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Sanford & Coral Gables developer close to deal on $50M downtown project

Sanford & Coral Gables developer close to deal on $50M downtown project
A rendering of the mixed-use development proposed by a South Florida developer for 5.5 acres of city-owned land in downtown Sanford. (Sanford Waterfront Partners)

A deal between the City of Sanford and a Coral Gables-based developer to redevelop three downtown city blocks appears imminent after six months of negotiations.

The development, dubbed Heritage Park, would be a $50 million mixed-use project that partially overlooks Lake Monroe, made up of 37,750 square feet of retail/dining space, 8,550 square feet of office, and 235 residential units in a mix of apartments, lofts and townhouses.

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The agreement would provide $13 million in incentives from the city, but the development is projected to generate $2.35 million in property taxes in its first five years, 254 permanent jobs, and $19.2 million in direct sales from businesses located within.

The developer, Sanford Waterfront Partners LLC, an affiliate of Torre Companies, began negotiating with city leaders in September 2016 after being chosen from a bid process in December 2015.

Originally, the two parties expected to ink a deal last Fall, but talks went longer than anticipated, requiring the Sanford City Commission to extend its Memorandum of Understanding with the developer three times.

Informally, city commissioners now appear to support the proposed agreement. It is now passing through various city boards for recommendations, and will be presented for public hearings at the April 10 and April 24 City Commission meetings. Pending no major changes, the agreement would go into effect by the end of April.

Three main issues dogged the negotiations:

-- First, the site "has some hair on it" and will require extensive work to make it ready for development, said John Jones of S&ME Inc., the city's engineering consultant. Power lines and underground utilities must be moved. In addition much of the soil was pulled from Lake Monroe when the city constructed a seawall in the 1920s and will need to be stabilized to build multi-story structures.

-- Second, the deal is complex because it involves city land and tax incentives.

City leaders were willing to provide incentives, but wanted them tied to performance benchmarks. Sanford Waterfront Partners (SWP) was willing to perform, but wanted  incentives up front to help finance the project.

For example, SWP originally proposed taking possession of the city's land but deferring payment  for five years. The developer also asked for 70 percent of the tax incremental funding (TIF) the completed project would generate.

The new proposal requires SWP to purchase the property at the start of each phase of a three-phase development, with the city refunding the purchase price after each phase is completed with a certificate of occupancy.  In addition, SWP will receive 50 percent of the TIF for a maximum of five years.

"As it was originally written, the city had no guarantees anything would be built, and we had no control of the land," said Sanford Mayor Jeff Triplett. "Now if they don't perform, it's costing them money."

-- Third, City Commissioners are leery about real estate deals involving public land because of past mistakes made by city officials in the 1950s and 60s. Specifically, commissioners cite Marina Island (which abuts the Heritage Park property to the north), which Sanford in the 1960s signed a 99-year lease with a company to build a Holiday Inn. The lease gives the city little control beyond standard zoning oversight.

The current leaseholder intends to replace the outdated hotel with an assisted-living facility, a land use many in the community believe is not the highest and best use of city-owned property in a prime downtown waterfront location.

"There was a lot of concern about what has gone on in the past, and rightfully so," said Venny Torre, a partner in SWP.

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Under the terms of the proposed agreement, Sanford Waterfront Partners' obligations include:

-- Purchasing the first piece of property within 24 months of a signed agreement. Purchase would require proof of financing for the project, getting all approvals and permits and providing specific start and completion dates;

-- Gaining approvals through the city's Historic Preservation codes;

-- Performing all geotechnical work, but only after gaining the approval from the city;

-- Beginning construction three months after purchasing property;

-- Agreeing not to flip the property until the entire project earns a certificate of occupancy.

The city's obligations include:

-- Funding up to $5.2 million for infrastructure improvements to include utilities, road work and streetscape. This funding will come from the city's general fund, but will be reimbursed by the Sanford Downtown Community Redevelopment Agency (CRA);

-- Reimbursing SWP for geotechnical work up to $3 million;

-- Waiving building permit fees up to $1 million and review fees up to $500,000;

-- Supporting SWP's request to Seminole County for a reduction in transportation impact fees of $225,000;

-- Providing stormwater credits;

-- Refunding the purchase price of the land, valued at $2.4 million;

-- And once the entire project is complete, refunding 50 percent of the property's ad valorem taxes collected through the city's CRA until 2025. The projected rebate is expected to be $900,000.

Have a tip about Central Florida development? Contact me at gnip@me.com. Follow GrowthSpotter on Facebook, Twitter and LinkedIn.

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