For several reasons, I decided to vote in favor of moving forward to develop the Triangle Property with New Urban Communities. Staff has vetted their qualifications extensively. I met early in the process with the principals of the company and their CFO not to speak about this particular project but rather to learn about their underlying philosophy. I researched the firm and looked at some of their other projects. I spoke with a variety of people who had worked with the company in the past, and everyone confirmed my initial feeling that they were able to complete a project and, just as important, ethical in their business dealings.
Using my own commercial real estate experience and CCIM training, I analyzed the financial numbers of different project scenarios. Their projections were based on market research from national firms plus a local realtor’s focus group and advice. The presentation to the CRA and Commission was thorough and informative. After questions, public comment and our deliberations, we voted unanimously to have staff negotiate the final terms. The project is for 48 new rental apartments with parking spaces in excess of our code.
As I have written in the past, I believe that the free market should determine what is built at any particular site. I am also a proponent of the city selling its non-municipal used real estate. In this case, because of the economics involved, New Urban Communities has demonstrated that a sale would scuttle the project. I further took into consideration what the market price as stated by a current appraisal is which is less than what we have invested in the parcel. Therefore rental would be best to recapture our investment dollars.
Some have suggested a structured parking garage on the Triangle lot. The construction cost for anyone to build is $17,500.00 per space without land costs. A garage for 100 cars with the land would cost over $3,000,000 dollars on that site. If you project what the ROI (return on investment) is, the garage would never pay for itself. In this instance, I believe the free market has spoken.
Others wanted to see a retail component to the project. The research, financial numbers and logistics of a mixed use building on the site prove that is less feasible than the proposed residential-only development. One of the important things to all of us is that the project be constructed and in scale with our codes and our “Old Florida feel”. The development will be 3 stories in height which is below our maximum height restrictions. Once again, the free market has spoken and to our advantage.
A few people wanted a condominium development instead of rentals. After looking at the price to construct a project with the amenities necessary, it becomes obvious that the sales price would be higher than what research dictates people would pay for the units. There has been no new residential construction downtown in a dozen years. In order to secure construction financing, the banks would insist on a cash flow to pay the loan. A dedicated stream of rental income does that. Again the free market has spoken.
If this was an entirely private deal without Stuart being a party to the transaction, this project could go forward as a PUD. Our commission would look at the proposed plans and make our comments as we do all the time. We will be doing the same thing when this comes before us to receive final approval. Stuart still exercises the same amount of control over the project. The only difference is that we will be the land owner and will rent to the developer the use of that land. This is the free market in action.
Currently I see our downtown streets as a “Potemkin Village.” Without more residents, we will never truly live up to our potential as a downtown and a city. This project jump starts revitalization of Dixie Highway. It will spur more new construction instead of the current patchwork of empty buildings and vacant lots. What Stuart needs is additional residents who will expand our tax base. More full time residents will bring added vibrancy resulting in more jobs and commercial development. Projects like this will allow our “Millennials” an affordable option to remain in Stuart until they are ready to buy that first house or apartment, hopefully within our boundaries.
The proposed rent that New Urban Communities would pay would result in our land purchase cost being paid by 2028 and our soft costs in the project around 2036. The project beginning in 2019 is projected to pay the city $90,000 in TIF initially, and as value increases, so too will the yearly amount of real estate taxes. This does not take into account the various fees and other taxes that the residents and building will pay. I see it as a win for New Urban Communities and a win for the City of Stuart. This is an example of what the CRA does by allowing the free market to work.
There will always be those who believe something different should go on the Triangle parcel. Everyone has ideas and thoughts and opinions. Ideas, thoughts and opinion are meaningless in the marketplace unless you are willing to risk your money. New Urban Communities and their backers are doing just that. For the Triangle property, the free market has spoken.