YOUR VIEW: The Good, The Bad and The Ugly of the Driftwood Westin Convention Center Proposal

YOUR OPINION • YOUR VIEW

While the development of the luxury Westin hotel is great news for Cocoa Beach (replacing the International Palms Resort), why is there a lack of transparency with Brevard County with the proposal to pay $80 million to build a convention center and parking garage for this hotel?

At Brevard County Commissioners meeting on January 11, 2022, Commission Lober communicated that the Driftwood Westin proposal will be back on the agenda in the next meeting, January 25, 2022, at 9 a.m. at the Brevard Government Center.

This agenda item will be to discuss whether to proceed with a new Request For Proposal (RFP) bidding process to select a vendor to evaluate the economic feasibility of the Driftwood Westin Convention Center proposal.

The proposal originally discussed in the April 20, 2021, meeting has conceptually changed: in funding, scope, decreased size of the convention center, removal of the profit-making parking garage, and increased downside risk for Brevard County.

Let’s discuss The Good, The Bad and The Ugly of the Driftwood proposal.  I have included some famous quotes as subtitles from spaghetti western, The Good, Bad and the Ugly…

“One, Two, Three, Four, Five, Six. Six. Perfect Number.” 

We are now in the largest inflationary period in 40 years with the Consumer Price Index (CPI) increasing to 7%. With uncertain times ahead, fiscal conservative spending should be warranted. Unfortunately, I learned the Driftwood proposal is again being pushed by lobbyists representing the developer.

Given the controversial nature of the lack of transparency and a deal benefiting one company and of risk to taxpayers, I had expected that this was the end of the deal as Bid Contract RFP P22117 May 2021 contract expired on December 31st, 2021.

The May RFP expired in December because Driftwood didn’t provide the Economic Impact and Market Study by CH Johnson & Company that was required for the vendor to do the analysis. Will Brevard County Commissioners make the same mistake and approve another Request for Proposal process this month without the Johnson Proposal Study again?

“Hey, Amigo! You Know You Have a Face Beautiful Enough to be Worth $2,000?”

The good is a beautiful new Westin Driftwood Hotel replacing an older International Palms hotel situated on 15.7 acres in Cocoa Beach, raising hotel rates in the area.

“The Next Town is 70 Miles… If You Save Your Breath, I Feel a Man Like You Could Manage it.”

The bad was a proposal to use $80 million public funds for a money-losing convention center proposition which is taking this money from cultural arts, zoo, aquarium, beach nourishment, stadium, Indian River Lagoon, etc.  Picking winners and losers of an industry is not free-market capitalism.

Using public dollars in a money-losing investment is not being fiscally responsible. Burdening taxpayers with a risky investment when the economy sours is also bad.

When the economy takes a downturn, the tourism tax dollars are the first to go, putting the losses of funding this deal on the shoulders of taxpayers.  Convention centers lose money so public funding this element is a bad business deal for Brevard.

At April 20, 2021, County Commission meeting, Commissioner Lober had sent a 19-page proposal, a proposal to use the County’s tourism tax dollars generated by the hotel to fund, “County issuance of municipal bonds for the development and use of tourist tax revenues to fund the convention center and multi-level parking garage.”

After 30 years of paying off the debt, after 6 more years, the County owns nothing as it all goes to the developer. What does the County get out of this deal, other than risk?

Why is Driftwood proposing for the County as their funding source when they portray themselves as such a successful investment company? And more red flags are raised when you see the incentive for their foreign investors to become a Permanent US Resident through the EB-5 Program by investing in Driftwood hotels.

From the get-go, the Driftwood proposal has been fluid and changing, and the developer losing credibility in my opinion, as could not deliver the Johnson Proposal report for the vendor to analyze for 8 months.

“You May Run The Risks, My Friend, But I Do The Cutting. If We Cut Down My Percentage…Who Knows?”

The ugly is the future degradation of a bad deal that has only gotten worse for the taxpayers of Brevard.  The small convention center idea has been reduced in size from 65,000 indoor space in the April 2021 agenda proposal to 20,000-25,000 square feet in 2022; removal of the profit-making parking garage in the County proposal, as well as TDC downside with risk of losses now all on the County.  This benefits only the Westin hotel company and not the tourism industry.

