What you might not know about airport hotel lease

Sandspur Development can subdivide the property into six parcels and is only required to build on one of the sub-parcels. The Master Plan shown the council and printed in the News Journal is “for illustration purposes only.” Lessee at its sole discretion may change the master plan.

The lease states Sandspur hotel “must be a nationally recognized hotel franchise brand.”

“Lessee’s current intention is to construct and operate a “Hyatt Place” hotel, but Lessee is not obligated to this franchise brand. ”

So Pensacola may not get a Hyatt Place. So what if Sandspur decides to build something else?

“Any substitute franchise brand must be identified to the City for its review and approval. Should Lessee select an alternate franchise brand or terminate the then current franchise brand and desire to substitute another franchise brand, then Lessee must notify the City in advance and identify the replacement franchise for the City’s approval.

Any such replacement franchise may not offer a lesser quality brand product. The City’s approval under this paragraph shall not be unreasonably withheld, conditioned or delayed, and the City’s approval or rejection must be provided within ten (10) business days after Lessee’s notification to the City; provided, however, if the City fails to provide notice of rejection within said ten (10) business day period, then the franchise shall be deemed approved by the City.”

This doesn’t state that the council approves the change…just the City. The City Council doesn’t meet once every ten days. What is a “lesser quality brand” hotel?

The contract does pre-approve certain brands: “The City hereby approves any Starwood, Marriott, Intercontinental Hotel Group, Hilton Corporation,or Hyatt brand hotel, and the same are hereby deemed approved by the City and will not require the City’s future approval under this subparagraph.”

Sandspur has 28 months after the Sept. 15, 2009 turnover date (Jan. 2012) to have the hotel open and will then have to pay rent. It has five years (Sept. 2014) to develop the other sub-parcels before it has to pay rent on them.

The City will pay for sewer lines (maybe ECUA will pick up the tab), putting power lines underground on College Blvd, demolition on the site, environmental clean-up, covered walkway from airport to the hotel and vacate right-of-way on Rental Car Road.