Dunedin Developer Planning $10-Million Condo-Hotel

They are gaining popularity, but since Dunedin does not allow them, a rule change would be required.

By MEGAN SCOTT
Times Staff Writer Published in the St. Petersburg Times Online
December 20, 2004

DUNEDIN - A local developer is prepared to spend $10-million on a 30-unit condominium-hotel on Bayshore Boulevard with a sweeping view of St. Joseph's Sound.

To do that, he has to persuade the City Commission to change its rules to allow condo-hotels, a financing arrangement that is gaining popularity across the nation.

Dunedin does not allow condo-hotels, hotel rooms with mini-kitchens that are individually owned.

But in neighboring Clearwater Beach, as well as other Pinellas beaches and elsewhere, the concept is becoming more common, as land values soar and developers seek investors.

"It makes sense from the point of view of the developer, the bank, the point of view from the investor," said Joel Greene, president of Miami-based Condo Hotel Center, which locates buyers for condo-hotel units and is not connected to the Dunedin project. "It makes sense, so people keep building it because of the demand for it."

Condominium hotels have been around since the 1980s, said Greene, but mainly in resort areas near water.

These days, they are in other locales near restaurants, shops, downtowns and other attractions.

"I have seen it expand obviously in the Las Vegas market," he said. "We have properties in South Carolina, New Jersey. Literally, we are getting inquiries from all over the world."

Close to home, developer Brian Taub is building a 250-room, mixed-ownership Hyatt on Clearwater Beach. The Hyatt Clearwater Beach Resort and Spa would be the chain's first condo-hotel and the first full-scale arrangement in Clearwater.

Buyers would own the room, but have access to it for only about a month each year. The rest of the time the rooms would be rented out, with the buyer collecting some of the revenue.

"Instead of owning a condo that's going to lay dormant, now you have someone else that is using it," Greene said. "That someone else is helping you pay down your maintenance so maybe at the end of the year it's not costing as much."

How much money the buyer makes varies, Greene said.

Usually, 10 percent goes toward management, he said. Then the balance is split evenly between the developer and the condo-hotel owner.

He warned, though, that people should not buy a unit merely to make money.

"These products are not sold that way," he said. "The reason most people are buying them is, it's hassle free. You're not going to get a call from a tenant saying your water pump broke. And then these people are looking at appreciation."

ERA Total Realty Services Inc. of Madeira Beach has a contract to purchase .8-acres near Bayshore and Palm boulevards, where the 18-room Palm Court motel is located.

The motel would be demolished and a four-story condo-hotel built in its place. It's a much better use for the property, said Joseph Jorgensen, president of Travel Resort Services, which is under ERA.

"Palm Court is a prime example of what you don't want in your community," he said. "I'm sure in its day it was a wonderful thing. Its day was 40 years ago."

Jorgensen said the hotel industry has changed, and consumers are demanding more amenities such as multiple bedrooms, living areas, washers and dryers and kitchens. If you don't live in one room at home, he asks, why live in one on vacation?

He said condo-hotels benefit the community more economically than a condo because of the taxes generated. Also, people who stay in a condo-hotel are spending their money on tourist activities.

"The person who lives in the condo is not out buying meals, is not out buying Madeira Beach T-shirts," said Jorgensen, whose company is developing Madeira Bay, which will have a condo-hotel component. "So the economic impact to the community is a major plus."

Dunedin commissioners on Thursday, however, said they needed more information about the concept of a condo-hotel.

A couple of them wondered: What exactly is it? A time share?

But they seemed open to the idea.

"We do have some hotels and motels that desperately need redevelopment," said Commission Bob Hackworth. "And if our current code hinders that redevelopment, it is clearly not a good thing. It is clearly in our interest to fully look at this and see if there is a way we can redevelop those properties."

Some officials worry that if someone uses a condo-hotel as a permanent residence, the city loses out on hotel tax revenue.

But many municipalities, including Redington Shores and Clearwater, have passed ordinances that limit the size of the units and how long the owner can stay there, Jorgensen said.

Under the development agreement with the Hyatt, for example, rooms must be available for guests at least 330 days each year. No one is allowed to stay more than 30 days and no unit can be someone's permanent residence.

"The majority of the time this is used as a standard, typical hotel," Taub said. "These condo-hotels units are built smaller than a typical condo unit so as not to encourage someone to stay."

The Palm Court motel, 2090 Bayshore Boulevard, is valued at $425,000, according to the Pinellas County appraiser's office.

Jorgensen said the Dunedin condo-hotel would consist of one- or two-bedroom suites with kitchens. The complex would have a restaurant, room service, a conference room.

Each would cost about $300,000.

He said the upscale units would be cheaper than many beach condominiums.

"Baby boomers want a second home," he said. "Now all of a sudden they walk in a condo-hotel, they've got something brand-new, fully furnished and on the water."

Vice-Mayor Deborah Kynes said Thursday she wanted to know the positives and negatives of condo-hotels.

Jorgensen said he has offered to meet with city officials to explain the concept. So far, no one, except Hackworth, has taken him up on the offer.

"Codes are ancient," he said. "What happens if all our hotels go away? Bed tax goes away, sales tax from food, restaurants, shops, attractions. It hurts their tax base, merchants, their whole community economically."

If Dunedin does not allow him to do the condo-hotel, he said he could build townhomes there.

But he wouldn't be happy.

"With land values having gone high, in order to make any money, you want to maximize the number of units you want to build," he said. "The condo hotel is not a different market. It's better value."

-- Times researchers Cathy Wos and Caryn Baird contributed to this report. Megan Scott can be reached at 445-4167 or mscott@sptimes.com.