St. Pete Beach Resort Property Sales Offer Strong Economic Boost to City

The oldest and some of the newest beach resorts on the white sand in St. Pete Beach sold in 2017 and 2018, and already are having a positive impact on revenue and boosting the city’s economy.

The first major sale was the city’s oldest resort property. The iconic 277-room Don Cesar and the 77-room Don Cesar Suites were sold by Loews and its partners in early 2017 for $214 million to Host Hotels of Bethesda, MD.  The 382-room Sirata Beach Resort was sold by Harry Nicklaus’s grandchildren to Texas-based Crescent Real Estate LLC in March of 2017 for $108 million and recently completed a $15 million facelift.

Property tax assessments from the increase in sales value helped in the tax year following the sale, with a boost to the city and county from the 2017 sales, SPB Mayor Al Johnson told Paradise News. The positive impact on taxes was reflected in the 2018-19 fiscal year budget.

Last October, the Post Card Inn, the beachfront hotel and staple of the beach party scene, was sold for $47.4 million, according to the law firm representing the new owner’s lender. Boston-based TPG Hotels & Resorts, which owns and manages more than 60 hotels across the country, bought the 196-room property at 6300 Gulf Blvd. from the Carlyle Group, an asset management and private equity firm in Washington, D.C. Lawyers said TPG plans to improve the property, though specifics were not disclosed.

Two more landmark property sales were recently announced on January 3. The $100 million sale of the Grand Plaza Hotel and the nearby Beachcomber Beach Resort and Hotel, with a combined 258 rooms, was announced by Holliday Fenoglio Fowler, L.P. The HFF team marketed the hotels for the seller, Excel Hospitality Inc. A venture led by Gencom purchased the hotels, and Benchmark, a global hospitality firm, will manage the assets.

Positive Budget Impact

“The effect of the Don, Sirata and PCI sales were felt in the current fiscal year (2018-19) budget as those deals closed in 2017,” SPB Mayor Al Johnson told Paradise News. “The result was an addition of approximately $370,000 to our ad valorem revenue. The Grand Plaza and Beachcomber closed in 2018 and should affect our projected ad valorem revenue by another estimated $150,000 for our 2020 fiscal year budget. 

“These are all approximate numbers as we do not have any preliminary figures from the County Appraiser’s office.  Vince Tenaglia, our Administrative Services Director, and the current and new City Managers will be working with staff in the next couple of months to start building the 2020 budget and should get some early figures from the County at that time.  Final figures come out around June.

“The City doesn’t receive any benefit from the Bed Tax revenue we generate. That goes to the county and is used for tourism advertising and major projects like major league baseball spring training facilities and other tourist/sporting venues. 

“In 2017 SPB generated about $8.9 million in bed tax revenue, over 15%  of the record $56.7 million total for the county that I believe was second only to Clearwater Beach.  We get virtually none of that back.  State law changed last year, allowing bed taxes to be used for infrastructure, but the Pinellas County Commission has yet to vote to adopt that.  I’m hoping that we might eventually be able to get some support through that route, since it is directly related to our tourist industry.”

Sewer System Situation

The Mayor continued, “The complete upgrade of our sewer system will be about $12 to $13 million and we are having the system designed as we speak. That work will be done by summer and we will go out for bids then, hoping to start construction about October. Vince and the City Manager are working on financing alternatives that they will present to the Commission for a decision. We have about $3 million in hand and are looking at other possibilities to reduce the amount that we will need to finance.  At this point I doubt that we will issue bonds as the requirement will be less than $10 million, but that is what Vince and Wayne Saunders are evaluating.”

He noted that the city’s top hope for kicking off redevelopment, the 200-room Sugar Sands Resort, planned by the TradeWinds Beach Resorts to replace the former Coral Reef, was put on hold recently when rising construction costs made its projections unfeasible. The TradeWinds had agreed to advance funding for the rebuilding of the north half of the city’s sewer system, (about $6 million) which is required before additional bathrooms can be built on the beach. They were going to be repaid through new sewer connections. 

St. Pete Beach is in a search for a new City Manager, with the candidate list narrowed to five finalists, introduced to residents on January 31, just before this issue went to press (see accompanying sidebar). He or she will oversee the sewer overhaul with a very capable public works department that has been assembled under retiring City Manager Saunders. The city is also looking for someone who will help with economic development, to fill some of the city’s vacant spaces and attract new development once the sewer system is repaired.  

Beach Property Highlights

If you are a beach walker, a boater, a lover of hotels, or just enamored with fascinating buildings, you can’t miss the 8-story pink hotel as you come over the Bayway bridge. The Don CeSar was built by Thomas Rowe, and opened its doors in regal splendor on January 10, 1928. Rowe started construction in 1926, but by mid-1927 he was running short of funds. Pass-a-Grille industrialist Warren Webster loaned him the dollars to furnish the hotel.

Even though the Don CeSar had a relatively short season (Dec. 15 – April 15), it flourished through the thirties with a register that included department store owners Gimbel & Bloomingdale, Mayo Clinic’s Dr. Walter Mayo, writers Faith Baldwin, F. Scott Fitzgerald with wife Zelda, and many more affluent businessmen and their wives along with movie stars and entertainers. It became known as one of the most luxurious hotels in Florida.

