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Diplomatic Immunity

Driving north on A1A from its intersection with Hallandale Beach Boulevard is like hacking through a micro-city under siege -- by construction workers. While out-of-town SUVs attempt to squeeze into one lane, bulldozers churn rubble, and dust-caked men scurry about wearing white hardhats and earnest expressions. Contractors and their crews are scrambling because the Diplomat Hotel project in Hollywood is once again behind schedule, now missing its original intended completion date by a full year.

Three years ago, when Hollywood city officials and Diplomat developers first began to tout the 1000-room shorefront hotel as the city's latest economic engine, many residents balked. They couldn't envision a 15-acre development that included a 200,000-square-foot convention center, a parking garage, a retail village, and a proposed 135-unit condo crammed into the narrow barrier island dividing the Atlantic Ocean from the Intracoastal Waterway. "This is called a coastal high-hazard area for a reason," says Brenda Chalifour, one of the community's most vociferous local activists. "That development belongs on U.S. 1. An Intracoastal shopping mall? It just doesn't make any sense."

Likewise lacking in sense were the Diplomat developers' request at last year's state legislative session for $2 million for rock barriers to contain the hotel's beach and the $600,000 they solicited from Hollywood last fall for sand. The state denied the former request, but the city agreed to cough up the cash. Chalifour was one of many residents who wondered why a private, for-profit venture should benefit from public dollars.

Then, when Diplomat Properties petitioned the city last October to establish a Community Development District (CDD), Chalifour's trepidation grew, spurring her to delve into CDD statutes. "Now I'm an expert. I know everything I never wanted to know about CDDs," Chalifour quips.

The Diplomat's bid to establish itself as a CDD is its latest maneuver in financing the still-unfinished hotel and its surrounding property. So far the resort is $300 million over its original $300 million budget, which to date has been financed solely by the Plumbers and Pipe Fitters National Pension Fund. If the city approves the CDD, the parking lot, convention center, and some of the rest of the property would effectively secede from Hollywood and become its own municipal government, with the power to issue tax-exempt bonds to fund the rest of the project. If all goes well, the CDD should repay these loans to bondholders (banks and other large financial institutions) through a yearly fee and might even gain exemption from property taxes. Chalifour, for one, has a problem with that.

Traditionally CDDs offer developers of residential communities a chance to acquire tax-free financing for needed public facilities like roads and water-and-sewer systems.

"But this is a private commercial venture," she says slowly, emphasizing each word. "There's very little public infrastructure [needed]. There's already a state road; the sewers have already been built." Chalifour also takes issue with a city hell-bent on pushing through a questionable proposal and the still-missing but legally required public hearing before the city commission, at which Hollywood residents can state their piece.

Originally from Massachusetts, the 42-year-old environmental and land-use attorney has practiced in Florida since 1993, fighting her share of battles with the city and prospective developers. She was one of several activists who blocked a proposal by Albertson's to build a supermarket on Sheridan Street near environmentally sensitive land, and she helped thwart the city's attempt to transform a site just south of North Beach Park into a commercial property. "They wanted to build an ecofriendly hotel," she recalls, shaking her head in disbelief.

She also formed "Save Our Shoreline," an entity that sued the city for developing property on the Broadwalk that was incompatible with the existing neighborhood. Chalifour takes her role as a community watchdog very seriously but wishes she didn't have to. "This is the job the city should be doing, looking out for the general welfare of its taxpayers. That's the role of the city, not to be the cheerleaders for the Diplomat," says Chalifour. "If they do cheer for a private commercial entity, then I seriously question their impartiality."

Chalifour might be underestimating the city. While Commissioner Sal Oliveri says Hollywood looks forward to the Diplomat's opening, he still has some serious questions. "Unfortunately I don't think they've been completely honest on occasion, and it puts the city in an awkward position in its responses to the public," Oliveri says. He adds that, while the city attorney has deemed the CDD legal, Oliveri doesn't necessarily think it's the right thing to do. "As a resident of Hollywood for 40 years, I think it's morally wrong."

Neither City Manager Sam Finz nor Diplomat counsel Debbie Orshefsky returned calls from New Times seeking comment for this story. But in a petition to the city, Diplomat officials declared that the project "has its own sources of revenue" and that "no state or local subsidies are required or expected" -- a statement some activists find laughable in light of developers' previous attempts to dip into state and local funds. The petition also promises to pay the city an amount equal to its property taxes in the event that the CDD is declared exempt. But Chalifour is skeptical. "A contract is worth only the piece of paper it's written on," she intones. "Who's going to enforce it?"

As former president and current member of the Hollywood Lakes Civic Association, Linda Wilson holds similar concerns about the CDD. "[The Diplomat] would have virtually every ability that a city government has, including that their employees are considered state employees eligible for state benefits," Wilson says. "What happens if in the future they can't pay the bond money back? What is to stop them from changing their own law? What about fire assessment fees, EMS fees, sanitation fees, water and sewer service? Is all that going to be included in the assessment? If not, who's going to pay for it?"

Hollywood's city attorney, Dan Abbott, is sympathetic to residents' concerns. "When a private party asks the government to do something, I think people are -- and should be -- a little bit suspicious," he says. But he also believes that the city wouldn't incur any negative impact if the CDD is approved.

Activists like Wilson still aren't buying it. "It's a $300 million project that's 100 percent over budget," she declares. "You're talking about giving this responsibility to the same people who've put it in the hole."

"If the CDD goes through and the project goes under, then we don't get any tax money, and the city has to stand in second place behind the bondholders to collect," explains Joe Schneider, a Hollywood attorney who keeps close tabs on the Diplomat's bid. He's concerned that, under the plan fostered by the Diplomat, other properties on the beach might apply for CDD status and find themselves free from paying local property taxes.

"This is really a bastardization of process," adds Schneider. Despite his qualms about the Diplomat's quest for CDD status, he wants the resort itself to flourish. "But we need to protect the people of Hollywood first," he says. "The question is, does it benefit the city and does it create any risks? If it does create risks, in my mind, it shouldn't go forward."

Chalifour says she too would like to see the Diplomat prosper, yet she thinks the city and developers are pandering to locals' nostalgia about the hotel's previous glorious days in the '60s when stars like Jackie Gleason and Frank Sinatra graced its banquet halls. But the Diplomat's former glitter has little to do with its funding, and Chalifour is convinced that tax dollars will best be secured if the development is not a CDD.

City attorney Abbott concedes that the law is not presently clear as to whether a CDD is exempt from property taxes, but he is certain about what will happen if the Diplomat takes a dive. "The CDD assessment is the same as the tax. If they pay it, everybody gets paid; if they don't, it's the same as if it was not a CDD. The government always finds a way to get their money."

To date, Diplomat officials have twice postponed their presentation before Hollywood's city commission, and Chalifour suspects that both developers and city officials are trying to bypass the public hearing that is legally required before CDD approval can be granted. If the hearing gets squashed, Chalifour plans to file suit against the city.

She points to a similar case in Kissimmee, where developer Rob Miller attempted to float $120 million in bonds to help finance a $650 million complex of shops, hotels, and a convention center in Osceola County. The state attorney's office objected to the use of public dollars for private profit. Recently Miller tried to withdraw his bond request; Chalifour wonders why local officials have failed to employ similar tactics with the Diplomat.

"Up there, the state attorney's going after the people doing this. Where's my state attorney?" she pleads. "Where's my city attorney? I don't understand. Who's looking out for the City of Hollywood?"

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Emma Trelles

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