The mother of all W192 motel conversions could be coming to Kissimmee.
New York-based CSC Coliving Co-Founder Sal Smeke says he is in negotiations to buy the long-vacant Orlando Sun Resort & Spa near Disney for $35 million and plans to convert all 960 rooms into studio apartments.
Owned by Fortuna Realty in New York, the one-time Hyatt resort is in a prime location at the northeast quadrant of I-4 and W192. Built in 1974, the sprawling two-story motel sits on 77 acres right across from Celebration and minutes from Disney.
It has been on the market since 2018, when the owners settled the outstanding code violations and rezoned it to Commercial Tourist.
“We would produce a superior product and bring credit-worthy tenants,” Smeke said.
CSC is scheduled for a pre-application meeting on July 7 with Osceola County’s Development Review Committee. The group is anxious to move the project forward at an accelerated pace — with permits in place within 90 days.
Smeke told GrowthSpotter the company is drawn to the project because the Orlando market has such a shortage of affordable workforce housing. The project has “good bones and a great location,” he added. The prospectus assumes a total budget of $77 million, including $25 million for hard construction and $6.2 million for design, permits and other soft costs.
“Given the site’s prolonged inactivity, Osceola County has every opportunity to reactivate it with desirable eyes for residential use, which gives us faith in the county’s responsiveness and cooperation,” he wrote in the executive summary.
CSC’s purchase contract is for the existing hotel, which sits on 35 acres. That means the property would need to be subdivided. A conceptual subdivision plan carves out the 35-acre parcel for the conversion and creates four additional lots fronting on I-4 and W192 that could be developed.
The CSC plan calls for converting the hotel’s exhibition center into a charter school. Smeke provided a Letter of Intent from a well known charter school operator outlining a deal to donate the 150,000-square-foot common building at the center of the complex, which would then be converted into a K-12 school that could accommodate 1,500 students and up to 300 employees.
In the submitted business plan, CSC said it has retained FK Architecture to assist with creating the subdivision and has engaged a “renowned hospitality consultant” to design the units and common spaces. Smeke said the apartments would rent for somewhere between $700 to $1,000 per unit.
The developer is asking the county to allow a connection to public utilities — it’s on well and septic now — and to waive all impact fees associated with the change of use. According to the business plan, CSC would divide the hotel into four pods, each with 240 units, and deliver them in phases based on construction and leasing.
“CSC has extensive experience repurposing historic structures in New York City and Philadelphia. With a portfolio of over 4,000 units, it is capable of executing and managing a project of this magnitude,” according to the summary.
The company would look to deliver the first units within a year, stabilize the property and sell after three years, according to the plan.
W192 Development Authority Executive Director Christina Morris said she had reviewed the CSC proposal. She told GrowthSpotter that based on the scope of work and condition of the property, the company’s timeline sounds unrealistic.
Hotel and motel conversions along W192 have been a hot topic in Osceola County this year. In January, the W192 Development Authority engaged consulting firm Logan Simpson to draft new policies and code revisions that could regulate conversions. The consultants expect to wrap up their work later this year, which could include design guidelines for residential conversions. The Development Authority and its advisory task force wants to restrict conversions on the tourism corridor west of S.R. 535; and Chairman John Classe has said they want to discourage motel conversions around tourist destinations like Celebration, Old Town and Margaritaville.
One option under consideration would be to make hotel conversions a conditional use on some segments of the W192 corridor.
This particular property has been on the county’s radar for years and was one reason the W192DA created a “catalyst grant” program that could award up to $1.5 million for new development. Classe said the board had properties like the former Hyatt in mind when it created the program and seeded it with $2.5 million per year.
“We thought if we had a larger source of funds, we could really make a difference, and this program gives us the vehicle to do that,” he said.
Osceola County Commissioners also might have a say on whether the project can move forward. They would have to approve a Preliminary Subdivision Plan that splits to hotel lot off from the rest of the parcel.
A potential change to the county’s school impact fee ordinance would virtually eliminate school impact fees for studio apartments, making the corridor’s aging hotel stock even more attractive to investors for residential conversion. The Osceola County School Board is tentatively scheduled to vote on the new fee schedule in August.
EDITOR’S NOTE: This article and headline were updated to reflect that the buyer is in contract negotiations for the hotel.