Council approves framework for hotel and joint-use garage; staff authorized to renegotiate county interlocal

Melbourne City Council on July 8 approved the conceptual framework for a public–private partnership (P3) with Melbourne Hospitality Holdings (MHH) to build a 160-room hotel adjacent to downtown and a city-owned joint-use parking garage.

Under the preliminary framework council approved, the developer would construct a roughly 542-space garage; the city would fund the public portion — about 300 spaces — with near-term capital estimated at $10.5 million. The developer would retain and use roughly 242 spaces for hotel parking under a license or lease arrangement. The city would take ownership of the garage when completed; the developer would operate and maintain it in the near term and the parties would split long-term capital replacement costs proportionally.

As part of the package, MHH requested a 10-year annual grant reimbursement of the city portion of property taxes for the hotel. The city asked consultants to review project feasibility and the need for public assistance. DRMP (civil/structural consultants) concluded the $10.5 million public-parking estimate fits within expected construction-cost ranges for a 300-space deck. Financial consultant Grow America concluded the hotel project would likely not be financially viable “but for” public support and that the developer's requested package is reasonable within that context.

Council also authorized city staff to reopen negotiations with Brevard County on the old O'Galley Riverfront CRA interlocal agreement. Staff said amendments will be necessary to permit a P3 arrangement, allow the use of CRA TIF escrows toward principal reduction and permit either taxable or tax-exempt financing, and to create flexibility to implement a future parking-management plan (including paid parking) — the existing interlocal agreement caps public-parking costs and contains a 90 percent public-parking requirement that would block the proposed split.

City staff said the proposal would replace a long-vacant commercial site, add streetscape improvements on Highland and Pineapple Avenues, expand downtown hotel capacity, and create roughly 75 full-time-equivalent jobs at the hotel. MHH would build the public parking portion to city standards and the city would disburse the $10.5 million to the developer upon performance benchmarks to be negotiated in a comprehensive agreement.

Council voted unanimously for both requested actions: (a) approve the conceptual framework and authorize staff to work toward a comprehensive agreement, and (b) authorize renegotiation of the interlocal agreement with Brevard County. Staff said draft agreements and additional public hearings will follow.