$2.7 million hotel incentives package gets nod

A major hospitality brand will receive $2.7 million in incentives to build a 112-suite hotel in north Cape Coral.

Cape Coral City Council approved a package for a TownePlace Suites by Marriott Hotel — a $29 million project — at 1475 N.E. 8th Terrace.

According to the incentive agreement, the recipient is under contract to purchase the 2.36 site at the northwest corner of Del Prado Boulevard and NE Pine Island Road behind The Commons for a five-floor hotel with various amenities.

The economic incentives include $176,000 for impact fee reductions, $770,000 for the site improvement reimbursement grant, $350,000 for generator reimbursement and $1,487,270 for the enhanced property value recapture grant. The total incentive package is $2,793,270.

As part of the incentive package, the city will have 37 hotel rooms available for its emergency personnel during a hurricane on the first two floors of the hotel. The city will pay the nightly government service rate if the city needs the rooms. 

Mayor John Gunter and Councilmember Keith Long voted against the resolution. Councilmember Jennifer Nelson-Lastra was excused from the meeting for a family emergency.

Long questioned getting two floors from the deal when the city is putting up $2.5 million. He said, essentially, the city is paying for the right to reserve the rooms, pointing out that the city will then pay $110 per room per a night at the current rate if and when the accommodations are needed.

“We are prepaying an amount in excess instead of renting at a local hotel,” Long said.

He questioned why the city could not just go to the Fairfield Inn and buy them a $350,000 generator.

Gunter said he appreciated Long’s remarks. He said when taking the inventive package and dividing that by 37 rooms, it would equate to the city paying about $75,203 a night.

“We don’t know how many times we are going to use it,” he said. “We need rooms for our employees when we activate during a hurricane. Being part of the Emergency Operation Center, I can understand that.”

Gunter said for arguments sake, if the city could partner with four hotels and provide $350,000 for a generator for 37 rooms at each, that would total 148 rooms the city could use if needed.

“I think I would want to explore possibly doing that first before I would approve one incentive program and one generator for $2.8 million. Are we incentivizing the hotel because we want the hotel, or incentivizing the project for 37 rooms?” he said. “For me, if we are trying to get hotel rooms for emergency activation, I would rather partner with a couple other hotels to see if they would allow us to install the generators with the understanding we can use those rooms.”  

City Manager Michael Ilczyszyn said staff was recommending an incentive package for a hotel developer because they are getting all of the space, operations, upkeep, amenities and secondary power for $2.4 million. He said if the city had to build the space it would be more than $30 million.

The incentive to a private entity is the first of its kind for the business.

“We were able to offset over $30 million in expenses in providing this incentive. It provides a tax benefit as opposed to an asset unused during blue skies,” Ilczyszyn said.

Councilmember Bill Steinke was among those in favor of the incentive, as he said the city needs to provide incentives to bring in hotels, so they can receive bed taxes generated from hotels.

“We need to encourage these hotels to come and provide these rooms for us. We are way short of hotel rooms. Forget the emergency management piece, I think it is a great incentive package to bring a high-quality hotel in the Marriott family in the city,” he said.

Steinke said the city cannot partner with four hotels in the city because all but one of those is in a floodplain area.  

Ilczyszyn said he appreciated the discussion, but he cannot tell them how many times they have tried to find rooms, as when a hurricane is nearing as every resident in the state is calling hotels trying to find a place to go. He said they won’t say they will take a government service rate over a free market rate.

“The availability of rooms when a storm is pending is near zero – that is fact. We are shoving people in closets, it is just what happens,” Ilczyszyn said. “The ability to have 37 rooms in perpetuity for the rest of the city, at this cost, I stand behind this analysis.”

He also addressed providing $350,000 to other standing hotels, which he said would surpass that amount as there would need to be design and engineering to retrofit the space, get a permit, business loss during construction, and change in distribution and service line.

“I cannot put first responders in harm’s way,” Ilczyszyn said.

Eric Thom, Continental Properties senior development director, said they analyzed their existing property in Cape Coral, Fairfield Inn, which would entail more room for a generator and tank, as well as the cost to retrofit items, as well as rewiring the floors and ripping out everything to make sure a generator would operate proficiently.

“The problem comes down to the electrical room that is big enough,” Thom said, adding that when they plan ahead  they can make it happen.

Ilczyszyn said they are partnering with a company that is seeking to build a hotel in the city, which will also solve a lot of issues emergency management has when needing emergency activation.

“In my 24 years we scramble every time there is hurricane season trying to enter into agreements with Army Reserve, Lee County School District and anybody they can find in order to have a place that is safe and remains operational for emergency staff,” Ilczyszyn said. “I am grateful the developer is willing to work with us and that issue is resolved for my tenure in the seat and all future administration and council as well.”

City Emergency Management Resiliency Director Ryan Lamb said the project is really important with the threat of hurricanes and getting required staff outside of flood areas in the city. He said there are 800 employees that are required to work, such as code officers, building inspectors, police officers and firefighters.

“If we have some of our consultants and recovery folks after the fact – in the longer recovery phase,” Lamb said could stay there too.

Economic Development Manager Sharon Woodberry said Continental Properties Company, Inc. is a national multi-family, retail and hospitality development company. One of their properties is Fairfield Inn & Suites Cape Coral/North Fort Myers.

She said the project will be managed by Schulte Hospitality Group, a professional hotel management and development company that manages hotels under the brands from Marriott, Hilton, and Hyatt.

Project TownPlace Suites by Marriott Hotel has a total investment of $29.1 million for the 13,500-square-foot facility, which will include an outdoor pool, a fitness room and a welcoming breakfast area.

Woodberry said the project has a total economic impact of hotel operations of $6.5 million for indirect, direct and induced output. The impact for one time construction has a value of $39.7 million for indirect, direct and induced output.

She said the site plan has been submitted and is under review with a proposed project commencement next month and anticipated construction completion of April 2027.

To reach MEGHAN BRADBURY, please email news@breezenewspapers.com