Palm Beach County commissioners are hesitant about giving tens of millions in tax subsidies for another convention center hotel from Related Cos., as well they should be.
For more than a decade, Palm Beach County government and tourist development officials lamented the lack of a symbiotic hotel to bolster a struggling convention center’s potential for attracting groups.
So when the 400-room Hilton Convention Center Headquarters Hotel finally opened next door three years ago, it was to a collective sigh of relief and feeling of hope.
To be sure, the popular Related Cos. hotel is doing well. But the question is whether it is doing well enough. Especially since Related is back seeking tens of millions more in county taxpayer dollars to build a second hotel.
>>>Related content: Developer wants second convention hotel, but county wonders how big should it be?
Commissioners are hesitant, as well they should be. They are being asked to hand over up to $100 million of what looks a lot like corporate welfare to a multi-billion dollar real estate conglomerate. And while such tax subsidies are nothing new to “incentivize” economic development, the numbers being thrown around are enough to warrant due pause.
First, remember that county taxpayers provided $27 million in property tax breaks to Related for the first hotel, and paid $10 million for the 3.6 acres for it.
For the new hotel, Related is asking for tax breaks worth $6.25 million up front, once they obtain building permits for the first 250 rooms, then $600,000 a year for 25 years, or, another $21.25 million. The developer wants similar amounts for whenever they build another 250 rooms. Plus, Related would get a $9 million benefit from not having to build a parking garage for their customers.
Second, consider that convention center bookings, which bumped significantly after the Hilton was built adjoining it in 2016, have fallen off slightly this year. So far, the convention center’s new, under-used garage, built at a cost of $54 million, tends to be only about 25 percent full.
Clearly, a second nearby hotel would help the convention center compete for, and book larger events. Last year saw a record number of room nights booked for conventions: 231,000. According to a recent study, the convention center could immediately use another 600 rooms within a half-mile of the facility.
But Related wants all those tax breaks to build just 250 rooms — with the possibility of building another 250 later on. The company’s senior vice president, Gopal Rajegowda, couches this as being for the county’s benefit. As he explained it to the Post’s Tony Doris last month: “The proposal was focused on minimizing the county’s financial exposure and putting a bulk of the risk on Related to build the hotel rooms as quickly as possible.”
Given these complexities, the commission was right to hold off on considering the new hotel project until a $125,000 study of the convention center expansion and improvement plans by Conventions, Sports and Leisure International (CSL) is done in the first quarter of next year.
>>>Related content: Convention center wish list: A hotel, more meeting space … and a bridge to cross the road?
Those plans must include addressing the longstanding logistical nightmare of pedestrians crossing a busy Okeechobee Boulevard for dining and entertainment at Rosemary Square and the Kravis Center. As we said last year when the city of West Palm Beach studied Okeechobee Boulevard, it is well past time to build an escalator-equipped bridge across the congested thoroughfare — for both tourists and convention-goers.
An advisory board made up of leading meeting planners “all said, ‘You really need to build that bridge. It’s such an important component to the safety of the individuals at conventions and meetings,’ ” Tourist Development Council Executive Director Glenn Jergensen told the Post’s Alexandra Clough.
>>>Related content: Editorial: Plans bode well for a more vibrant, livable downtown WPB
Regardless, if the CSL study does come back recommending hundreds more hotel rooms, Related must do a better job of justifying such a significant commitment of public dollars to what is essentially a private venture.
An increase in convention business would be a boost to county, and West Palm Beach, tourism. But with the existing Hilton’s booking numbers already trending downward, commissioners are right to question whether sinking so much tax money into another hotel is the best use of public dollars right now?
“If the board wants to go forward with this level of subsidy, which I would not be recommending,” County Administrator Verdenia Baker told commissioners last month, “it’s a matter of priority, whether you want to raise taxes or re-prioritize what we’re doing.”
The priority should always be what’s best for the taxpayer.