Osceola County's W192 Development Authority is considering a tax abatement program as an incentive to lure high-end hotels to Kissimmee's tourism corridor.
Executive Director David Buchheit floated the idea at the authority's board meeting Thursday, and told GrowthSpotter he got the idea earlier this year after a fact-finding trip Anaheim, California.
"When we were in Anaheim, they had a tax abatement program there where if you brought in a 4-star or 4-diamond hotel, they would abate your taxes for 20 years," he told board members. "It worked well for them. They were able to bring in two new hotels."
Buchheit said the city of Anaheim abated the hotels' Tourist Development Tax. "It wasn't on the property tax," he said. "Their room tax is much higher than ours -- I think it's 18 percent."
The Gaylord Palms Resort & Convention Center is the only 4-star/diamond property within the entire W192 CRA district -- and it's not on U.S. 192. That property pays about $4.5 million per year in property taxes.
Board Chairman Hector Lizasuain said W192 has always had a reputation as a more affordable alternative than Orlando and Disney hotels. That's made it a challenge to bring in 4-star hotels. He's the project manager for Magic Development, which is starting construction this month on the $1.7 billion Magic Place project, which will include a luxury hotel component.
Buchheit said the addition of projects like Magic Place and the new Margaritaville Resort have changed the paradigm on W192. "They put us in a position where the corridor will dynamically change," he said. "This is a good time for us if we decide we want to attract more 4-star hotels."
Margaritaville Holdings already operates a 4-diamond hotel at the Margaritaville Hollywood Beach Resort. Company officials said they would seek 4-star and 4-diamond ratings for the Kissimmee hotel, which is slated to open in 2018.
Buchheit said the W192 tax abatement likely wouldn't mirror the Anaheim program. One reason is that the redevelopment authority itself must be renewed every 10 years, so it may not be able to approve a 20-year tax abatement.
Any hotel or business that qualifies for the abatement would have to maintain the 4-star status and AAA 4-Diamond rating. The incentive program would have to be approved by the Board of County Commissioners. County Attorney Andrew Mai told the W192 board it is legal.
"If the board wants to go in that direction, we can find a way to make it happen," he said.
Osceola County is home to two other 4-star/4-diamond hotels -- The Reunion Grande and the Omni Orlando Resort at ChampionsGate -- but both are outside the W192 CRA district.
Other developers have floated proposals for luxury hotels on the corridor, so far none has come to pass. Park Square Homes executives have been pursuing a 250-acre parcel immediately south of Magic Place and envisioned at least two 4-star hotels.
It's been a year since the Authority awarded a planning grant to a confidential developer for a proposed $750 million convention center/hotel project at an undisclosed location on the corridor. Dubbed "Project Edison," the plan called for 950 high-end hotel rooms, including the county's only 5-star hotel, and an entertainment/shopping district. That developer was seeking moe than $67 million from the county's Tourist Development Tax fund to construct the convention center.
Board member Mary Ellen Kerber questioned if they weren't "putting the cart before the horse." She said the W192DA should update its master plan and decide as a group whether to incentivize luxury hotels or other types of uses, such as tourist attractions.
Buchheit will bring a formal proposal to the board at its September meeting.