November 27, 2021

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How Protogroup’s $192M hotel-condo project in Daytona Beach went south

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To the casual observer, it would seem Protogroup’s nearly $200 million beachside hotel-condo project has been plagued from the outset. 

After the Russian-family-run Palm Coast company announced plans to build its ambitious two-tower, 28-story, 500-room hotel-condo straddling the Oakridge Boulevard beach approach, officials and tourism-industry watchers anticipated the project would spur a resurgence in the blighted beachside area better known for bars, strip clubs and rundown motels.

But it wasn’t long before it became clear to everyone involved that an initially-proposed opening date in 2016 wasn’t going to happen.

The latest on Protogroup: Daytona Beach oceanfront Protogroup hotel out of cash, can’t complete promised roadwork

Since then, the future Daytona Grande has experienced nearly every conceivable delay a project could suffer — from financing woes to a worldwide pandemic — culminating in a revelation this week that without assistance from the city, the project could potentially fall into bankruptcy. 

Here’s a timeline of how this lofty project went from a two-year hotel build to a nine-year city-defining saga.

March 2012: Protogroup buys more than 2.5 acres of oceanfront land near Seabreeze Boulevard for $6.3M 

Palm Coast-based hotel developer Protogroup Inc. bought four lots south of the Plaza Resort & Spa on A1A near Seabreeze Boulevard and announced a broker with Charles Wayne Properties. The sale parcel includes the closed Sea Side Inn, 500 N. Atlantic Ave., as well as empty lots at 422 and 414 N. Atlantic Ave. and 700 Oakridge Blvd.

The hotel was expected to meet the city’s need for a second convention hotel to complement the Hilton Daytona Beach Oceanfront Resort. 

June 2014: Protogroup agrees to deal with the county and estimates hotel completion in 2 years

In order to get Protogroup moving on construction, the Volusia County Council agreed to a deal that would allow the developer to build a pedestrian bridge spanning the two towers over a renovated Oakridge Boulevard beach approach. The approach would be open to the public, but the pedestrian bridge would not.  

November 2014:  After several delays, Protogroup says it expects to break ground early 2015 and finish in mid-to-late 2017

Saying it is a “big, complicated process,” then-City Planner Rich Walton said the delays do not reflect a problem with the project. 

“It’s looking good,” Protogroup attorney Rob Merrell said. “Sometimes the process takes longer than you anticipate. There’s no real problems or issues.”

March 2016:  More delays push expected project completion to 2021

A project manager told The News-Journal that the project ran into a snag trying to finance everything at once. Instead, the project had to be broken into three phases. There were also infrastructure issues at the city permitting level. 

The new plan called for the construction of the south (hotel) tower to be done in four years, which would have been 2020, and for the north (condo) tower to be finished in six years. 

April 2016:  Protogroup breaks ground on parking garage across the street

Four years after announcing plans to develop a $130 million oceanfront hotel/condominium complex, ground was finally broken on the project’s first phase: a six-story parking garage across the street.

Feb 16, 2017: Record $192-million hotel/condo breaks ground

“In 30 months, we’ll start managing the hotel. (Then) it will be very exciting,” said Alexey Lysich, vice president of Protogroup Inc., at the time. 

It would actually be another 51 months (more than 4 years) before the first customers checked in.

March 2017:  Excavation work begins on the project site

This would be the first time any work was actually done at the site the Protogroup purchased for what would eventually become the most expensive — and tallest — beachside development ever built in Daytona Beach.

October 2018: Gryffin Construction takes over as general contractor

Gryffin took over the construction of the Protogroup’s twin tower project following the abrupt departure of the original contractor, Mississippi-based W.G. Yates & Sons Construction Company.

After Protogroup cut ties with that company, Yates spokesman Kenny Bush said the contractor hadn’t been paid for three months, a claim that Protogroup VP Alexey Lysich has denied. 

November 2018:  A federal lawsuit is filed against Protogroup 

Included in lawsuit documents is an Internal Revenue Service report that questioned company spokesman Alexey Lysich’s claim that he paid a Bahamas shell company $710,000 for an estimated $71 million in fruits and vegetables in 2014. The IRS stated that a deduction Lysich declared for payments to the shell company “should be disallowed in full.”

That shell company and another offshore corporation connected to an Alexey Petrovich Lysich were included in the Panama Papers, 11.5 million documents leaked in 2015. 

