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A plan to house hundreds of illegal immigrant children at a multimillion-dollar hotel complex in Texas was scuttled after the prospect of taxpayers footing the bill for luxury lodging proved too much of a public relations obstacle.

BCFS, previously known as Baptist Child and Family Services, which has a contract with the Department of Health and Human Services to run camps at Lackland Air Force Base in San Antonio and Fort Sill in Oklahoma, had a deal to buy the Palm Aire Hotel in Weslaco, Texas, for $3.8 million. The hotel was built in the 1980s and includes three swimming pools, tennis courts and an exercise room.

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"This proposal sought to find a solution for providing safe, humane care for the children flooding across the border and overwhelming U.S. Border Patrol and communities," BCSF said in a statement announcing the deal was scrapped. "BCFS is thankful to the City of Weslaco for their consideration and support, and is disappointed that misinformation has fueled so much negativity against this effort that its success is likely jeopardized."

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Officials said the project never reached the point of submitting a proposal to the U.S. Department of Health and Human Services, but one of the hotel's current owners confirmed that a sales agreement with BCSF had been in place.

The deal died Wednesday afternoon, hours after FoxNews.com reported that as many as 600 children between the ages of 12-17 could be placed at the Palm Aire, where BCFS would also provide medical and mental health care and educational and recreational programs under a contract that sources said could total as much as $50 million.

The Palm Aire Hotel is not exactly Club Med -- but the 7-acre site features three swimming pools, lighted tennis courts, concierge service and a Jacuzzi. The property also has around 10,000 square feet of retail and meeting space.

Weslaco is part of the complex of communities that includes McAllen at Texas' extreme southern border, where tens of thousands of unaccompanied children from Central America have crossed over from Mexico, overwhelming Border patrol facilities. Federal agencies and non-governmental organizations have been scrambling for places to house the massive surge of illegal immigrants.

BCSF had planned to hire 650 workers – some making upward of $45 per hour - to staff the facility, according to sources.

Officials said the location made sense, even if it made for bad optics.

"The facility also would have allowed for the quick transfer of children in Border Patrol custody in South Texas to a residential child care facility, and then expedited release to their families," BCFS officials said. "The average length of stay was expected to be 15 days. During that time, children would be provided room and board, in addition to basic education, recreational activities, medical and mental health care, case management, and religious services, if they chose to participate. The children would not have attended public school."

But images of the hotel's amenities generated a backlash that officials said could not be overcome.

"We are not going to continue with trying to purchase that hotel," a source close to the plan told Fox News. "It was just too controversial. We should have known better, no matter what the cost."