EXCLUSIVE: Real estate company considers selling historic Gulfstream Hotel in Lake Worth

The never-ending saga that is the Gulfstream Hotelrenovation project in Lake Worth has seen more delays than Interstate 95 at rush hour.

The latest: Hudson Holdings, the Delray Beach company behind the $70 million restoration, is exploring selling the site, claiming city officials aren’t doing enough to attract more investment in the city.

“I’m a long-term investor and we want to be part of a city that is moving forward,” Steven Michael, Hudson Holdings co-founder told The Palm Beach Post late Monday night. “It’s not just about our investment. It’s important that investors follow us and I feel that Lake Worth isn’t promoting that.”

But City Manager Michael Bornstein, who called Hudson Holdings’ decision a “huge” disappointment, disputed Michael’s characterization, saying more than $100 million worth of new private investment and projects are underway in Lake Worth.

“This is from a city that seven or eight years ago had no commercial permits pulled to now over $100 million,” Bornstein said. “(Michael’s comments) don’t match up with the realities.”

Bornstein also pointed out Lake Worth has $116 million in upcoming infrastructure improvements, including road, sewer, water and electric work.

In recent days, Hudson Holdings placed a sign from Talon Point Capital, a West Palm Beach real estate investment firm, in front of the Gulfstream, vacant more than 10 years, which read, “site development opportunity.”

“We’d like to see the city make some positive changes,” Michael said. “If that doesn’t happen, we’ll explore other possibilities. We don’t feel like we’ve worked in tandem with the city like we hoped to.”

Hudson: Code enforcement slows process

The project includes transforming the 106-room Gulfstream Hotel, built in 1925, into an 87-room hotel with a downstairs restaurant, a champagne room and a rooftop sky bar while also building a five-story hotel annex to be branded by the Curio Collection, an upscale Hilton Hotel brand.

Plans, however, remain in limbo over legal issues. A suit was filed last year over building heights by former City Commissioner Jo-Ann Golden and two others.  A three-judge panel dismissed that suit in August, but an appeal was filed. That appeal has yet to be heard.

Michael called the suit “frivolous” and said it hasn’t been a major stumbling block for the project.

“It’s very difficult dealing with code enforcement,” Michael said, although the city gave Hudson Holdings all the key zoning approvals it needed to move forward. “There’s much room for improvement within the city departments. Not just for our project, but for the long term stability of Lake Worth.”

According to William Waters, the city’s director for community sustainability who oversees the Lake Worth’s code compliance division, Hudson Holdings hasn’t done a good job of maintaining the property and has not acted in a timely manner to complaints.

“The neighbors are unhappy,” Waters said.

The company, Waters said, has been cited for construction signs that have fallen down, trash and debris building up in front of the property, graffiti on the company’s signs and fence screens blowing away.

City: Complaints have piled up

Among the seven properties that encompass the Gulfstream site, Waters said the city has formally responded to 11 complaints. The city has also forwarded directly to Hudson Holdings more than a dozen other complaints for a variety of issues that it did not formally write up as a violation, Waters said.

“We have not kept a running account of all of the informal anonymous complaints we have received as we have tried to work directly with Hudson Holdings to address those issues,” Waters said.

Bornstein said no one likes code enforcement when they’re being subjected to a code action.

“It’s like getting a ticket from a state trooper, then saying all state troopers are a bad bunch,” Bornstein said. “But when the trooper asks ‘What were you doing?’ You say, ‘105mph.’ We’re trying to improve code enforcement … and its created a bit of a backlash with some people who own properties.”

But Bornstein lauded Hudson Holdings for doing an “outstanding” job for taking a derelict property and cleaning it up to the point where it can now be renovated if not by Hudson Holdings than by another developer.

“I give a tremendous amount of credit to Hudson Holdings,” Bornstein said. “Nobody can overstate the city’s desire to get a hotel. It’s been our dream and it will help boost our downtown.”

As for Michael’s assertion the city hasn’t done enough to attract more investors, Waters disagreed, saying the city has been working with the Business Development Board of Palm Beach County as well as the county’s Economic Sustainability Office, individual investors and the city’s Community Redevelopment Agency to lure more downtown businesses and private investors.

For example, Waters pointed to a 26-unit condominium that’s in the works from a Miami developer on the south side of Lake Avenue and Palmway. He also noted Chase Bank’s intentions to build a suburban style bank downtown and plans for TD Bank to build a branch on Second Avenue North and Dixie Highway.

“Some people are waiting for the Gulfstream to happen before they want to invest,” Waters said. “Hudson Holdings would like to wait for investors (before moving forward). So, you can see we have a bit of a dilemma.”

Hotel an ‘enormous challenge’

Chris Fleming, a senior broker with Strategic Realty Services, said he’s seeing “tremendous” interest in the city from potential investors, particularly for downtown and Dixie Highway.

“I also see the city government doing its part,” Fleming said. “(But) old and historic properties like the Gulfstream are an enormous challenge to successfully remodel into a viable investment.”

While some businesses such as Hoffman Chocolates and Bx Beer Depot have recently moved out, such new businesses as Lilo’s Streetfood & BarCarrieElle’s Closet, and Awe Flowers have moved in.

Michael said he’s not eager to sell the property. No timetable or asking price have been set.

“We would only sell if the right buyer came along,” Michael said. “We’re not going to sell it to somebody who’s going to build something we don’t feel is important to the site.”

Many residents on social media, however, have hinted for months that selling the property has been Hudson Holdings’ endgame all along and that the company never had any plans to develop the site and just saw the property as a way to make a fast buck.

Not true, Michael said.

“We would love to be the long term operator and investor,” Michael said. “But I need to feel comfortable that the city shares those same goals. I hope it’s us that develops and operates The Gulfstream, but if it isn’t, it’s very important that it’s done right. It’s a great asset to the city.”

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