Developers working on a high-scale resort hotel that will replace the Best Western on Pensacola Beach will move forward with a summer groundbreaking, but the issue of a $320,000 fee possibly owed to the Santa Rosa Island Authority is still on the backburner.

The 209-room hotel, which doesn’t yet have a name and branding, is being developed through Pensacola Beachside Resort LLC, a partnership between Innisfree Hotels and Dallas commercial real estate firm RREAF Holdings.

The current 120-room Best Western hotel on the site will be demolished any day now, according to Innisfree Vice President of Development and Asset Management Rich Chism, and if construction on the new structure can begin this summer, the hotel would open in spring of 2023.

Renderings show the new Pensacola Beach hotel that will replace the Best Western damaged by Hurricane Sally in September. (Photo: Courtesy of Innisfree Hotels)

The hotel was significantly damaged in Hurricane Sally in September and has been closed since then.

Chism and the Innisfree team presented the conceptual designs for the new hotel to the SRIA Wednesday night, showing renderings of an upscale outdoor area with a lazy river, a pool deck, a dining terrace, hot tubs, a fire pit, a splash pad and a tiki-style event hut.

The popular Fish Heads pool bar wasn’t damaged by Hurricane Sally and will remain, but it will be connected to the new hotel’s second floor lobby by a bridge.

More: Best Western on Pensacola Beach to be torn down, rebuilt as resort after hurricane damage

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The development team and the SRIA have been back and forth for weeks now on the issue of whether a $320,000 consideration fee should be imposed on the development.

The previous owners of the Best Western paid a similar consideration fee in 2007 for a development on that site that was never fully complete, and the fee period expired in 2011. When Pensacola Beachside Resort LLC acquired the Best Western in 2017, the new owners assumed the consideration fee was part of their purchase and they wouldn’t need to pay it again should there be future development on the site.

But, in a committee meeting late last month, some committee members voted to still impose that fee because the previous one had expired a decade ago.

Consideration fees are similar to impact fees, but rather than the money being used to help offset infrastructure costs surrounding a specific development or project, they’re added to the SRIA’s capital improvement fund to be used on the island in general.

The consideration fee issue was up for discussion again Wednesday night, when committee member Karen Sindel said she had done further research since the last meeting and no longer was sure the committee’s stance was correct.

“I’d like to have a little more conversation because I’m not certain I’m totally sold that in the current environment, meaning how we do business now, that this is appropriate,” she said.

Julian MacQueen, founder and CEO of Innisfree Hotels, told the board it was a shock to hear the SRIA was going for a “money grab” with the fee.

“We are good neighbors, when the island authority was shut down, we provided you housing and fed your people for months and we asked for absolutely nothing,” he said.

MacQueen added that Innisfree’s sites have been decimated after the hurricane and the bridge outage and it’s a blow at a time when the company is trying to recover financially.

Ultimately, the board decided to stay the issue and allow the developers to continue with their project, with the understanding that there would be more discussion at the next committee meeting May 26 including an amendment to the policy for clarity and a decision on how to handle the future hotel project.

Emma Kennedy can be reached at [email protected] or 850-480-6979.

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