Downtown Saga

Downtown Saga

government watch by Jean Gruss | Editor/Lee-Collier

One developer's saga in downtown Fort Myers shows the perils of urban redevelopment. It's a warning to other entrepreneurs who have grand plans for urban living.

Thinking about developing property in downtown Fort Myers? Be careful. You might get "throgmarted."

Ron Throgmartin was attending a lunch meeting of the Real Estate Investment Society in Fort Myers in 2002 when he heard Fort Myers Mayor Jim Humphrey make an enticing pitch.

Humphrey promised developers speedy permitting, tax credits and a warm reception if they built condos in downtown Fort Myers. "I love downtown," Throgmartin says. "I thought it could be like St. Pete."

But The Vue, a condo and office project Throgmartin planned for the Fort Myers downtown waterfront, became entangled in a swamp of environmentalist litigation and political squabbling by newly elected council members who weren't as eager as Humphrey about high-rises along the Caloosahatchee River. The ensuing political power play and legal bickering delayed the project for so long that Throgmartin missed the condo-development cycle.

Whether it's perception or reality, Fort Myers is getting an anti-business reputation especially when it comes to developing projects downtown. There's a joke making the rounds among developers that the mayor gives away the keys to the city but the staff changes the locks.

After investing $20 million and seven years, it's doubtful whether Throgmartin will ever get to start on his project. His advice to anyone with thought of developing property in downtown Fort Myers: "Don't do it."

But Warren Wright, a Fort Myers city councilman elected in 2005, says Throgmartin's project is an isolated case. He says another half dozen condo towers got permits to build. "All these developers pretty much got what they wanted," Wright says.

Perhaps, but WCI Communities was another developer that ran into similar difficulties when it attempted to build a waterfront condo and retail project in downtown Fort Myers at around the same time.

"I will tell you that the company spent the better part of 18 months working with the city council to design a project that would meet their approvals," says Ken Plonski, WCI's former vice president of public relations who now runs his own firm, Master Planned Communications.

Every time WCI addressed one objection, city officials raised more hurdles. "After a while, you understand it's not going to take you anywhere," Plonski says. "They squeezed us until it didn't make financial sense anymore."

Plonski estimates WCI spent $1 million on the condo and retail project before it abandoned the effort a little over a year ago and wrote off the expense. That's despite the fact that Duany Plater-Zyberk & Co., the firm that designed a downtown plan for Fort Myers, backed the WCI project, Plonski says.

But Wright says the WCI project was a "giant wall that separated the river and downtown." Wright acknowledges that discussions with the developer were strained. "It was a total communications nightmare," he says.

The projects that faced the biggest objections were those that strayed the most from the Duany plan, Wright says. Originally, that plan called for waterfront towers that should be no higher than seven stories. The city eventually adopted a plan that allowed 18-story buildings and approved some condo towers that were even higher. For instance, the city approved Throgmartin's 27-story tower.

"The whole process has been corrupted and violated," Wright says.

Mayor Humphrey and Fort Myers Redevelopment Agency Executive Director Don Paight could not be reached.

Fight in the park

For Throgmartin, The Vue was to be a new kind of project. His firm had built three million square feet of commercial buildings in the Midwest over a 20-year span, including stores for office-supply chain Staples. But when he moved to Florida in 2000, Throgmartin shifted to residential construction just as the boom was about to begin in earnest.

After hearing Humphrey's pitch to developers in early 2002, Throgmartin found a two-acre site adjacent to Centennial Park along the river that was zoned for a high-rise tower. "You can do this, no problem," Throgmartin says city officials assured him. His design for a tower was well received; "Everybody loved it," he says.

The 189-condo tower would also house the Edison Sailing School, a nonprofit organization that teaches children how to sail and operate motorboats. Centennial Park adjacent to the tower would benefit from new residents too as it would be used by more than the occasional arts and crafts fair.

But Throgmartin's architects determined they needed an extra 35 feet on the park side to avoid building an L-shaped structure that could obstruct more views of the water. So the city proposed a land swap with Throgmartin for one-third of an acre of the adjacent Centennial Park in exchange for another similar sized parcel downtown.

That's when things began to sour. "It's sacred space," says Wright. Looking back, Throgmartin says: "Had I known it was such a big issue I wouldn't have done it."

To be safe, the city asked the National Park Service for approval of the land swap, something the city's attorneys thought would be approved relatively fast. The city sought approval because it had used federal funds to improve the park and that agreement required the city to keep the park as green space in perpetuity.

By January 2005, Throgmartin had pre-sold most of the condos in the building and he had lined up $110 million in financing from U.S. Bank. The following June, Throgmartin held a groundbreaking ceremony for The Vue. He was so certain of the Park Service's approval that he flew to Europe on vacation immediately after the groundbreaking.

But while he was in Europe, Throgmartin got bad news. The Park Service wanted more information about the land swap and residents and politicians were complaining about the deal. It appeared that the Park Service's approval would take longer than anticipated and the bank financing couldn't proceed without it. Throgmartin had to cut his vacation short and rush home to deal with the problem.

In addition, local property owners and environmental groups sued the city for approving the land swap and a judge agreed the deal was made improperly. The city is appealing.

"The contention is that they improperly gave this land to the developer and it needs to be undone," says Andrew Dickman, the Naples-based attorney for the environmentalists.

By then, Throgmartin had spent about $15 million on attorneys' fees, architectural plans, engineering and other services. "At that number, quitting wasn't an option," he says.

While all this was going on, the city council moved to hire a city manager to shift power away from Humphrey, the mayor. And a settlement between Wright and another downtown developer raised questions because he says the proceeds were donated to the group that's suing the city over The Vue. In an opinion sought by Wright, the Florida Commission on Ethics ruled that Wright had no conflict of interest related to the settlement.

What does the future hold?

Observers are left to wonder: Is Throgmartin's case an aberration or a sign of things to come? Dickman and Wright say they're not opposed to development, just those that don't conform to the existing codes. "If you've got private property and it's zoned for a certain amount, then you've got nothing to worry about," Dickman says.

"I'm not anti-development," Wright says. "I haven't opposed the other high rises."

For now, no more condo towers are likely to rise in downtown Fort Myers because of the housing slump. Buyers are scarce and banks won't finance the construction of a condo tower because it's too risky.

But cities eager to transform their waterfront to luxury condos will likely face more public opposition. "It's not isolated to Fort Myers," Dickman says. "It's something that's under assault all over Florida."

In addition, state and federal legislators are tightening regulations governing development of "working waterfronts" that are used by fishing and boating industries, for example.

Throgmartin says the city and the county have discussed buying his property.

"Nothing would please me more," he says, adding, "It's like believing in the tooth fairy." For now, he's pushing ahead with efforts to build a five-story office building on a portion of the site.

"I'm not going to give up," Throgmartin says. "This market will come back and I'd like to be there when it does."

REVIEW SUMMARY

Company. Throgmartin Co.

Industry. Commercial development

Key. Redeveloping downtown can be arduous, especially when politicians aren't united.