January 2019:  Subcontractors initiate a legal claim to collect on months of unpaid work 

Three subcontractors have taken legal action to collect payment for several months of work they say they performed on Protogroup’s towering $192 million oceanfront Daytona Beach Convention Hotel & Condominiums project at the east end of Oakridge Boulevard.

An attorney representing Protogroup said the three legal disputes are between the subcontractors and Yates, the company that hired them and was contractually required to pay them within 10 days of receiving payment from the developer.

December 2019: Protogroup seeks 3-year extension, settles for 1 year

Protogroup initially sought a three-year extension but public outcry forced them to abandon that request and ask for one year instead. A one-year extension can be approved by staff without public input.   The new deadline for completion of the South Tower would be Jan. 28, 2021, Protogroup attorney Rob Merrell said.

Other changes contained in the proposed new agreement include a reduction from 501 to 459 hotel rooms as well as a corresponding increase from 122 to 164 condominium units in the south tower. 

February 2020: The appearance of a crane at the project site represents the first activity in more than a year

For the first time in more than a year, there was construction activity visible on the North Tower. 

Not much has changed in that portion of the project in the past year, with the city officially confirming that North Tower construction had ceased in June as that part of the project was being redesigned, according to Gryffin Construction Corporation, the project’s general contractor.

Aug. 24, 2020:  After 2 years on the job, general contractor Gryffin Construction has left the project

In the request, Craig Stephen Greene, Gryffin’s president, stated that “this transfer is voluntary on behalf of my company.” He offered no additional comment about the change when reached by phone by The News-Journal.

Gryffin Construction out: $192 million Protogroup project deadline looms

Dec. 3, 2020: Developer extends deadline citing a declared state of emergency

Rob Merrell, the attorney representing the developer, requested the extension of the existing Jan. 29, 2021, deadline for completion of the project’s South Tower based on state statute §252.363(l)(a)l, which provides that “[t]he expiration of a development order issued by a local government” is tolled during the duration of any emergency declaration issued by the Governor.

Due to the coronavirus virus pandemic, Gov. Ron DeSantis issued an executive order declaring a state of emergency on March 9 and extended it by three additional 60-day periods. 

COVID concerns: Daytona Protogroup hotel deadline extended yet again; pandemic partly responsible

June 4, 2021: Soft opening of Daytona Grande

After nearly a decade of waiting, the doors finally opened at Daytona Grande.

Looking at the hotel from North Atlantic Avenue, where construction workers on tall ladders still labored on electrical wiring behind chain-link fences on Friday morning, there was no indication that the hotel is welcoming guests.

A News-Journal reporter’s request for a tour was rebuffed.

“Are you planning to check-in?” Alexy Lysich said. Otherwise, “send me a request.”

Quiet opening: Long delayed Protogroup hotel opens without fanfare. Here’s a look inside

June 22, 2021:  A code enforcement complaint is filed due to safety concerns

In 2017, The News-Journal reported that the foundation consisted of 100-foot deep holes drilled into the ground and filled with concrete and rebar. The rebar is tinted copper, the result of rusting in the sun and salt air for nearly three years since foundation work began in December 2018 on that portion of the project.

Rusty Rebar: Code enforcement complaint filed over rusted rebar on Protogroup North Tower site

Less than 48 hours after the complaint was filed, in the early morning hours of June 24, the 13-story Champlain Towers South condominium in Miami-Dade County suddenly collapsed.

Sept. 9, 2021: Protogroup hosts exclusive grand opening celebration

In keeping with the tumultuous track record of a project marked by nearly a decade’s worth of complications, the planning for the grand opening event has been accompanied by a bit of drama. After Bob Davis, president and CEO of the Lodging & Hospitality Association of Volusia County, mistakenly forwarded the email invitation to his contact list, some who RSVP’d with their interest in attending the event received word from the hotel that the guest list was full.

Nov. 2, 2021:  Protogroup tells the city it’s out of money and can’t  complete promised roadwork

Protogroup, the Russian family-run Palm Coast company behind the project, has burned through its construction loan for the 28-story, 455-room hotel before work has been completed on the venture.

Cashless: Hotel complete promised roadwork, looking to city for help

“Protogroup now finds itself in the place of needing to close the construction financing loan and to obtain permanent financing in order to avoid bankruptcy and maintain ownership and operation of the convention hotel property,” Deputy City Manager Jim Morris wrote last week in a memo to City Manager Deric Feacher.