Naples, developer settle lawsuit over luxury condo, retail development

A stalled development set for the gateway to Naples’ Fifth Avenue shopping district may be moving forward after the developer and the city reached a settlement on a lawsuit filed last year.

According to the city of Naples and the developer, M Development, the parties have reached an agreement that includes doing away with underground parking and agreeing to forego big box retailers.

The property is on Fifth Avenue between the 900 and 1000 blocks and is set to be turned into a mix-use project that will include 50 luxury condominiums and 75,000 square feet of boutique retail space. There will also be a tree covered alley to “create retail and pedestrian engagement.”

According to an M Development description, the property sits on 4 acres of mostly vacant land between the shopping district and Naples Bay. The developer says the site “currently consists of vacant, non-conforming buildings and lots that were damaged by Hurricane Ian.”

M Development paid $43.5 million for the property in 2021.

The firm filed a lawsuit against the city Dec. 7 saying the city blocked the project, in large part, because of parking issues.

According to the lawsuit, on Sept. 30 city leaders “in an action that would shock the conscience of any reasonable person” violated the law by “adopting a motion that imposed a moratorium on administrative approvals for projects containing underground parking garages.” This, the suit alleges, was done to keep city staff from approving site plan application in the works.

The city, sans the hyperbole, denied the accusation in a court filing saying that M Development did not have the authority to build the underground parking below city streets and alleys.

It argued that while M Development “has not been denied all reasonable economic use of its property,” building the proposed parking piece would not be possible as designed without the use of the city’s streets and alleys.

The two parties were ordered into mediation May 1, according to court papers.

The parking garage will now be built on the southwest corner of the property.

With a settlement in place, what happens next or how long before work on the project begins is unclear.

The city’s lawyer, Ralf Brookes, says in an email that a motion will be filed to “hold the case in abeyance” until the site plan review is finished. Once the steps called for in the agreement are completed, the case will be dismissed, he writes.

As for M Development, a spokesperson would not say when construction could begin or if potential tenants had yet been identified. (The spokesperson also declined to share the cost of the development.)

The emailed answer to all three of the questions was, “These details will be shared in a forthcoming press release.”

M Development is becoming a major property in owner in Naples. In November of last year, a month before it filed its lawsuit, the company bought 27 properties from the Naples-based Hoffmann Family of Cos. for about $182 million.

The portfolio included 12 buildings on Fifth Avenue South, nine on Third Street South and six off U.S. 41 in Naples.