The fate of the long-anticipated Margaritaville Hollywood Beach Resort is in peril because of problems obtaining financing, but the city and the developer say they're optimistic the money will come through.
Developer Lon Tabatchnik is supposed to have financing in place by Tuesday but has yet to raise the $126 million needed for the 17-story, 349-room Jimmy Buffett-themed resort.
Tabatchnik had hoped to get the money through a program that gives foreign investors residency in the United States if they invest at least $500,000 each in job-creating projects.
But Tabatchnik, city officals say, has received commitments to date from only 26 Chinese investors, which would raise $13 million, far too little to meet Tuesday's deadline.
To get the project going, he's now talking to banks for loans and he's asking the city's Community Redevelopment Agency to kick in up to $25 million.
"We're not alarmed by this," Assistant City Manager Cathy Swanson-Rivenbark said. "We absolutely know he is feverishly working on this."
Despite "the unforeseen hurdles," Tabatchnik said he is not discouraged.
"We're in the process of negotiating and finalizing the terms of our financing arrangements. We're very close," he said. "We'll get them accomplished and we'll get this project built."
City officials say Tabatchnik wants to borrow at least $75 million from banks, but hotel analysts say banks are tight with credit for new hotels since the financial crisis in 2008.
"I think it's going to be awfully tough. Banks are typically looking for at least 35 percent to 40 percent real equity," said hotel analyst Scott Brush, of Brush & Co. in Miami.
The CRA already committed to lend Tabatchnik $10 million for furnishings at the resort when it is built. Tabatchnik is asking the agency to increase the loan by $15 million and provide it sooner so he can build.
The city is studying the proposal, Swanson-Rivenbark said.
Margaritaville is the most ambitious hotel venture for Hollywood since the Westin Diplomat opened in 2002. The Jimmy Buffett name is expected to attract people from far and wide and boost the city's ailing finances.
The project will occupy six acres at Johnson Street on the Broadwalk and across State Road A1A on the Intracoastal Waterway. It will include seven restaurants, numerous bars and retail shops, a spa, pools and a simulated-wave pool. Backers hoped it would open in early 2014.
Leonard Ivler, a bike-rental merchant on the Broadwalk, has long been skeptical of the project.
"Nobody believed from the beginning that the guy was going to get his money together," Ivler said.
That skepticism was fueled in March when the City Commission pushed back certain construction related deadlines from March to June and the proposed opening from March 2014 to August 2014.
Tabatchnik has missed other deadlines. The city sent him a letter May 1 for failing to submit certain project specifications and construction contracts on time. He has 60 days to comply.
Still, city officials are confident the project will go forward.
Tabatchnik has been paying $20,000 a month since July as a pre-lease payment to the city.
"The way that we structured the lease agreement, the city does not turn over the property until everything is in place," Swanson-Rivenbark said. "While it may delay the project, I don't believe it jeopardizes it."
Others are hopeful too that Margaritaville will strum like a six-string.
"It's a shame," Brush, the hotel analyst, said about the financing delays. "I would like to see that hotel get built."
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