However, the depression era took its toll on Rowe’s dream hotel and after barely holding on to his investment, he struck a deal with New York Yankees baseball owner Jacob Ruppert to house the team there for three years. This proved to be the Don’s salvation; not only had Rowe built the hotel, but he was now able to develop the surrounding blocks; building duplexes including the Beach House Suites, putting in a park, and even a miniature golf course. Rowe died in his hotel suite in 1940. In 1942 his wife sold the hotel to the U.S. Government.

The once splendid hotel became a hospital for the military based in St. Petersburg and in 1943 it housed traumatized air force pilots. It was selected as an R&R hospital because it was “a quiet, peaceful location along the warm Gulf waters and beaches.” Once the war was over, the hotel became a VA Headquarters, remaining so until the property was declared obsolete in 1969 and the Government left it in disrepair with peeling paint and gutted rooms.

The property soon became an eyesore and was headed toward demolition. A citizens’ committee was formed and a “Save the Don” effort headed by June Hurley Young was launched. Finally, in 1972, the Government sold it to the City of St. Pete Beach, which, in turn, quickly sold it to William Bowman, a hotel entrepreneur, for $460,000. In order for Bowman to receive permission to construct the overpass and redo the hotel entrance, he relinquished the Don Vista property directly to the south of the main hotel – now the city-owned Don Vista Community Center.

Bowman’s engineers found the Don was constructed of concrete and was a virtually sound fortress! After spending $3.5 million over 18 months, Bowman and his partners reopened the big pink structure in November of 1973. In 1975, it was put on the National Historic Register, becoming an official historic landmark.

After several ownership changes, over the past 10 years it has been completely renovated and refurbished, with much of the decor similar to that in Rowe’s time. In keeping with its original builder’s dream, it continues to be a hotel which offers elegant surroundings, impeccable service, recreation and relaxation along the quiet Gulf shore.  

The Sirata Beach Resort & Conference Center celebrated its 50th anniversary under ownership of the Nicklaus family on March 20, 2012, in this profile from the Sustainable Business Coalition Of Tampa Bay.

“Harry and Beverley Nicklaus had two rules for their children who grew up with the family trucking business in Pittsburgh. One: Get a college education. Two: Leave home to attend school. Their three daughters and son listened well. Two became lawyers and the others earned degrees in fine arts and hospitality management. But the separate paths of Lenne, Deborah, Gregg and Valerie Nicklaus eventually led to St. Pete Beach, where they blended  varied business backgrounds and personalities to run the 382-room Sirata Beach Resort & Conference Center on the site where their grandfather bought a tiny 46 unit El Sirata Motel in March, 1962.

“The Nicklauses’ success drew on their ability to merge loyalty with different skills and fierce streaks of independence. The siblings were unlikely to pass each other in the halls during the workday in the Sirata’a offices, but the four faithfully met each day for lunch and business planning.

“’This is not a democracy,’ Gregg Nicklaus said, ‘but we truly try not to divide and conquer. If there is a strong personal feeling, the other three often will yield.’ But operating a hotel with more than 250 employees requires more than hands-on from the four Nicklauses.

“Gregg continued, ;It’s a family operation, but it is a very, very professional situation. We have given senior management autonomy to hire the right people and have encouraged the rest of the staff to buy into the ownership mentality, that all of us are part of the business. If you look at where we are today compared to where we started, we are unusual,’ as he pointed to a series of photographs in his office chronicling the growth from a 3,000-square-foot motel to a 300,000-square-foot resort.

“The resort has a Mediterranean feel. It has an 8-story main building, 15,000 square feet of meeting space, three swimming pools, two restaurants and two beach bars, including Harry’s Bar, named for the founding grandfather. Before its sale in 2017, the family had invested more than $40 million in renovations and expansions to the original El Sirata Motel, not including regular improvements.”

As noted in the Conde Nast Traveler, the 196-room Post Card Inn at 6300 Gulf Blvd. “traces its origin to a1950s motel and is an ode to an easy-living era gone by. In the vaulted-ceilinged lobby there’s a refurbished industrial fan and the day’s surf conditions are handwritten on a chalkboard in case you want to harness your inner Kelly Slater. But before hitting the beach, grab a seat on one of the low turquoise loungers and thumb through the collection of art books, play a few games of ping-pong on the patio, and cram all your friends into the vintage photo booth.

“None of the rooms are alike, but each shares a casual, come-as-you-are vibe. Instead of headboards there’s a mural of a surfer inside a mammoth wave, a gallery of sepia-toned surfing snaps, or quotes from music greats such as Janis Joplin, along with birch desks, metal drafting lamps and vintage light fixtures.”

“The sale clearly demonstrates that Hurricane Irma hasn’t scared investors away from purchasing beachfront property,” said Dan McCawley, an attorney with Greenberg Traurig. That firm represented Bank United, which financed TPG Hotels & Resorts $47.4 million purchase from the Carlyle Group in October 2017. He emphasized, “The market remains strong due to its limited supply.”

STORY by STEVE TRAIMAN

[Editor’s Note: Special thanks to SPB Mayor Al Johnson and Administrative Services Director Vince Tenaglia; Tampa Bay Times, Tampa Bay Newspapers, Conde Nast Traveler and Sustainable Business Coalition Of Tampa Bay.]

[Steve Traiman is President of Creative Copy by Steve Traiman in St. Pete Beach, offering freelance business writing services. He can be reached via email at traimancreativecopy@gmail.com ]    

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