Orange Beach approves design for Gulf-front resort hotel

Thursday, July 23, 2009 By RYAN DEZEMBER Staff Reporter

ORANGE BEACH - Developer K.C. Chiang's designs for a high-rise Gulf-front hotel and convention center won unanimous approval from the Orange Beach City Council, but now the panel must decide if it wants to grant the developer a tax abatement worth tens of millions of dollars to see the project come to fruition.

During a two-hour public hearing Tuesday night that preceded the council's vote on the designs, Chiang said that he and his partners - Chicago-based Centrum Properties and the Wyndham Hotel chain - need Orange Beach to share millions of dollars of revenue generated at the resort to secure their $160 million financing package.

Specifically, they are asking for half the sales and lodgings taxes for up to 30 years as well as the ability to levy additional taxes of up to 4 percent on the resort's rooms and at its restaurants and shops.

Chiang said he and Centrum have a pledge from Bank of America to loan them $110 million, but that arrangement is contingent on the developers raising $50 million in tax-free bonds. Those 30-year bonds, which would be issued through a special tax district set up on the property by the city, would be financed, in large part, by the resort's additional levies and the rebate tax.

The developers' lenders, Chiang said, "want to see more involvement from the city.

"This is something that is a new financial strategy that the financial world is requiring of us today. It's a different method of financing and I really don't have a lot of choice out there in order to make this happen."

Elected officials generally said Tuesday that they were willing to forgo for three decades half of the sales and lodgings tax generated there - estimated by the developer to be more than $30 million - in order to help Chiang realize his vision for the Wyndham & Winfield Resort Hotel and Convention Center.

"Unfortunately, the rules of the game have changed," said Mayor Tony Kennon. "In my research I believe this project can't get approved without abatements. It's just that simple."

Said Councilman Jeff Silvers: "None of us want to give away tax breaks, but what I want to do for our community is capture 50 percent of something instead of zero percent of nothing."

Plans for the Wyndham & Winfield call for nearly 500 hotel rooms housed in towers of 17 and 18 stories, convention seating for 1,200 and a theater that could double as a wedding chapel. There will also be a 20-lane computerized bowling alley to which Chiang said he will try to woo professional tournaments, a pair of restaurants, recreational features ranging from a roof-top tennis courts to a video game arcade and a 6,000-square-foot spa.

Should the council approve the revenue-sharing deal in the coming weeks, Chiang said he would start construction on the 9-acre tract in February. When construction starts Chiang will have to pay somewhere between $4.5 million and $5.5 million on sewer taps, building permits, impact fees and sales taxes on construction materials. The two-year project will create 800 construction jobs, and the resort will employ 300 once it opens, Chiang said.

Chiang, a Mobile businessman, said that all told the project could net Orange Beach more than $88 million in revenue over 30 years even after half of the sales and lodgings tax were refunded to finance the bonds. Chiang also told city officials that he would have financial incentive to repay the bonds, which will carry an interest rate nearly double the 4.76 rate on his $110 million loan, before they mature.

As such, he said he may only need the tax abatement for half the 30 years. City leaders, however, said they will base their decision on sharing revenue for the full 30 years.