More W192 hotels looking to convert to workforce housing

Fresh on the heels of the sale of Kissimmee’s Red Lion Hotel Maingate to a company planning a $40 million workforce housing conversion, at least three more hotel properties on the W192 corridor are moving in the same direction.

Carlos Balzola, a development partner on the Red Lion conversion, also has a purchase contract for the Rodeway Inn at 5995 W. Irlo Bronson Memorial Highway, right at the S.R. 417 interchange, and is in the process of rezoning it to allow for multifamily housing.

“It’s about time,” planning consultant Jim Hall said. “The problem with W192 is it’s all commercial. It needs to have residential built in – particularly affordable workforce housing.”

Hall is not involved in the Balzola projects, but he did represent a hotel owner on the tourism corridor who was marketing his property for a multifamily conversion.

That deal fell through earlier this month due to a last-minute environmental issue, but Hall said there are plenty of aging motels on W192 could provide much needed housing for low-wage workers who need to live on transit corridors. He sees the Red Lion as a test case.

“Hopefully the first couple of guys in will do a nice job, make some money, and more will come in,” Hall said.

Longtime Kissimmee hotelier Johnson Young filed a Site Development Plan this week with Osceola County to convert the Quality Inn & Suites Eastgate at 4960 W. Irlo Bronson Memorial Highway into affordable workforce housing. The motel, built in 1980, spans 9 acres just west of S.R. 535 and has lake frontage on Lake Cecile. The plan calls for creating 200 studio apartments.

HREC Vice President Paul Sexton, who brokered the Red Lion deal for the seller, is working on behalf of other motel owners on W192 who see the same potential. One such property is the is Westgate Inn & Suites at 9200 W. Irlo Bronson Memorial Highway in Clermont.

“We’ve got two converging trends,” he said. “One is we’ve got a lot of inventory that really is past its useful life as a hotel. The other trend is that we have these developers that come in and know how to make economic use of these old hotels for workforce housing.”

The Westgate’s Colorado-based owner filed a pre-application meeting request with Polk County this week to discuss converting the 198-room motel into studio apartments.

“The biggest challenge they have from a planning perspective is meeting the parking requirements,” Sexton said. “Typically the parking requirement for a hotel is 1:1, but for a studio apartment is 1.5 spaces per unit.”

The parking issues can be overcome by combining hotel rooms to create a mix of studios, one- and two-bedroom apartments. Developers also can qualify for parking reductions if they provide transit or bike-friendly amenities.

“The other challenge is they typically have the underlying zoning that allows for multifamily, but now they’ve got to go back and pay school impact fees,” Sexton said. Developers also must bear the expense of installing fire sprinklers and other measures to bring the buildings up to code.

The costs ended up being too steep for Rob Jarvis, who owns the Champions World Resort at 8660 W. Irlo Bronson Memorial Highway. The resort property sits on 26 acres west of the S.R. 429 Beltway and consists of multiple 1970s-era, two-story exterior corridor hotel buildings totaling 435 rooms. It stood out among conversion candidates because of its extensive amenities, which include multiple pools, sports fields, parks and a full service restaurant.

Jarvis and his broker, Jose Cantero, had several meetings with Osceola County staff to discuss the potential conversion to workforce housing but ultimately decided against it.

Balzola found an equity partner, Chicago-based T2 Capital Management, that was able to make the numbers work despite Osceola County’s high impact fees. That bodes well for the other projects, Sexton said.

“Earlier in this cycle, a lot of these old hotels, people were coming into town and saying they were going to convert them to assisted living, and none of that panned out,” he said. “Now they are getting these deals done.”

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