Financing delays construction on convention center hotel

The groundbreaking on a new 250-room Sheraton hotel at the Bradenton Area Convention Center was set to begin next month, but financing issues, as well as the replacement of the contractor, have temporarily put the project on a shelf.

Improvement Network Development Partners Director of Project Development Anthony DeRusso said the project will eventually move forward, and he said he nd hoped to have a better idea of when by the end of August. DeRusso said the project has suffered a “hole in capital stack,” due to increased construction estimates, as well as having to renegotiate the purchase of 12.5 acres of land to the north of the project site.

All of the property was expected to be secured by now, but DeRusso indicated the developer missed the closing date and was not provided an extension.

“We are back into renegotiation to get that land back under contract and hope to close by Oct. 1,” DeRusso said.

INDP will return to the Manatee County Commission, possibly as soon as Aug. 22, to ask for an extension on the groundbreaking, but that’s not all the developer wants.

“We’ll be asking Manatee County to participate in some incentives that will resolve the hole in capital and put us back on schedule,” DeRusso said.

The incentives INDP is seeking are worth almost $2 million. DeRusso said the county could, in fact, decline to do so, in which case, “We’ll find a way to get it done. We are heavily invested in this project.”

DeRusso said the design phase is about 50 percent complete and many of the permits are ready to go. It’s been a complicated process to get the project moving with deals needing to be made between the developer, Manatee County and the Palmetto Community Redevelopment Agency.

The Palmetto CRA is pledging $8 million to the project in exchange for the county donating the land the hotel will sit on to the CRA, which will eventually reap the benefits of property taxes. Several land swaps were made along the way to make that happen, but until the developer is ready to break ground, the CRA will not secure the funding.

Palmetto City Clerk Jim Freeman said the funding is in place from a bond through the Florida League of Cities. City Attorney Mark Barnebey said while the funding is ready to be secured, “until we know the project is moving forward, we don’t want to push that button.”

There remains much to do before groundbreaking can occur. Because INDP is changing its approved contractor, DeRusso said there will be several changes and amendments made to the development agreement before work can begin.

In September of 2016, project costs stood at an estimated $69 million. The project calls for a 204,000-square-foot hotel with more than 17,000 square feet of public meeting space. A 4,100-square-foot, 240-seat restaurant also is part of the plan.

This story was originally published August 8, 2017 at 2:49 PM with the headline "Financing delays construction on convention center hotel."