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Business Observer Tuesday, Nov. 8, 2022 2 weeks ago

Developer changes hotel plan in hopes to avoid lawsuit with city

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A Tampa developer going before City Council on Nov. 10 to win approval for a $40 million hotel plan will proceed with a lawsuit if turned down again.
by: Louis Llovio Commercial Real Estate Editor

Tampa real estate developer Punit Shah has changed the plans for a $40 million Harbour Island hotel his company is looking to build, as he again tries to gain Tampa’s City Council’s approval, this time at a Nov. 10 meeting.

The updated plan calls for the number of rooms to drop from 180 to 145, a 20% reduction, the number of parking spaces to drop from 288 to 115, a 60% reduction and the number of floors to drop from 12 to 10. A planned rooftop bar with views of the city has been eliminated.

All these changes were made to appease a group of Harbour Island residents opposed to his building an AC Hotel by Marriott on a piece of property they say is too close to their residences and the city council members they’ve influenced.

“I don’t want to fight,” says Shah, the CEO of the Liberty Group.

But he will.

Shah, who lives on Harbour Island, has already filed a $6.6 million lawsuit against the city which has been put on hold after mediation in August as the updated proposal goes before a city vote Nov. 10. If city leaders once again turn it down, he is prepared to go to court.

A Tampa developer going before City Council on Nov. 10 to win approval for $40M hotel plan will proceed with a lawsuit if turned down again. (Courtesy photo)

“We listened. We modified our plans and we should get approval even if it might not be the most popular idea,” he says. “It’s the most legal. It’s legally accurate. And you know it is compatible. So our goal is, once that’s done, we can dismiss this lawsuit against the city and just move forward with the hotel.”

The issue is in large part one of location. The way island, just off of downtown Tampa near the convention center, is set up so that the north side is for commercial use and the south for residential.

The dividing line historically has been Knight’s Run Boulevard though Shah, and others, argue that the line of delineation is “distinctly and clearly” a secured gate and gatehouse for the major residential section of Harbour Island.

Shah’s property is at 800 S. Harbour Island Blvd. on the south side of Knight’s Run but not inside the gate, meaning the hotel will be built just outside the gate.

The property itself, currently zoned for office, was originally built in 1987 as a sales office for Harbour Island and later became a SunTrust Bank branch, which closed in 2014.

Liberty has owned it for the past seven years.

Neighbors, who attended the May City Council meeting where the plan was rejected as a group, argue the hotel is too close to the residential portion and that crowds of conventioneers, whether they be businesspeople, politicians or costumed revelers in for a comic book show, will descend on their residences wreaking havoc.

Shah argues that the AC Hotel by Marriott will be a boutique hotel with higher rates, meaning it will be a more selective group that will be staying there. According to Skift, a website for the travel industry, AC Hotel is “an upscale business hotel brand in the select service category.”

Liberty will own the hotel, which will be managed by Tampa-based McKibbon Hospitality Management. McKibbon manages more than 100 hotels in the U.S. including three AC Hotels.

“It’s not a cheap room by any means. It’s a lifestyle boutique hotel,” he says. “And, you know, the bar and the restaurant are going to be a cool amenity for the neighborhood, and it’s open 24/7 for people to come and enjoy.”

Rates at an AC Hotel property near Tampa International Airport for Nov. 7 started at $273 per night.

Shah’s argument to city leaders is that what he plans is consistent with other commercial projects in the area and that the hotel will generate $20 million in tourism taxes for the area over 30 years as well as increased property taxes in the area.

Others, though, have suggested in online forums and discussions that a better use would be if Liberty donated the property so it could be turned into a dog park or green space for a farmers’ market.

“It’s very difficult to address that kind of unreasonableness,” Shah says.

“You know, we’re addressing neighborhood comments on a continuous basis for the past two years, but also now city comments. And I think at this point, there’s nothing more left to do. We can’t bring the building down any further. We can’t reduce the room count any further. We’ve made it as efficient and boutique as possible.”

Tampa’s City Council will hold a public hearing on the matter at its Nov. 10 downtown meeting.

If the plan is approved, there will be a second reading in about 30 days. Once that is done, Shah says the planning and engineering will begin immediately, with construction starting late next year and the hotel opening in late 2024 or early 2025.

Louis Llovio is the commercial real estate editor at the Business Observer. Before going to work at the Observer, the longtime business writer worked at the Richmond Times-Dispatch, Maryland Daily Record and for the Baltimore Sun Media Group. He lives in Tampa.

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