cycle is continuing: Delay after delay after delay and we are DYING on Highway 192," Denise Bianculli of the Sevilla Inn wrote in an e-mail last month to commissioners.

"You don't have to be a rocket scientist to figure out that if you choose the Gaylord deal, Osceola County will be giving them OUR 100 million dollars as a GIFT."

But businesses in the Old Town area of U.S. 192, which is closer to the Gaylord site, say the Gaylord Palms has helped their business. They have asked the county to help Gaylord expand.

"They have an excellent track record, are leaders in development, and will not waste years that bear no fruit," wrote Larry Naddeo, who owns several amusement shops in Old Town.

Market is wild card

The success of either deal hinges on projections by consultants that there is sufficient demand for convention center space in Osceola County.

A report by hospitality consultants David O'Neal of Conventional Wisdom and Charlie Johnson of C.H. Johnson Consulting said a hotel adjacent to the county convention center would reach 62 percent occupancy and bring in $150 a room per night, even in slow years.

Some experts say those figures are overly optimistic.

"If those projections are not true," Owen said, "then you're in trouble."

Daphne Sashin can be reached at [email protected] or 407-931-5944.

Copyright

[prahaboheme]

hey you should just post all these articles under one thread, start it if you want.

[depechecureguyorl]

Aren't Osceola County schools some of the worst in the region? I can't believe that Osceola commissioners are wasting more money and more time on this project. Given the recent findings that the Orange County Convention Center is LOSING money, one would think they would find more important things to spend all that money on.

[prahaboheme]

Osceola County now has the highest impact fees on new homes in the state at $9000 per home. Of course this is all tied up at the moment due to developers sueing the city, but once that is cleared out the school board will be loaded.

I think the convention center is a good idea considering Osceola's current situtation with tourism. It needs more high end stuff in that part of town. The Gaylord is definitely a nice start, its got to be the nicest resort in Orlando.

[Aessotariq]

Aren't Osceola County schools some of the worst in the region? I can't believe that Osceola commissioners are wasting more money and more time on this project. Given the recent findings that the Orange County Convention Center is LOSING money, one would think they would find more important things to spend all that money on.  <{POST_SNAPBACK}>

Osceola County and the Osceola County School District are independent bodies and therefore they levy separate taxes. These two issues don't really have much to do with each other. Except that a convention center might increase property values for a surrounding taxable area and increase the taxes collected by the county and school district.

[sunshine]

...and create sprawl....

[Aessotariq]

Agreed... 192 is one big elongated piece of sprawl...

[prahaboheme]

truthfully, most of the Orlando metro is sprawl, as is most of Florida.

[depechecureguyorl]

Osceola County and the Osceola County School District are independent bodies and therefore they levy separate taxes. These two issues don't really have much to do with each other. Except that a convention center might increase property values for a surrounding taxable area and increase the taxes collected by the county and school district.

<{POST_SNAPBACK}>

Thanks for the clarification, but I still think Osceola could find more practical ways to spend their money, rather than building a convention center that hardly any local citizens will go to anyway. In response to "...might increase property values..." The Gaylord Palms already increased property values when it was built. A convention center does not guarantee Osceola will get big conventions, when the Orange County Convention Center is the largest in the state and receives all the big ticket conventions anyway. I hate to disagree w/some folks who think this is a good thing. I just don't see the benefit of a county contributing MORE tax money to cater to tourists.

[prahaboheme]

Thanks for the clarification, but I still think Osceola could find more practical ways to spend their money, rather than building a convention center that hardly any local citizens will go to anyway. In response to "...might increase property values..." The Gaylord Palms already increased property values when it was built. A convention center does not guarantee Osceola will get big conventions, when the Orange County Convention Center is the largest in the state and receives all the big ticket conventions anyway. I hate to disagree w/some folks who think this is a good thing. I just don't see the benefit of a county contributing MORE tax money to cater to tourists.

<{POST_SNAPBACK}>

Its really the same reason that Orange expanded. They want to diversify their tourism base with higher end clientelle. When Osceola County tore down the old Silver Spurs Arena and built the Osceola Heritage Park and Exhibition space, it proved to be a huge success and gets most concerts in the Orlando area that need a midsized space. This is the same idea with a convention center. Like I've said before, I lived in Osceola County for a few years, and its pretty evident that they got the short end of the stick when it comes to tourism in Central Florida. Its always been an uphill battle. In the past few years however the county has really taken a new approach to pretty much everythign (which basically means that it no longer sees itself as Orange County's ugly stepsister) and has grown by leaps and bounds in terms of planning initiatives and strategies. This is beginning to trickle down into most aspects of the county and the cities in it.