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Clearwater Beach is hot property for hotel developers again

CLEARWATER — Hear that noise? It's the sound of developers' feet pounding the sand on Clearwater Beach.

Years of stagnation on one of Florida's best-known beaches is over. Clearwater Beach is leading Pinellas County's beach hotel renaissance with some 2,000 rooms proposed, cheering tourism officials eager for more beds and city leaders hopeful for revenue.

Builders have lined up to pore over paperwork with city planners. At marathon City Council meetings, lawyers and architects have cooled their heels for hours until they could make their pitches.

Time will tell if it's a speculative bubble or a real hotel boom, but some hotels are already starting construction.

Big-ticket projects proposed along just one street, S Gulfview Boulevard, include:

• A 230-room, 15-story hotel by Ocean Properties about to begin construction on the site of the former Adam's Mark resort.

• The Views, a 202-room, 14-story hotel by developer Uday Lele's Enchantment LLC that will replace the less-grand Wyndham Garden hotel.

• The 180-room Seaway Hotel proposed by St. Petersburg resident Tony Fernandez.

• A 171-room Hampton Inn & Suites.

More than 1,000 of the rooms have been proposed just since January, most of them along the neglected south end of the island bordering Clearwater Pass, a boat channel between the Gulf of Mexico and the Intracoastal Waterway.

Pick your reason for the rush. An improving economy? The fading memory of the BP oil spill? Developers whose condo fever broke years ago and who now see a lifeline in hotels?

That's all part of the mix, say developers, land-use attorneys and city officials.

Not to be overlooked: The long financing freeze has thawed.

"Banks are lending again," said Clearwater City Manager Bill Horne.

If just the rooms proposed this year are built, at least $200 million of taxable property will be added to an already thrumming economic development engine for the city.

That value could double if Dr. Kiran Patel's long-stalled $250 million resort comes to fruition. In addition, hotelier Jeff Keierleber told the Tampa Bay Times last week that he plans to propose a 125-room hotel next to his existing Holiday Inn on S Gulfview Boulevard. And an expansion of Shephard's Beach Resort is already under way.

Some beach real estate observers think many of the hotel rooms will never be built.

"Some folks will fall by the wayside. They always do," said Ed Armstrong, a Clearwater land-use attorney who has years of experience representing developers on the beach and elsewhere.

Armstrong points to history, specifically the rash of beach condominium projects proposed in the mid 2000s. Oodles of them never made it past the blueprints.

But, even if only a fraction of the rooms gets built, it will greatly aid putting heads in beds and spur Tampa Bay tourism, said David Downing, deputy director of the Pinellas tourism agency Visit St. Pete-Clearwater.

So far, the frenzy is only happening in Clearwater, he said.

"In terms of new construction, Clearwater Beach is where it's happening right now," he said.

Clearwater Beach has a big enough tourist profile to handle the influx of mostly mid-price hotel options under consideration, said Russ Kimball, longtime general manager of the Sheraton Sand Key Resort and a member of the county's Tourist Development Council.

"I think the demand is there," he said.

The condo boom virtually annihilated the fading mom-and-pop motels that once dominated Clearwater Beach. About 1,200 motel rooms were torn down before the economy soured, and many proposed condos were never built.

Ironically, some of those failed condo developments are rising again, this time with hotel rooms. Enchantment. Marquesas. The splashy names of the last decade are back in a different guise.

In most cases, the stampede to build new rooms can be traced to a city incentive created to lure mid-price hotels to a beach with high-end resorts and condos, but not many meat-and-potato options.

Beach By Design, a 2001 master plan designed to encourage and guide redevelopment of then-sagging Clearwater Beach, was amended in 2008 to create a hotel-density reserve of 1,385 units in hopes of attracting mid-price hotels such as Marriott Courtyard or Hampton Inn.

"Not everybody can afford $300 rooms," said City Council member Jay Polglaze.

An earlier 600-room density reserve for high-end resorts had worked well — it was fully allocated to three resort projects, two of which now stand on Clearwater Beach.

Density reserve units allow developers to pack more hotel rooms onto a property than would otherwise be allowed and help with financing projects on expensive beach land. To make a mid-price hotel financially viable on that real estate, developers need as many rooms as they can get.

But for years, that carrot didn't get many nibbles. Just 342 rooms were requested from the mid-price density reserve in the first three years — zero in 2011.

This year is different. Already, 558 rooms from the reserve have been allocated or are pending approval, although planning officials say nearly 200 of those units have serious hurdles to clear.

That kind of "froth," as attorney Armstrong puts it, makes some elected officials and even developers uneasy.

"I'm just concerned," said St. Petersburg developer J. Michael Cheezem, who developed the ritzy Sandpearl resort and high-end Belle Harbor condominiums on the beach. "Maybe they've gone a little overboard."

Cheezem protested when the City Council recently approved a 202-room hotel, "the Views" by Enchantment LLC that got 92 units from the reserve. Cheezem said it would crowd his 4-acre property next door, where he and international hotel developer Ocean Properties plan to build Marquesas, an eight- to 10-story hotel plus a condo tower.

He added that shoulder-to-shoulder hotel towers that eliminate views of the gulf and force pedestrians to wander a retail desert along S Gulfview Boulevard could be the beach's future if the City Council doesn't "put down some guidelines."

Even City Council members are divided over whether the development rush is entirely positive. Council member Polglaze, a strong proponent of beach development, said the city should get as many hotel rooms as it can to accommodate demand.

Not so fast, said Vice Mayor Paul Gibson. A density pool unit is worth up to $100,000 per room. Doling them out too liberally encourages sketchy proposals that might never get built, he said.

"It's OPM. Using other people's money," Gibson said.

Mayor George Cretekos worries about an overdeveloped beach beset by clogged traffic and irritable tourists.

"Even if we've got the best beach, even if we have the best sunset, if you can't get there, you're not going to be able to enjoy it," he said.

Beach residents sing the same song.

"We want to enjoy the views and not have wall-to-wall projects. We already have traffic problems in peak season," said Wendy Hutkin, president of the Clearwater Beach Association.

Right now, there is no consensus on the council about how to proceed. That has prompted many developers to rush their project proposals to the council before it decides to tweak Beach By Design.

"Everyone is trying to figure out this new environment. It's more unpredictable," said Horne, the city manager.

Polglaze said the city shouldn't try to fix what isn't broken.

"We're in a very good position," he said. "I get the feeling that things are really starting to turn around."

Times researcher Caryn Baird contributed to this report. Charlie Frago can be reached at cfrago@tampabay.com or (727) 445-4159. You can follow him on Twitter @CharlieFrago.

Clearwater Beach is hot property for hotel developers again 10/27/13 [Last modified: Sunday, October 27, 2013 11:32pm]
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