Sold On Sarasota

Sold On Sarasota

After a development process that featured highs and lows, itis time to break ground on the condominium project at 1350 Main.

By Sean Roth

Real Estate Editor

The fall of 2000 was a pivotal time for Chris Brown. The former executive director of the Delray Beach Community Redevelopment Agency was attending the Florida Redevelopment Associationis annual conference in Sarasota. While Brown mingled with the likes of officials from Casto Southeast and Faison Development, he liked what he saw of the West Coast city.

Brown had lived here in the late i80s and early i90s: A decade later the downtown area was vibrant and ready to sprout new development.

Sarasota Commissioner Mary Quillin pulled Brown aside. The two had met earlier that year when Sarasota officials and the chamber of commerce toured Delray Beach. Quillin urged Brown to compete in an existing Request For Proposal (RFP) to redevelop the city-owned parking lot at 88 Cocoanut Ave. and 1289 N. Palm Ave. The major hurdle to the 2.25-acre parcel was the creation of 300 public parking spaces.

Assuaging his curiosity with a trip to the lot, Brown knew his answer. He and his development partners began the journey to build a high-rise in Sarasota.

Since then, not all has not gone as expected.

Today, Brown is the local partner for Sarasota Main Street LLC, which is developing the $55 million, 17-story condominium development at 1350 Main near the intersection of Main Street and Palm Avenue in downtown Sarasota. The development, set for a ground breaking later this month, has had many distinctions, including most notably the achievement of reserving all but five of the developmentis 134 units in about 90 minutes, back in May.

Brown, joined by his development partner in the Jacksonville-based LB Jax Development LLC o Mike Langton and William Morris, owner of Boca Raton-based Southcoast Partners Inc. o also worked with city staff to create affordable and transit housing trust funds, which they expect to contribute to as part of the development.

The project has had its share of trouble, most notably a tax increment fund request for $3 million in May. The application, publicly decried by local media and civic organizations as an unnecessary taxpayer subsidy to the developeris profit, was later revised to $2 million and eventually was frozen at the developeris request. Although the request is still held by the city, it is by all accounts a dead issue.

Critics of the project remain, however, and in the absence of the tax increment request, they harp on the density bonuses given with little trade off for affordability. In January, the city commission approved bonuses for the project, which increased the allowed development o on the about three quarters of an acre site o from 50 units per acre to 200 units per acre. The terms of the overlay districtis density bonus requires 20% of the units to be under 1,250 square feet and a contribution from the developer to the affordable housing and transit funds. The rationale used by the city to justify the bonuses was the creation of more affordable housing in downtown.

But while the developer built several smaller units (38 under 1,000 square feet according to city filings) the per square-foot price rate, which ranged from $248 to more than $450, ended up comparable to more luxury projects, such as One Hundred Central, the San Marco, Kanaya, The Savoy on Palm and Cityscape at Courthouse Centre.

While Sarasota Main Streetis partners acknowledge the bad press, they say it hasnit soured them on developing in the downtown. The partners are looking for additional development sites and are still optimistic that their proposal for the Palm and Cocoanut garage RFP, which was listed second by one point to Ersa Graeis Plaza Verdi proposal in the cityis most recent short listing, will be selected.

iWe are still hopeful that we will get it,i Brown says. iOur project didnit ask for any city money ... and we even gave the city more public parking than they had asked for. (Even so) we are snooping around looking for other sites. Itis only logical to do another site here. This is the most heated real estate market we have been in. Frankly, I donit know if we really took advantage of the market. But we arenit greedy.i

Brown, who now lives in a home on Lido Beach, is seen by his fellow partners as the lynch pen driving the development of 1350 Main. It is almost impossible to look at Brownis current development without considering his previous nine years on the other side of the public/private line directing redevelopment for Delray Beach. Prior to that Brown had worked for Toronto-based Campeau Corp. and the Woodlands-based Mitchell Energy and Development Corp.

His current counterparts in Delray Beach give him high marks for a positive impact on that city.

iHe was really excellent,i says his successor, Diane Colonna, who was the cityis planning director when Brown was at the CRA. iHe was here during the doldrums of the early i90s when nothing new was happening here. We had high vacancy rates and lots of depressed property.i

Brownis four-pronged attack focused on: increasing the funding for redevelopment (largely through loan programs and grants); having the city acquire more properties for resale to developers (allowing the city to absorb some of the land costs); increasing the supply of parking; and bringing more marketing to the downtown.

iI think he should get a lot of credit for the revitalization of downtown,i Colonna says. iThere has been a really significant turn around from a really depressed downtown. He was a just a very bright engaging guy with a great love of the downtown.i

Bill Wood, director of the Greater Delray Beach Chamber of Commerce who arrived the same day as Brown in 1991, is another fan.

iHe was such an outspoken advocate for free enterprise and business,i Wood says. iHe was not necessarily pro-growth, but he was for ways to encourage businesses. He was a great advocate. He was a just a real straight shooter.i

As a more practical matter, Brownis time at the CRA also introduced him to both of his future partners on 1350. Langton, who owns Jacksonvilleis Langton Associates, a grant consulting and government lobbying firm, met Brown when his firm assisted the CRA in writing matching grants. Morris ran into Brown when Morrisi Southcoast Partners competed for an RFP in Delray Beach.

