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Tourism Turning Point

John Bozzo  Staff Writer john.bozzo@news-jrnl.com   December 3, 2000; Page 01A    

Take a good look at the Boardwalk next time you're in the area. A few years from now, you may not recognize the place.    

The latest proposals in more than a decade of Boardwalk redevelopment plans offer the most ambitious vision and strongest potential yet. Optimism is high among city and business officials for creation of a central beachside tourist district they say could rival Disney. "This is going to redefine what Daytona Beach is all about," said Paul Politis, president of the Beachside Merchants Association, which supports redevelopment. We have a first-class beach. Now, finally, we're going to have a first-class resort product." Of course, local residents have seen similar predictions and proposals fall flat before.    

But there are key differences this time around that could provide the fuel to keep the plan from stalling: the momentum of a beachside transformation that has already begun with $200 million in construction just north of the Boardwalk; the support of property owners who have been historically opposed to massive redevelopment that leaves them out of the picture; and the heavyweight credentials and cooperative attitude of competing developers.    

A lot of things still have to happen, including the selection of a developer by the City Commission, negotiation of a development agreement, establishing control of the site from various owners and obtaining financing and construction permits.    

If all goes well, and one or more of the current proposals comes to pass, the Boardwalk skyline in 5 to 10 years could include:    

* As many as five towers, up to 20 stories high, housing a full-service hotel, luxury condominiums, a limited service hotel, a suite hotel and luxury apartments;    

* The return of a Ferris wheel as a Boardwalk feature along with a roller coaster and other rides;    

* New, modern amusement centers with the latest games, and upscale restaurants and retail shops catering to a well-heeled clientele;    

* An open area providing a public gathering place and space for outdoor, oceanside entertainment and activities.    

In addition, two parking garages west of Atlantic Avenue could provide badly needed parking space for the new development and existing beachside businesses, such as those on Main Street. New apartments and retail shops with the parking structures could add to the critical mass of activity necessary for success of a major redevelopment.    

The largest of three Boardwalk redevelopment proposals under review at City Hall is estimated at $238 million and could provide as many as 5,000 construction jobs, according to developer estimates. The smallest plan, at $105 million, promises about 1,500 new permanent full- time jobs, a $500,000 annual increase in annual property tax collections and a tripling of Boardwalk tourism to 3 million visitors annually.    

Any of the visions, if realized, could rewrite Daytona Beach's scruffy tourist image of two-for-$5 T-shirt shops, fast food, strip clubs and $25 a night hotel rooms.    

"This is big," City Manager Carey Smith said recently. "I'm quite optimistic."    

History of failure    

Dazzling plans to redevelop the Boardwalk have been floated in the past, only to sink away.    

Daytona Beach began soliciting plans for another hotel and revamped Boardwalk to complement the Ocean Center, the area's convention hall, in 1987. Financing difficulties, resistance from property owners and even the Gulf War blocked progress.    

A 1988 plan, called Ocean Walk, proposed a $250 million redevelopment to include the Boardwalk. The Ocean Walk name remains, but it is attached to a condo/time share/retail project under construction north of the Boardwalk.    

Also in 1988, Boardwalk redevelopment was proposed in both a $28 million Omni hotel plan and a $45 million Hyatt hotel proposal. On Halloween in 1989, the Boardwalk's famed Ferris wheel and other rides were cleared for a proposed $30 million Sheraton hotel and Boardwalk redevelopment. But a year later, negotiations with Boardwalk merchants bogged down. Economic conditions and a decline in the resort industry were cited when the Sheraton plan was scuttled in 1992.    

A $40 million Holiday Inn Boardwalk plan in 1991 was shot down due to financial tightening caused by the Gulf War.    

But several factors are leading officials to believe the current proposals could be the real thing despite the checkered past of Boardwalk redevelopment plans.    

The tourism industry has rebounded in recent years with taxable sales statewide of almost $47 billion for 1999, an 8 percent increase over the previous year, according to Visit Florida, a not-for-profit corporation that markets Florida tourism.    

Officials also can't say enough about the importance of visible progress.    

"Ten years ago, when there was talk about redeveloping the Boardwalk, there was nothing else out there," Politis said. Now there is development: expansion of the Adam's Mark, construction of the Ocean Walk Village condominium/time share project, retail development, the recently opened parking garage, the Adventure Landing water theme park and plans to expand the Ocean Center.    

"Development breeds development," said Virginia Brown, who, with husband Tom, owns the Breakers Beach Oceanfront Hotel in the Boardwalk redevelopment zone. Although the couple only recently completed a renovation of their property, they see the need for change even if it means selling their business.    

The strength of the plans and the companies behind them bolster redevelopment prospects, too.    

The three new Boardwalk redevelopment plans were submitted to Daytona Beach in November in response to a request from the city for proposals. Trammell Crow Co. submitted a $238 million plan, Carlsberg Management Co. offered a $105 million proposal and NOVAHH Inc. envisioned a $180 million project.    

Trammell Crow appears to lead with the largest plan and most star-studded lineup. Trammell Crow is one of the nation's largest commercial real estate services companies, managing 559 million square feet of corporate and retail space including the Volusia Mall. The company broke ground on projects valued at $1.8 billion in 1999 and $1.3 billion in 1998.    

Business partners aligned with Trammel Crow also give them a link to Daytona Beach, including Morris Architects, an internationally known firm that designed Ocean Walk, and Foley Construction, which lists Daytona International Speedway improvements and Daytona USA among its credits. The long list of Trammell Crow's other partners include firms with national and international reputations.    

