Osceola County’s six-month-old ordinance setting strict guidelines for hotel and motel conversions hasn’t stopped developer’s from seeking to transform the tourism corridor’s aging hotel stock into affordable workforce housing, but the county is no longer being deluged with applications.
T2 Investments and development partner Carlos Balzola have two projects under construction now on the W192 tourism corridor and just received $31.75 million in construction financing for a third conversion. Midcap Financial Trust provided the construction loan for the former Claremont Hotel, right across from the Water Tower Shoppes at Celebration.
T2 Chairman Jeff Brown said the purchase of a 7.7-acre property will revitalize a stalled hotel-condominium construction project at 6051 West Irlo Bronson Memorial Hwy. T2 will bring the three existing partially completed buildings up to code, convert them to 260 apartments, and upgrade all interiors to provide a quality multifamily living experience at below-market rents.
The Celebration project has been in the works since 2019, roughly the same time Balzola and T2 joined up to execute their first conversion project, a $40 million renovation of the former Red Lion Hotel Maingate into Maingate Apartments. The project has served as a template for some of the stepped-up regulations for adaptive reuse of commercial to residential buildings.
But the new ordinance approved in November adds costly new levels of regulation. For example, in new conversions, each residential unit must have a separate utility meter. The developers also must meet the minimum residential standards for parking, recreation and fire suppression, which are higher than commercial buildings. Those are on top of the county’s $12,165 per unit school impact fee — the most expensive in Florida.
Those changes went into effect while Osceola County was experiencing unprecedented rent escalation and an extreme shortage of affordable workforce housing. The Orlando Sentinel recently reported that the Celebration area saw average rents increase last year from $1,595 in January to $2,050 in December.
“We continue to strive to be part of the solution in providing affordable, quality housing to local service professionals within our target markets,” Brown said. “There is still a lot to do but we are grateful to continue our progress.”
All three of the T2′s ongoing projects, including the former Champions World Resort at 8660 W Irlo Bronson Memorial Highway, were approved before the ordinance went into effect, so their permits were essentially grandfathered in. The two most recent projects were classified as condominiums rather than apartments, which means they are charged a $4,702 school impact fee.
Three new conversions are being proposed under the new design guidelines.
Balzola has a purchase contract on the low-budget Rodeway Inn Maingate, which is right next door to Celebration Village, at 5995 W. Irlo Bronson Memorial Hwy. He met with Osceola County’s Development Review Committee earlier this month to discuss plans for converting the 200-room motel into a 162-unit condo community, which would be managed as rental units. The community would be called Bonnet Creek Village and plans include renovating and refurbishing the existing retail property fronting on W192 by landing a new 4,000-square-foot national restaurant as the end-cap user. That building also would house the property management offices. The existing Waffle House would remain.
All four of the existing motel buildings would be converted to residential units with a mix of studio units (329 SF), one-bedroom units (658 SF) and a laundry facility. In addition, the existing innkeeper/maintenance facility would be converted to residential units and a fitness center, which, along with the pool and greenspace, help satisfy the recreation requirements.
If approved, Bonnet Creek Village would be the first hotel conversion to move forward since the new ordinance went into effect. Balzola told GrowthSpotter he and his architect, Bruce Arthur from WHA Design, are working through the comments and conditions staff set for approval of the project before he submits a Site Development Plan. The sale is scheduled to close early next month. The total project budget is around $20 million. “We have to go through hurdles before this can become a reality,” he said. “This has to be efficient and inexpensive.”
Meanwhile, the owner of the Clarion Inn & Suites at 4985 W Irlo Bronson Memorial Highway recently filed a Site Development Plan to convert the hotel into studio apartments. The Clarion was built in 1985 and renovated in 2019. It has 122 guest rooms and 15 suites. Aventura-based Equity Multifamily, which specializes in hotel to residential conversions, is the contracted buyer for the property.
The Howard Johnson at 4836 W. Irlo Bronson Memorial Hwy. is also being targeted for conversion. Delta Bridge Partners, a Coral Gables-based investment firm led by Martin Ametrano, paid $1.75 million last October for the two vacant parcels on Lake Cecile next to the hotel. Now the company has applied to rezone all three parcels to create a unified 12.25-acre site to allow for the adaptive reuse of the hotel into condos. The site is directly across from the primary entrance to Storey Lake Resort.
Kissimmee hoteliers Susana Wong and Mateo Marcasciano bought the 129-room hotel in 2018 for $5.25 million. Joining the hotel property with the two vacant parcels makes it possible to satisfy the higher parking and open space requirements while also allowing for new construction of additional housing units. The project would be called “Dimora Lake.”
Tara Tedrow with Lowndes is representing the property owners and has applied to change the zoning from Commercial Tourist to Urban Center Core, which matches the future land use.
The City of Kissimmee could see its second hotel conversion following the October 2021 sale of Ramada Inn on Vine Street to California-based Vivo Living. A company called Urbanest Group has a pre-application meeting scheduled for this week with Kissimmee planners to discuss converting the 130-room Baymont by Wyndham at 4156 W. Vine St. into workforce housing.