Every downtown has a building no one wants.
You know the kind: It sticks out like a sore thumb, blighting the downtown neighborhood around it. It's the kind of building that's too expensive to tear down and too costly to renovate, so it just sits there vacant for years. Mayors hate it, developers avoid it and brokers joke about it. Occasionally, a brave entrepreneur tries to put a deal together to salvage it.
The latest redevelopment effort concerns the former Ambassador Hotel, a vacant 24-story tower of hideous pinkish hue at the gateway to downtown Fort Myers. It is so big that the developers who opened it in 1986 lost it in foreclosure a few years later because it was a financial disaster.
Now owned by a Thailand-based hotelier family that's been paralyzed by internal strife after the patriarch died, the hotel is under contract to be sold to Robert MacFarlane of The Pittman Group, the same developer who built condo towers in downtown Fort Myers during the real estate boom.
MacFarlane plans to turn the hulking structure into upscale senior-housing apartments called Campo Felice (happy fields in Italian), which he named after a village by the same name in Sicily where he owns a home.
The $60 million project is an ambitious one that includes raising money in a tax-exempt municipal bond offering and obtaining tax-increment financing to build 323 apartments, a restaurant, a 175-seat lecture hall, two pools and a bar overlooking the Caloosahatchee River. If MacFarlane is successful, the deal could close this summer and construction will be completed by fall 2014.
As significant as the project is, it is more meaningful for the ongoing revitalization of downtown Fort Myers. For example, city officials have been eager to attract an upscale hotel to downtown so it can host conventions at Harborside Event Center. The building's renovation as a senior-housing complex takes a prospective competing hotel off the market.
In addition, the redevelopment of the Ambassador Hotel could provide a boost to properties around it. Entrepreneurs are discussing new restaurants, shops and even a movie theater nearby.
“It's already leading activity to that end of town that we didn't have before,” says Don Paight, executive director of the Fort Myers Redevelopment Agency.
A new skin
As ugly as its exterior is, Michael Sheeley and Todd Gates say the building's structure is sound. Sheeley is the architect on the project, and Gates is the general contractor. “The building has a great bone structure, it just needs a major facelift,” says Gates.
In fact, Gates attempted to buy the building in 2003 to turn it into a condo hotel, but the chairman of the Thai family that owns it died and the deal never closed because his children fought over his estate.
The reason the building is so large is it was built in the 1980s with the hope that casino legislation would allow gambling in Florida. To be eligible for a casino license under the proposed legislation, a property needed at least 400 rooms. Sheeley says the building has 417 rooms.
When the casino legislation failed, the hotel was too big for Fort Myers. “There was very little demand,” says Sheeley. “It was overbuilt for the market.”
A bank foreclosed on the hotel and it was sold to the Thai family for $6.7 million in 1993, court records show. Recently, the Lee County Property Appraiser assessed the building at $3.9 million, down from $11.8 million in 2006. The hotel hasn't welcomed any guests in five years.
Conversion to condos would have been difficult. That's because the rooms have 8-foot ceilings and condos today are built with 9- or 10-foot ceilings. “That was a downer for a lot of people,” says Sheeley.
Ceiling height is less important for senior housing. The interior will be gutted to create 323 apartments and the exterior will get new glass with a white facade. “You might not recognize what was there before,” says MacFarlane.
There are few urban senior-housing complexes on the river and those that exist have waiting lists, MacFarlane says. Monthly rents will range from $1,100 to $2,800 a month depending on the size of the apartment. “All the others are suburban,” Sheeley notes.
In addition, the building has 535 parking spaces, half of which will be leased to the city. A new city library is now under construction across the street.
The appeal, MacFarlane says, will be the building's proximity to downtown's shops, restaurants and entertainment. The Florida Repertory Theater is a few blocks away, for example.
In addition, Campo Felice will have an upscale restaurant overlooking the river, a terrace bar, two pools, a cafe and a 175-seat lecture hall.
Campo Felice is located in an enterprise zone that is eligible for tax-exempt financing under the auspices of the Industrial Development Authority. Investment-banking firm Bair will underwrite a $49 million bond issue within a few weeks, MacFarlane says.
MacFarlane says bank financing had dried up for real estate projects downtown. “A year ago, there was almost no banking of that type in the United States,” he says.
In addition, the building is eligible for a downtown tax rebate of $7 million over 19 years, says Paight. “For a project like this, you've got to get creative to make it work,” says Paight. “There's a lot of moving parts in this.”
The city has an incentive to make it work because it's been trying to attract a developer to build a new convention-center hotel to feed additional business to the Harborside Event Center downtown. The removal of the building as a potential competitor gives a developer more confidence to proceed, Paight says.
“The demand is very strong in great part because you have 10,000 seniors entering the market daily in the U.S.,” says MacFarlane.
Many of today's retirees come from urban areas and seek a more urban lifestyle. MacFarlane says more New Yorkers are discovering Southwest Florida, which traditionally has been the destination for Midwesterners. “JetBlue changed that entire dynamic when they started to fly to Fort Myers from New York,” says MacFarlane, a New Yorker who owns a condo in the Beau Rivage building in downtown Fort Myers.
The building sits near First and Fowler streets. “It's the gateway to the historic River District,” MacFarlane says. He says he's in discussions with developers of a 10-screen movie theater and a possible university campus extension on adjacent properties.
MacFarlane credits the positive political climate in Fort Myers, whose mayor, Randy Henderson, is a longtime developer and commercial real estate owner downtown. “We've been lucky here,” MacFarlane says.
Pretty in pink
The Ambassador Hotel in downtown Fort Myers is one of several landmark buildings in a Gulf Coast urban core in makeover mode.
Another one is the old Manatee River Hotel in downtown Bradenton, more infamously called the Pink Palace for its exterior color. The building, on 10th Street West, is being redeveloped into a 115-room Hampton Inn & Suites, a $17 million project overseen by Syracuse, N.Y.-based Widewaters Group. Renovation work began in January, and the hotel is expected to open by the end of 2013.
Like the Ambassador, The Pink Palace has a rich history. It's been both a hotel and a retirement home since it opened in the early 1920s. Guests rumored to have stayed there when it was a hotel include Al Capone and Babe Ruth.
The building, however, sat empty for about the past seven years, until Widewaters and Bradenton city officials reached a deal on incentives and tax rebates for the Hampton Inn project. Now local officials are enthusiastic about the project, both for the additional rooms and to complement some other recent downtown successes. That includes renovations at McKechnie Field, spring training home of the Pittsburgh Pirates, and the new Riverwalk.
— Mark Gordon