Margaritaville — the $130 million beach resort Hollywood city leaders have been dreaming about for years — has a new funding source: Starwood Capital, the investment group which once financed high-end hotels such as the St. Regis, W, Westin and Sheratons around the globe.
“We now have the necessary funds to complete the project,” developer Lon Tabatchnik said Thursday. “This is what we were waiting for.”
With a letter of intent in his hand for Starwood Capital to put up what could amount to more than $80 million, Tabatchnik said all he needs is commission approval to finalize the deal, and that could come as early as next Wednesday.
Starwood spokesman Pat Tucker said the company could not comment on the deal.
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However, according to the company’s website, Starwood Capital is a global investment group with assets of nearly $20 billion. It is the parent company to several businesses worldwide. Until 2000, it owned Starwood Resorts, which manages Sheraton, Westin, Le Meridien, St. Regis, Four Points and W Hotels internationally.
Despite the financial infusion from Starwood Capital, the future hotel and restaurant will keep its original name: Margaritaville Beach Resort. It’s not known yet if Starwood would be involved in managing the property.
Developing the project over the last two years has not been smooth sailing.
“This was a tremendous challenge,” Tabatchnik said. “We had to be creative.”
In 2010, when he first got the green light from the city, Tabatchnik planned to get the bulk of the financing from foreign investors under a federal program where they could win U.S. residency if they put up $500,000.
That plan did not materialize and in May Tabatchnik proposed alternatives to the Hollywood commission, including getting traditional financing and asking for more money from the city’s Community Redevelopment Agency. Originally the CRA was going to put up a $10 million loan for the resort; now it is being asked to provide $23 million.
In July, after Tabatchnik missed three key deadlines to work out a financing plan and get construction permits, the commission agreed to give him more time.
Meanwhile, while trying to get permits, Tabatchnik learned Broward County needed to have the beach property near Johnson Street platted — a process that precisely defines the boundaries of the tract as well as the access to public rights of way. But the county said the platting could take until November. The delay added an additional $200,000 to the project.
Once the platting is complete, Tabatchnik said work could begin within weeks. Construction is expected to take about two years.
Even with the delays, Tabatchnik said he was able to get Starwood on board.
But, he said, Starwood needs to see the commission approval in order to finalize the deal.
“They want to see a shovel-ready project,” he said.
Commissioner Dick Blattner said Thursday he thinks “all the stars may be aligning.”
“I recognize how difficult and impossible it’s been to raise money, but I think what they have here is indicative of their commitment to this project,” Blattner said Thursday.
On Wednesday, Tabatchnik and city staff will give a presentation to the commission laying out the entire funding plan. The commission, acting as the CRA, will have to approve increasing its loan to the project from $10 million to $23 million.
The remaining chunk of the project will be paid for through a special taxing district on the parking garage and money from the developer.
“This is better for the city in the long-run,” said Hollywood City Manager Cathy Swanson-Rivenbark, adding she would strongly recommend the commission and the CRA board approve the new deal. “This is exactly what the city needs.”
The new funding plan calls for the developer to increase the rent it pays to the city, which owns the property where Margaritaville will be built.
In the first year, instead of paying $500,000, the developer will pay $1 million. The rent will then increase by 3 percent annually, and there are other bumps in the scale.
“Frankly, I think this is a better deal than what we originally had,” said Commissioner Heidi O’Sheehan.
CRA Director Jorge Camejo also said the plan to loan more money to the project would be a good investment.
“We have the resources to make this happen,” he said.
Debra Case, president of the Hollywood Beach Business Association, said everyone is looking forward to seeing the new funding proposal. Her board was set to get a preview of the proposal Thursday night.
Case said she supports anything that won’t interrupt the CRA’s current redevelopment plan, which includes improvements to the beach.
Business owners are hopeful the new proposal means the resort will get built, she said.
“There is not a sense of ‘It’s not going to happen,’” Case said. “It’s more like ‘When is it going to happen?”
There will be a meeting open to the public to learn more about the proposed financing plan 6 p.m. Tuesday at Hollywood City Hall, 2600 Hollywood Blvd..