Luxury hotel, condo project is now dead
By Christopher O'Donnell
Tampa Tribune
Published: Aug 9, 2013

ST. PETERSBURG - After nine years of work, a plan to build a luxury upscale hotel and condo project known as the Grand Bohemian is dead.

City leaders Thursday agreed to a deal to let Orlando hotel developer Kessler Enterprise pay off its remaining debt from its $3.3 million purchase of the old Maas Brothers Store site that it bought in 2004 to build a hotel and condo tower.

Kessler officials said they now plan to sell the 1.2-acre parcel on the northwest corner of Second Street North and First Avenue North to Daniel Corp., an Atlanta-based development firm planning to build luxury apartments and some retail stores. Kessler officials declined to divulge the sale price.

Under the agreement, Kessler will repay the city the $1.3 million it still owes on the deal. Payment will comprise a $900,000 lump sum with the remainder being paid when the sale completes or by Jan. 3. City attorneys said there was no stipulation in its agreement with Kessler that would let the city take back the land.

The Grand Bohemian was envisaged as a lavish conference facility with meeting rooms, plush hotel accommodations, an art gallery and spa.

But the project was another victim of the real estate crash, said Kessler Senior Vice President Brian Py, who said demand for convention space and hotel rates are still too low to make the Bohemian viable.

"That demand segment has not recovered anywhere to the extent that it was pre-2008 levels,” Py said.

Losing the project is a blow for the city's downtown, which city leaders said lacks hotel and convention space. Meanwhile, neighboring Tampa has benefited from events such as last year's Republican National Convention.

"It's not going to be a hotel; that is my biggest problem,” said Councilwoman Leslie Curran.

Kessler's decision to scrap the hotel also comes at a time when Pinellas County is reporting record levels of tourism, she said.

Py said the Bohemian was not aimed at the regular business traveler and that 60 percent of its revenue was expected to come from commercial businesses, many of which are still restricting their travel budgets.

Council members supported the deal saying it would be better for the city to see some development on the lot, which also was once the site of the Florida International Museum, than for it to remain vacant.

"I think this makes perfectly good sense if we have someone close to building,” said city council Chairman Karl Nurse. "Kessler has clearly invested a lot of money and energy in this over the years.”

That included two occasions when Kessler, which owns 10 hotels, including four in Florida, renegotiated its 20-year loan with the city as it struggled to get backers during the recession.

City records show that in addition to its $1.8 million down payment, Kessler has paid roughly $571,000, total, in monthly payments.

"We've invested a substantial amount of money in this project,” Py said. "We'd still like to do it in St. Pete. It's a question of timing.”

codonnell@tampatrib.com
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Twitter: @codonnellTBO