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IHE Proposes Condado Improvements
Ideas considered far-fetched by area business owners and residents
BY EVELYN GUADALUPE-FAJARDO
January 10, 2002
While most Condado business owners and residents welcome the rejuvenation of the former Condado Trio, a closer look reveals many obstacles that must be overcome for it to become a reality.
Considered a troublesome project due to the years of legal entanglement between the past developer--Brian McLaughlins Development Management Group, selected by the Rossello administration--and the municipality of San Juan, when Gov. Sila Calderon was mayor, the project had remained at a standstill for nearly four years until Dec. 26, when the government officially selected International Hospitality Enterprises (IHE), headed by veteran hotelier Hugh Andrews, as project developer.
However, the proposal presented by IHE for the enhancement of the surrounding Condado area has been categorized as far-fetched by many of those who would be directly affected by it.
For starters, IHE proposes an open-air vista spanning a city block across the street from the Condado Vanderbilt Hotel to the Condado Lagoon, in an area which is fully developed.
"We highly recommend the development of a formal garden in the city block between the Condado Vanderbilt Hotel and the Condado Lagoon," the proposal states. "It would be a grand idea to revive this urban park, not only to open a view from Ashford Ave. to the Lagoon, but also to give dignity to the principal facade of the Vanderbilt."
The developers propose that the government pay to expropriate the following propertiesAguadilla No. 52 condominium, Condado Vanderbilt Apartments, Vanderbilt Lagoon Condominium, Bayview Apartments, Dominos Pizza, Calle Barranquitas Apartments, Principado Restaurant, Andale Mexican Restaurant, and Scooters.
As of yet, how much the government would have to pay to develop a public garden is still undetermined, but the costs could be astronomical.
"The formal garden would need government intervention for acquiring the properties, the cost being relatively high because it is built-out," the proposal states. "But the benefit that the public space would have for the future of the Condado area should be able to justify the concept."
That option has business owners on that block enraged.
"I doubt we would sell our business unless the price was right for the owner," said Marilyn Saldaño, manager of Principado Restaurant on Ashford Ave. "Businesses in Condado have been suffering for years, and we blame the existing administration for this."
Ricardo De la Peña, owner of Scooters on Ashford Ave., was unaware that his property could be in danger.
"I did not know that the proposal for the Condado Trio requested that the government intervene in trying to buy our property," De la Peña said. "I am not in agreement with that, though it would make me happy if the hotels were open for business sometime soon."
Another area of concern with IHEs proposal involves traffic and parking. Traffic flow and parking availability in that area of Condado are already a headache and the proposal does not guarantee this problem would be resolved or even improved. The proposal recommends that Delcasse St. be extended as an access street and that Jofre St. be included as an exit street to the Baldority de Castro Expressway.
"We realize that there is strong opposition to the plan [to gain direct access to the Expressway] from the residents of the condominiums in the area; however, it is a highly desirable improvement to the traffic flow," the proposal states.
On the issue of parking, IHEs proposal is inferior to the proposals submitted by the other two bidders, Desarrollos Insulares and Meta Development Group for development of the Condado Beach Resort and La Concha Hotel.
IHE proposes two hotels [a five-star luxury hotel operated by Leading Hotels of the World organization to replace the former Condado Beach Resort and a family-oriented, value-priced hotel to replace the former La Concha Hotel under the brand of Holiday Inn, Hilton Garden Inn, Homewood Suites, Renaissance Hotels, Sheraton Four Points, or Marriott Courtyard], two condo-hotels of 80 suites each next to the five star hotel and a 200 all-suite condo-hotel tower next to the value-priced hotel for a total of 686 rooms with 810 parking spaces.
On the other hand, Desarrollos Insulares (headed by developer Juan Carlos Albors) entails two hotels [a Regent Vanderbilt Hotel to replace the Condado Beach Resort and a Park Plaza Hotel to replace La Concha Hotel], a 60-unit condo-hotel next to the Regent Vanderbilt and a 64-unit condo-hotel next to the Park Plaza for a total of 614 rooms and 1,277 parking spaces.
Meta Group (headed by Eduardo DeBeers of Beers-American Builders) proposes a 92-room five-star boutique hotel to replace the Condado Beach Resort, a 176-room Condado Beach condo-hotel tower, a three or four-star condo-hotel tower of 154-rooms, a 226-room three-star hotel to replace La Concha Hotel and a 20,000 square feet Las Vegas style casino at street level for a total of 648 rooms and 1,340 parking spaces.
When announced, one of the main reasons given for choosing IHEs $183.3 million proposal was that it required the government to play a smaller role in financing the project.
According to the Puerto Rico Tourism Co., IHE requires the government to issue $44 million in Afica bonds via the Tourism Development Fund and grant the developer $8.8 million in tax credits. It also requires the government to rent the land to the developer for the next 99 years for an annual fee of $1 million. A copy of IHEs proposal given to CARIBBEAN BUSINESS did not include any financial information regarding the project.
On the other hand, the proposal submitted by Desarrollos Insulares requested that sources of financing for the $211 million project include $71 million in Afica bonds, secured financing of $46 million for the construction of condo-hotel improvements, $30 million in proceeds from the sale of limited partnership coupled with tax credits, and $64 million in equity contributions from various sources.
However, it also required the government to rent the land to the developer for 43 years (includes construction phase) for an annual fee of $2.6 million, representing 9% of the appraised value of the leased property.
Meanwhile, Meta Group requested that sources of financing for its $100.5 million project include $60.5 million in Afica bonds, $30 million in private and public partner equity and $10 million in the sale of tax credits.
It also required the government to rent the land to the developer for 70 years at a fair rental value of the properties on-as-is basis with one renewal option for an additional 20 years, plus two fixed payments of $500,000 for each one of the surface rights for the construction of the condo-hotel towers.
This Caribbean Business article appears courtesy of Casiano Communications.