Palm Beach County to reconsider convention hotel deal on Nov. 10

Palm Beach County commissioners are scheduled to reconsider a transaction for a second convention center hotel on Nov. 10, including a $26 million purchase of the completed hotel and land and a long-term lease back to the developer.

County staff are asking the board to reconsider and readopt the agreements approved on Sept. 29 and to approve separate letter agreements for the existing convention hotel and the proposed second hotel. The earlier agreements were executed Oct. 1, according to the county agenda. The new vote has not yet taken place.

The agenda describes an 18-story, 400-room hotel on about 1.8 acres at 940 S. Rosemary Ave. in West Palm Beach. A Related Ross affiliate would finance, construct and operate the hotel; the county would acquire the completed building and land for $26 million.

Under the county summary, the purchase price would be advanced through deposits released to the seller for construction costs and credited at closing. That structure is distinct from an immediate $26 million purchase of undeveloped land alone.

The county would then lease the property back for an initial 33 years, with renewal options that could extend the total to 97 years. The proposed hotel lease starts at $1.117 million in annual base rent, with 3% annual increases. Actual receipts depend on when the agreements commence and on a negotiated hotel base-rent deferral, the agenda says.

The county also lists combined initial annual parking rent of $708,000 for the two hotels. Together with the hotel base rent, that produces about $1.825 million at the initial contractual rates. It is a stated gross amount before the different commencement dates and deferral, not a calculation of net return.

The hotel lease also includes participation rent equal to 6% of gross annual revenue above an initial $77 million threshold. That threshold increases by 3% annually and is subject to specified capital-expenditure adjustments, according to the agenda.

Room-block agreements are intended to provide rooms for conventions and other events at the adjacent Palm Beach County Convention Center. The county says the proposed hotel would address a substantial portion of a projected need for 600 additional rooms serving an expanded center.

Commissioners previously approved the broader hotel transaction. The Nov. 10 agenda says approval of the new item would independently authorize the transaction and supersede the earlier agreements and related budget items. The purchase agreement requires a supermajority of five commissioners, according to the county.

The board meeting is listed for 9:30 a.m. Nov. 10 in commission chambers. The agenda can change before the meeting; interested residents and businesses can follow the county’s published agenda for the item and final action.