Trammell Crow's team is excited about the project, according to Paul Rutledge, managing director for Flor ida retail development at the company.    

"This venue (the Boardwalk) in Daytona Beach is really exciting," he said. Most redevelopment areas are in dilapidated downtowns that need to be resuscitated. This is Daytona Beach. The package that's there doesn't match the venue. This product should be comparable with Disney."    

Financing cannot begin until the city selects one of the three projects, which could happen early next year, and until control of the development area is established. If Trammell Crow is picked, Rutledge said his first stop for financing would be Faison Enterprises, a real estate holding company with $1.3 billion in assets that was acquired by Trammell Crow in 1998. Getting owners involved    

Trammell Crow also is aligned with the Boardwalk Property Owners Association, whose members fought redevelopment early this year. That's a key point in the company's favor. A costly battle to obtain site control could delay construction or endanger the financial viability of redevelopment.    

The two competing proposals express a stronger need for eminent domain proceedings by the city to declare a property blighted and force a sale for the new development.    

Rutledge said Trammell Crow is committed to offering ownership opportunities to existing property owners.    

"Our intention is to reach out to all property owners in the area and work with them individually," he said. We don't want to move anyone out, we want to put them in this vision."    

Much of the Boardwalk is owned by Greek families who plan to pass the properties on to successive generations, said Dino Paspalakis, spokesman for the Boardwalk Property Owners Association.    

"If our proposal is selected, I think it's a certainty redevelopment will happen," he said. If our proposal is not selected, it's a certainty we'll fight. Eminent domain is a last resort in our plan."    

In addition to uniting the Boardwalk merchants, Rutledge of Trammell Crow extended an olive branch of cooperation to the two competing projects. There have been discussions among the three developers.    

"The good news is there's three good proposals," said Doug Daniels, an attorney representing Carlsberg Management. Rather than trying to do each other in or compete with one another, it sounds like the people who have submitted proposals are willing to work together.    

"I believe that the Boardwalk will be redeveloped, absent some general financial calamity," he said. If there's a sudden recession or interest rates go sky high all bets are off. But I think something's going to happen. It's time for something to happen."    

Carlsberg Management is a real estate company boasting $100 million in assets under management and a partnership in the Ocean Walk project. Its partners include CNL Hospitality Group, with a portfolio of $600 million in hotels, and CNL Financial Group, a real estate investment and financial services company with $3.6 million in assets under management, along with architects, engineers, construction, entertainment and economic consultants.    

One main difference in the Carlsberg plan is that it envisions widening and strengthening the historic Main Street Pier for amusements including a Ferris Wheel. The other two plans would place such rides on land.    

Theresa Doan, owner of the Main Street Pier, said she would be happy with either scenario and remains open to suggestions that the city of Daytona Beach seek grants to purchase the pier.    

"I think redevelopment would be good," she said. It's a great destination and to improve it would be great."    

Carlsberg faces a tougher road with local merchants who recall the company's decade-old failed Sheraton project and pronouncements that eminent domain proceedings would be needed on the Boardwalk.    

NOVAHH owner Barry Sror knows about eminent domain proceedings firsthand. He was forced to relocate a leased business to make way for the existing beachside redevelopment. He currently owns four pieces of property and six businesses in the Boardwalk redevelopment area. The NOVAHH name stems from his first local property on Nova Road in Holly Hill.    

Sror said he has been branching out from retail businesses to development, but admits he's stepping up in class with a $180 million development plan. His partners include Hall Architectural Associates and engineers from The Performance Group. His main interest is a proposed $65 million, 300-unit, 20-story time share south of Main Street.    

"We'll be able to work with any of the other two entities (Trammell Crow or Carlsberg) and start basically right away," Sror said. The city's role    

All three plans envision a public-private partnership that could include an investment of 10 percent to 15 percent of the project cost by the city of Daytona Beach. Trammell Crow's $238 million plan includes $35 million from the city.    

Tax-increment financing, using increases in property taxes generated by a development to help pay for construction, could provide some of the public investment. So could revenues from a parking garage. These would provide public support without a burden on citywide property taxpayers.    

Other property owners are spared because of the tax- increment formula. The Boardwalk is located in the Main Street Redevelopment Area, which was created about 20 years ago. The area's property values at that time were established as a baseline, and any increases in property tax collections from property owners in the redevelopment area are placed in a trust fund for improvements within the Main Street zone.    

"The real question is the degree of public participation in the project and it has to be sensible, fair and clearly demonstrated to be in the public interest," Smith, the city manager, said. It can't just be to further the economic goals for the developer."    

Daytona Beach is seeking proposals from planning experts to provide an analysis of the three Boardwalk plans. Smith said, We think this is only fair to the three entities that have submitted proposals that we take the very best look at what they're saying and make sure we understand it completely." Smith said Daytona Beach gained experience and a track record in the ongoing beachside redevelopment that will help in pending discussions on the Boardwalk. We feel confident in our ability to put together a viable development agreement," he said.    

That confidence is echoed in the business community.    

"It can't remain the same as it was 50 years ago," said Mike Forest, who owns property leased by Carlsberg. "We're in a time warp. Things change and it's time for the Boardwalk to change for the better."   Cutline: See microfilm for graphics of what the boardwalk will look like in the future.    

This article is copyrighted by The News-Journal Corporation  and may not be reprinted in any form without permission.  For more information please go to www.news-journalon




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