Pink Palace Deal Looks Like Another Government Handout

Long before the giant, beige Hampton Inn and Suites welcomed guests in downtown Bradenton, it was a dilapidated ruin on the verge of condemnation, known as the Pink Palace. Rather than raze the building and sell the land, the city aggressively sought to have it redeveloped, offering lavish incentives to would-be developers. In April of 2011, TBT's Dennis Maley questioned a proposed $4 million grant that would be added to already lavish subsidies. The following week, the board reversed course on the plan.

by Dennis Maley¥Sunday, Apr 10, 2011

The Bradenton Downtown Development Authority is raising a lot of eyebrows with the suggestion that a $4 million investment in the restoration of the former Manatee River Hotel would be a sound venture. Dubbed the "Pink Palace,“ the historic building dates back to 1925 and is rumored to have hosted famous and infamous guests from movie stars to Al Capone. It is a true pillar of local history, but in its thoroughly dilapidated state, it is unclear how "historic“ the proposed Hampton Inn and Suites project would really be.

First, the Hampton Inn and Suites logo on an intensively renovated, completely gutted hotel doesn't exactly scream nostalgia, though initial renderings include similar interior and exterior designs (but no pink). Second, it wouldn't include a public restaurant and bar – the chain does not allow them on their properties. Since local residents don't typically rent hotel rooms in their hometown, that would mean few local residents would likely have use for the establishment, which further dampens the nostalgic aspect in my opinion. For these reasons, I find spending that sort of money in these times, for the sake of "preserving a landmark,“ a thin argument.

Next, there has been discussion of the financial impact the hotel would have on the area, with numbers thrown around as to how many visitors would stay annually and how much money they would be likely to spend downtown. This is flawed data, because it doesn't consider that they would otherwise likely be staying in another downtown hotel. People visit cities, not hotels, so it is illogical to suggest that simply putting a Hampton Inn downtown adds significant visitors to the city. Unless you increase the number of people coming downtown for some other reason, you simply spread more of the guests out from other businesses like the Marriott.

Now, the city is also planning the Riverwalk Project – over $6 million to improve the riverfront with restrooms, volleyball courts, a skate park, etc. This is supposed to lure guests and businesses to the downtown. That's where I get stuck. If the $6.2 million dollar project can't draw a Hampton Inn and Suites without a public subsidy of nearly as much, what's the point? The DDA would be paying $250,000 to subsidize Ezra Cafe right now, claiming again it would have drawn business downtown, despite the fact that the previous tenant had gone belly up, precisely because there wasn't enough appetite for another eatery. And remember, it was the owner of Ezra that wised up and realized that she'd be competing for a slice of the same pie of customers already struggling to fill tables at the restaurants that were there, because again, people eat at a restaurant when they are downtown more often then they go downtown to eat at a restaurant. The demand that exists is seemingly being met.

The difficulty in seeing the merit in such projects awakens the skeptic in me. The DDA chair Will Robinson abstained from the vote to extend additional funding to the consulting firm working on the project, because his law firm represents the hotel's developer, Widewaters Group. This is not uncommon when it comes to these boards of government, where part-time appointees continue to work outside their position, usually in the industries they deal with, as their expertise and experience is the justification for their appointment in the first place.

I think this is a fundamental flaw that guarantees conflicts of interest, which is why I favor full-time elected officials who are forbidden from engaging in such commercial enterprise, when it comes to casting these sort of votes. The chair's firm's client purchases a note on a foreclosed property, bids essentially against themselves to become owner (allowing the real price of the property to escape public record) and now that same board is proposing spending millions subsidizing the investment to a degree that the TIF fees returned could never justify – hence the vague assertion of less quantifiable values added.

I'm certainly not implying that Mr. Robinson influenced the board or gave inside information to the developer that the DDA was considering such a partnership. It just doesn't look good when there are so many potential conflicts of interest, and when a $4 million deal doesn't look like a slam dunk in terms of ROI, it better at least be squeaky clean. Because when it comes to politics, it's often hard to tell a dumb idea from a crooked one.

The DDA and the city really have to do a better job of explaining the point of investing in the riverfront to draw people downtown, if they then turn around and argue that they still need to subsidize all of the businesses that are supposedly going to be drawn to it. If Riverwalk is a worthy project and does what is claimed it will, the market will respond and private investors will come and fill the demand for hotels, restaurants and other services. If not, then maybe we should reconsider the bond issue to pay for it. Where is the return on millions of dollars of subsidy to private companies and how is it fair to the free-market businesses that face increased competition without a handout of their own?

There are volumes of examples of municipalities all over the United States that have sunk million after million into an area that they were determined to transform into something other than what the tendencies of their citizens and the response of the market have determined it to be – build it and they will come, rather than build it because a demand already exists. I have seen few examples of even limited success in this approach, especially when you consider how much is invested all told.

Downtown Bradenton is a government, legal and financial hub. At night, young people like to do go there to drink beer and socialize. Many people seem to have a vision of it becoming something very different, but I'm not sure that all of the socialized development in the world will make that happen. If the city wants to incite revitalization, perhaps it would be better off sinking that money into 14th Street West, a much more challenged neighborhood – one that doesn't have the benefit of a riverfront, a theater and fine dining to lure private investment – one that is dying right in front of our eyes.

As for the Pink Palace, the city should follow its codes. Condemn it, and if the developer does not bring it up to code, raze it and allow the Riverwalk project to draw private investment in its redevelopment. If the city does not have confidence that will happen, it has a lot of nerve asking its citizens to.