Despite controversy over the city's funding of the Margaritaville Hollywood Beach Resort, Hollywood mayor Josh Levy argues his city has made an investment in its long-term future.
According to a deal between the City of Hollywood and the resort's owner, KSL Capital Partners, the resort and parking garage will be paid for in part by taxpayers. The city provided a $28 million grant for the construction of the resort and an $80 million loan for the resort’s parking garage, which will be paid off by the parking garage's users and taxpayers by 2045.
The garage holds 600 parking spaces, 100 for hotel residents and the rest for the public. Revenue from public parking will be used to pay off the loan, and taxpayer money will be used in form of property taxes. That's stirred controversy about the use of taxpayer money and forced city leaders to defend why they gave the money to Margaritaville.
Hollywood Mayor Josh Levy says it's an investment in the city’s future. He joined Sundial to defend the deal and spoke to concerns about the plan's financial viability.
Here's an excerpt. The text was edited for clarity.
WLRN: What happens if there's another financial crisis?
Levy: We are the ground lease landlord of this hotel. The hotel pays rent. The hotel is doing well, but if there is a calamity in the national markets and tourism totally slows, the hotel is still obligated to make its rent payments. Their obligation to pay rent is still there and maybe we wouldn't enjoy the extra icing on the cake, but we still get our base rent which I believe is about a million dollars a year. The hotel would also be obligated to continue paying -- of course like all of us -- its property taxes.
One of the great benefits of Margaritaville beyond just the rents that we bargained for in bringing this project in, is that the hotel's value for property tax purposes is somewhere in the neighborhood of $200 million. That brings in as of last year, $2.4 million a year in property taxes. The beneficiaries of which are the City of Hollywood (taxpayers), the school district, the County, the Hospital District and the Children's Services Council -- all of those taxing authorities split $2.4 million a year just in property taxes that Margaritaville is paying for the improvements they've built on our city land.
What protections does the city have over natural disasters? What if the city gets hit by a really bad hurricane?
The city owns Margaretville. They have insurance for wind-storms just like everybody else so if something were to happen to the hotel they'd be responsible to fix it. If they were to walk away from it completely, that's a $200 million asset. Nobody would ever walk away from it. That's like saying you'd walk away from your own home because the roof got blown up from the hurricane. You'd get a loan to replace the roof. You wouldn't just give the bank the house if you had a bunch of equity in it. They have $190 million of cash equity in that hotel, they're never walking away from it.
You feel confident this is a great deal for the city, but I'm wondering: have you seen anything like this in any other city that shows you, 'Yeah it's a good deal to be in'? At the end you're basically invested in the success of this hotel.
There's a new phenomenon called public-private-partnerships -- P3s -- and this is where the public owns land, the private industry is expert and is in the business of building hotels, and the city as property owners of this land opted to rent this land to the private party that would build this asset. The asset would spill over a bunch of external benefits to the rest of our beaches as well. A total win-win.