iIt was an RFP to build 219 residential units in the downtown with retail space ... off the main spine called Atlantic Avenue i Morris says. iA condition of our approval was that we had to build a 208-space parking garage and give it to the city. As an aside, he was incredibly successful in rejuvenating the downtown in bringing new restaurants and a significant amount of nightlife. Most would say that Delray is one of the most dynamic cities on the (Florida) East Coast.i

In July 2000, Brown resigned from the CRA and partnered with Langton to return to private development. Brown also contacted Morris and agreed to partner with Southcoast Partners on larger developments.

iWe scraped together our savings and started LB Jax,i Langton says. iOur niche was we would build downtown infill mixed-use projects.i

LB Jaxis first project was the W.A. Knight Building, where the partners created one of the first live and work loft projects in downtown Jacksonville. Then Brown heard of Sarasotais Palm Avenue garage RFP.

iWe didnit come in first or second; it was awarded to Dr. (Mark) Kauffman and (Sarasota attorney) David Band,i Brown says. iIt didnit go anywhere.i

Yet it was that bid that set up the partneris 1350 Main condominium.

Sarasota businessman Jay Foley sent out letters to all of the Palm Avenue bidders along with an aerial photograph of a property he owned at 1350 Main Street.

iHe said, eOnly one of you is going to win the RFP,i i Brown says. iBut all of you can go after this, and itis a better piece of land.i

Within a day, Brown checked out the site and began negotiating with Foley. Brown and Langton knew they would need more financial and development muscle to build, so Brown called Morris.

Morris knew about the Longboat Key-Sarasota area from his time as an executive with Arvida.

iIt was very easy to look at a development in Sarasota because I already liked the city and the area,i he says. iI knew it had good potential. We were building a very similar project in downtown Boca Raton. We saw a city commission that was really committed to doing something with the downtown area. It had hired (Miami architect and urban planner) Andres Duany. So we knew higher densities were coming to the downtown. We also looked around and saw the Ritz-Carlton, One Hundred Central and Whole Foods, Plaza at Five Points.i

It took about a year, but the three partners placed the land for 1350 under contract. The next big hurdle for construction was insuring the site had the proper density. Brown says.

With less than an acre and a density of 50 units per acre, the three partners were facing only being able to build 30 units on the site.

iThey would have had to start at $1 million and go up to around $3 million,i Brown says. iWe didnit think units that expensive would work in downtown. So we decided to go through a land-use amendment. We suggested (to the city) creating an affordable housing fund or a transit fund O to get the additional density.i

The developers, city staff and commission agreed on the idea that encouraging smaller units created more affordable housing. This led to the creation of the section of the downtown overlay district which required a certain percentage of units to be smaller and the creation of the affordable housing and transit funds.

The partners assert that the smaller units worked, allowing them to deliver units starting in the $280,000 range, far less than most nearby condominiums. iThis wasnit a bait and switch,i Langton says. iThis is certainly more affordable. Not everyone can afford to live in the downtown. We created smaller units. The price did ratchet up because of increases in costs but not dramatically. Without the density you canit get anything thatis affordable when you pay (about $3.3 million) for a little more than a half-an-acre site.i

Asked about the issue of TIF funding, the partners attribute the request to skyrocketing construction costs and the cityis inconsistent application of tax incentives for other downtown projects.

iIn the RFP for the Palm Avenue site the city said, eWe will give you the value of the land but no additional city money,i i Langton says. iSo we didnit ask for any additional city funds. What does Ersa Grae ask for? They asked for the land plus $4 million, and nobody brought it up. How can the city say no to $500,000 (for an easily defensible public purpose) ... when you give away $4 million across the street. You have to treat everyone fairly. It did leave a bit of a bad taste in our mouthi

Brown, however, thinks some of the criticism was warranted.

iI think it was justified by the fact that CRA changed the policy after it gave the (TIF) money to Ersa Grae,i Brown says. iThey changed the policy to include a must-meetnbut-for test. A project wouldnit be built if they donit have the (TIF) money. We didnit meet that test. We would still build the project without the money. But there are lots of tests. I still think a project should receive money to pay for needed public improvements ... such as streetscaping. I will probably be proposing some public improvements in another month.i

Brown says the legacy of the 1350 Mainis experience with TIF will hopefully be a more restrained use of incentives by the city across the board.

The result of the cityis denial, the partners says, will require more front-end money and will mean that the partners and investors in the development will make less money.

i(But) we love Sarasota,i Langton says. iWe canit divulge our next project, but we would like to do three or four other projects. We are sold on Sarasota. We love dealing with the city commission. They are tough as nails and donit play any games, but they are fair, straight forward and honest.i

PAST & CURRENT MIXED-USE PROJECTS

LB Jax Development LLC

W.A. Knight Building LLC o redevelopment of a 1920s era building for 12 loft apartments and two retail units on the ground floor o Jacksonville

West University Avenue Lofts LLC o 31 loft apartments and four retail units on the ground floor o Gainesville

The Barnett LLC o redevelopment of a 1926 18-story office building for an 80-room boutique hotel and 65 luxury lofts with a bank and restaurant oJacksonville

Southcoast Partners Inc.

Palmetto Place o 253-unit upscale urban condominium project with 15,000 SF retail (9 floors) o Boca Raton

Bridgeside Square o 246-unit upscale urban condominium complex with 15,000 SF retail, 28,000 SF office and a 1,172-car parking garage n Fort Lauderdale

Worthing Place o 219-unit upscale urban apartment project with 13,000 SF retail and a 650-car garage o Delray Beach