The original premise was a convention center large enough to be used by other hotels and thus generate more tourism development dollars in the area potentially as justification for investment, but the sad reality is this is now a smaller proposition.

I suggest that a business center and ballroom benefits only the Westin Hotel thereby not generating more tourism dollars for the other hoteliers; and inequitably benefiting just the Westin Hotel, with the County choosing a company of foreign investors over our local hoteliers.

“When That Rope Starts To Pull Tight, You Can Feel The Devil Bite…!”

And then there are the economic forecasts.  Brevard is booming, but a shadow is cast by the Federal spending on inflation.  Why should this concern taxpayers? When Tourism Tax Council (TDC) dollars are committed for 30-year debt service what happens when the economy takes a downturn when TDC dollars are the first to go?   The payments and risk are on Brevard’s taxpayers to pay the debt service.

US stocks have taken a hit lately as investors are anticipating raising interest rates to combat the largest inflationary period in 40 years with the Consumer Price Index (CPI) increasing to 7%.

With uncertain times ahead, fiscal caution should be warranted.  The last thing we want is for the taxpayers to be on the hook for the debt service during the recessionary period because the TDC money has taken a hit.   It would be prudent to be fiscally conservative in light of the inflation we are already seeing.

“Whoever Double-Crosses Me and Leaves Me Alive Understands Nothing About Tuco. Nothing!”

Last April 20, 2021, Commissioner Lober put forth a proposal for Driftwood Capital paying the County $75,000 for a legal, financial, and economic evaluation of the County funding $80 million for the Westin Convention Center and Parking Garage.

The problem was Westin Driftwood’s lobbyists pushed that this analysis needs to be done urgently NOW resulting in little transparency and inadequate due diligence/ specification and shortening the proposal process for bidding.  This was all done without even a formal Johnson report needed for analysis – a document the county still does not have.

Here is the proposal from the April meeting:

■ Proposal has County arrangement as a non-profit company

■ Funding to pay for 65,000 sq feet convention center under roof with 2 ballrooms, 6 banquet and board rooms, capital interest, operating reserves, capital repair and maintenance reserves.

■ 781 parking spaces in parking garage

■ Land leased to County for 36 years – bond is 30 years

■ Developer would build it and charge County a development fee

■ Developer would run it and charge the County a management fee plus incentive fee of 50% of surplus funds on deposit.

Fund through $80 million tax-exempt Revenue Bond, pledging the County’s Tourism Development Tax, net of collection fees, generated by Westin’s hotel revenues and assignment of leasehold mortgage.

For the April 28, 2021, Tourism Development Council (TDC) meeting, Bob Baugher had pushed to have transparency of the Drift Proposal on the agenda.  The County included a Driftwood presentation by lobbyist, Kendall Moore.

While bringing the matter into the open, after 6 years of serving on the TDC, he was not reappointed to the council.  Transparency in our County should be the norm, not something we have to struggle to maintain.

In the May 10, 2021 RFP meeting, Director of Tourism, Mr. Cranis said Conventions are loss leaders – don’t make money.  He said funding it with tourism dollars is an issue as in a down economy TDC dollars are the first to go – and expressed concern whether the taxpayers could be on the hook.

That deal 9 months ago was not a good deal for Brevard County and the deal has continued to sour. Now they have removed the profit-making parking garage, reduced the size of the business center to 20,000 sq feet, and the risk to the county has increased on the downside.  We are free-market capitalism, not a socialist state providing funding to benefit a particular developer.

Perhaps most importantly, with increasing inflation, fiscal responsibility would dictate cost-saving measures and conservative spending especially in deals that could impact taxpayers for many years to come.

ABOUT THE AUTHOR: Sandra Sullivan of Satellite Beach is running for the Brevard County Commission in District 4, which includes Rockledge, Melbourne, Viera, Palm Shores, Satellite Beach and Indian Harbour Beach.

 

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