Make us your home page
Instagram

Today’s top headlines delivered to you daily.

(View our Privacy Policy)

Grand Bohemian hotel project in St. Petersburg could face loan default

ST. PETERSBURG — Downtown's long delayed Grand Bohemian hotel project stumbled again this week when city officials announced the developer could no longer honor the terms of its $1.5 million loan.

But unlike in the past, when the city has accommodated numerous requests for delays and changes, city officials took a hard stance: City Council agreed to advise Kessler Enterprise of Orlando that it must comply or its loan would be in default.

The city provided the line of credit in 2004 on the promise that the luxury chain would build a 4-star hotel tower on First Avenue N between Second and Third streets. The prime downtown lot remains vacant.

City officials said the default notice might enable the developer to obtain a loan from another creditor and use that money to continue payments to the city.

The default notice should not kill the project, city officials assured council members during the public meeting.

"They have a lot of investment in making this property ready to go," said Bruce Grimes, the city's real estate director. "I don't think our action will stop them from moving forward."

However, the default also won't guarantee the city a return on its loan, city attorney John Wolfe stressed.

The original loan called for Kessler to pay the city in 36 monthly installments of $6,250 starting in September 2007. The rest of the loan and interest would be paid off starting in September 2010 with monthly payments of $9,899 over 20 years. Kessler also had to maintain a letter of credit with a private creditor to ensure the city would receive the payments.

Kessler had been making steady payments, but advised the city last month it could not renew its current letter of credit when it expires at the end of the year. Kessler offered to keep making payments without the letter of credit.

"This is the best alternative that we can propose in the current financial environment," wrote Day Dantzler, Kessler's chief financial officer, in an October letter to the city. "We remain committed to the project and look forward to commencing construction once the financial and demand markets rebound."

City officials also discovered Kessler had gotten itself into more debt after it mortgaged the property as security for $6 million. Kessler did not tell the city of the mortgage, which prevents the city from substituting the loan with a mortgage on the property.

Mayor Rick Baker, who has fiercely advocated for the project, remained optimistic about the hotel.

"I'm hopeful that someday it will still happen," he said. "The good part of this is at some point the economy will turn."

The Grand Bohemian project has a long, troubled history.

The City Council agreed to sell the prime downtown parcel formerly occupied by the Florida International Museum to Progress Energy for $5 million in 2004. As part of the deal, developers promised a Grand Bohemian would open along the eastern corner of the site in August 2007. Progress Energy was awarded the bid even though three other companies offered to pay more.

Kessler Enterprises promised a luxury hotel tower, complete with an extensive art gallery, an elite Bosendorfer piano bar, an upscale Boheme restaurant, a spa and 62 condos ranging from the $700,000s to more than $2 million.

The project never took off.

Earlier this year, after council members complained about the unsightly, vacant lot, Kessler hired workers to plant shrubbery and oak and palm trees along the lot's borders. Kessler also removed several torn signs advertising the proposed hotel and repaired the fence.

Still, council member Wengay Newton questioned the developer's commitment Monday.

"There is nothing to stop them from walking off and leaving us with what we have now, a lot with trees around it," he said.

Cristina Silva can be reached at (727) 893-8846 or csilva@sptimes.com.

Time line

A look back on the Grand Bohemian project

October 2004: The City Council agrees to sell a prime downtown parcel formerly occupied by the Florida International Museum to Progress Energy for $5 million. As part of the deal, developers promise to build a luxury hotel along the eastern corner of the site in August 2007.

December 2004: Progress Energy and its development partner, Kessler Enterprise, agree to pay the city $3.5 million at closing for the property. They agree to pay the remaining $1.5 million through a six-year loan with a 5 percent interest rate.

May 2005: Orlando hotel developer Richard Kessler presents his design for the Grand Bohemian hotel complex, a 205-room luxury hotel topped with 82 condos ranging from the $700,000s to more than $2 million.

July 2006: Kessler modifies development plans for the 28-story tower to include 260 hotel rooms, an increase of 50 percent, and nearly twice as much event and meeting space. The number of residential condos, priced from $500,000 to $5 million for penthouse suites, is cut from 82 to 52.

August 2007: Kessler wires $1.8 million to City Hall to complete the purchase of the half-block next to the new Progress Energy headquarters. The company vows to start construction by December 2007.

December 2007: Kessler reduces number of condos from 52 to 22.

August 2008: Kessler tells City Hall the project will no longer include condominiums. A grand opening is pushed back to early 2010.

February 2009: Kessler Enterprise tells City Hall it can't meet its April 30 deadline to start construction and asks to push back the groundbreaking to September 2012.

November 2009: City Council agrees to send Kessler a notice advising the developer that it has to comply with the terms of the city's loan or it will be in default.

Grand Bohemian hotel project in St. Petersburg could face loan default 11/17/09 [Last modified: Monday, November 7, 2011 5:08pm]
Photo reprints | Article reprints

© 2017 Tampa Bay Times

    

Join the discussion: Click to view comments, add yours

Loading...
  1. Rays late-night bullpen shuffle: Alvarado, Pruitt down; Kolarek up

    Blogs

    The Rays shuffled their bullpen again after Tuesday's game, sending down struggling LHP Jose Alvarado along with RHP Austin Pruitt to Triple-A Durham, and turning next to LHP Adam Kolarek, who will make his major-league debut at age 28,

  2. Tampa Bay Times honored for top investigative story in Gerald Loeb annual business awards

    Business

    The Tampa Bay Times was a co-winner in the investigative category for one of the highest honors in business journalism.

    Tampa Bay Times current and former staff writers William R. Levesque, Nathaniel Lash and Anthony Cormier were honored in the investigative category for their coverage of "Allegiant Air" in the 60th Anniversary Gerald Loeb Awards for Distinguished Business and Financial Journalism. 
[JAMES BORCHUCK   |   Times

]

  3. Pasco woman gives birth to child fathered by 11 year old, deputies say

    Crime

    A Port Richey woman was arrested Tuesday, nearly three years after deputies say she gave birth to a child fathered by an 11-year-old boy.

    Marissa Mowry, 25, was arrested Tuesday on charges she sexually assaulted an 11-year-old and gave birth to his child. [Hillsborough County Sheriff's Office]
  4. For good of the Rays, Tim Beckham should embrace move to second

    The Heater

    PITTSBURGH — The acquisition of slick-fielding shortstop Adeiny Hechavarria said a lot of things, most notably that the Rays are serious about making in-season moves to bolster their chances to make the playoffs, with a reliever, or two, next on the shopping list.

    PITTSBURGH, PA - JUNE 27:  Tim Beckham #1 of the Tampa Bay Rays celebrates with teammates after scoring during the eighth inning against the Pittsburgh Pirates at PNC Park on June 27, 2017 in Pittsburgh, Pennsylvania. (Photo by Joe Sargent/Getty Images) 700011399
  5. St. Petersburg showdown: Kriseman faces Baker for first time tonight at the Rev. Louis Murphy Sr.'s church

    Local Government

    A standing-room-only crowd packed a Midtown church banquet hall Tuesday to witness the first face-off between Mayor Rick Kriseman and former mayor Rick Baker in what is a watershed mayoral contest in the city's history.

    Former Mayor Rick Baker, left, is challenging incumbent Mayor Rick Kriseman, right, to become St. Petersburg mayor.