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Developer needs cash to finish Fenway resort renovation in Dunedin

Built in 1925 on 6.4 acres, the Fenway resort on the shore of St. Joseph Sound served as a waterfront getaway for Jazz Age high society. It has also been the campus of two colleges.

JIM DAMASKE | Times (2007)

Built in 1925 on 6.4 acres, the Fenway resort on the shore of St. Joseph Sound served as a waterfront getaway for Jazz Age high society. It has also been the campus of two colleges.

DUNEDIN — George Rahdert invested $6 million of his money into the Fenway renovation, hoping profits from hotel customers and condo sales would follow its timely completion.

Yet after four years and another $6 million in borrowed money, not a single shovel has turned on the Fenway project.

Rahdert, a St. Petersburg-based developer and attorney, doesn't know where he'll get the money to finish the project. The bank that committed to the historic hotel's rebirth reneged last year. So, too, did a self-declared hotelier who offered to buy out Rahdert's interest.

That financial shortfall has hit home for Rahdert. County records show he has yet to pay about $142,000 in 2008 property taxes, including more than $90,000 for the Fenway.

Still, he's confident he'll find a way to fund the rest of the project.

All he needs is another $17 million.

Rahdert thought he had found a buyer in Robert Masson, who claimed a connection to a California wine empire and spoke "the language of hotel development."

Masson gave Jessica Hollingsworth, Rahdert's broker and project manager, an offer: he would pay to own and operate the hotel, while Rahdert would stay on as a minority partner helping with its historic dedication. Masson signed a contract promising $12.5 million, which would have bought the land, paid off Rahdert's investment and left the rest of the redevelopment costs to Masson.

But, according to a lawsuit filed by Rahdert, Masson reneged on his commitment and may have misrepresented his credentials.

Masson did not respond to three messages last week seeking comment.

That leaves Rahdert in a tight financial bind. He continues to pay monthly interest payments and utility bills on the property, but couldn't estimate how much. "It'd probably make me sick to sit down and compute it all," he said.

He also faces costs from the architects and engineers who have helped with the Fenway's preliminary planning. Last week, Gulf Coast Consulting placed a lien on Rahdert's development company, 1 AVS LLC, for about $15,000 in engineering costs.

Rahdert said he has three alternatives.

1. A Masson-like buyout, in which Rahdert would lose ownership but would recoup his investment.

2. Secure full financing of $17 million to $20 million to complete the project. Hollingsworth said this is their preferred course and that two investors have expressed interest.

3. Secure lesser financing and build the project in stages. A first phase, which would open ballrooms, common spaces and fine dining, would cost $10 million.

• • •

For now, the 6.4-acre property's only occupant is the Washburn Academy, a private school that uses teaching methods devised by L. Ron Hubbard. It has leased a building there month-to-month since the summer of 2006.

The academy's presence has allowed Rahdert, who represents the St. Petersburg Times on First Amendment and business issues, to maintain a special zoning exemption and protect against vandalism at the site, located at 453 Edgewater Drive.

Rahdert and Hollingsworth, a former vice president of the now-defunct Triangle Development, met in 2005 when Triangle paid Rahdert $6.5 million for 2 acres of his family's land on the Clearwater waterfront. Two Triangle partners, both Scientologists, sold the land to the Church of Scientology when their plans for an upscale condo development failed. The land remains vacant.

Hollingsworth, a Scientologist for more than 30 years who has publicly criticized press coverage of the church, has helped with the Fenway's redevelopment since Rahdert's purchase, attending site visits, meeting with city staff and seeking condo buyers and financiers.

The Times has aggressively reported on the church for decades, including a series of investigative reports published this year based on sources Hollingsworth said were "liars," according to an Internet comment she confirmed was hers.

Rahdert said his business relationships with Hollingsworth and the Times are kept separate and do not constitute a conflict of interest.

Rahdert said the Triangle project and the Fenway were the only times he has worked with Hollingsworth, though she has occasionally brought him other real estate proposals.

Rahdert said that the church has not asked about purchasing the Fenway, that he and Hollingsworth have not proposed its sale to the church and that they would not factor in faith when evaluating proposals.

"Our country prohibits religious discrimination. I happen to very much believe in that," Rahdert said. "The only color that matters is green."

The Fenway's financial future seemed promising in January 2006, when Rahdert signed a $6.4 million mortgage with RBC Centura, a North Carolina investment bank that committed to millions more in funding for Rahdert to complete the project.

That month, he bought the historic hotel for $8.2 million, more than double the county's property appraisal.

Built in 1925, the Fenway resort on the shore of St. Joseph Sound served as a waterfront getaway for Jazz Age high society. The site of the city's first radio station, the Fenway saw tourists flock to its yachting pier, card parties and lawn croquet.

Visitors wishing for longer stays built homes near the Fenway's surrounding orange groves, transforming the neighborhood into one of Dunedin's most fashionable even as the Fenway site became Trinity College in the '60s and Schiller International University in the '90s.

Rahdert, a historic preservationist who the Times profiled as collecting "real estate the way 10K runners collect T-shirts," believed he could restore the campus to its former glory, opening 250 condos and hotel suites, three floors of parking, elegant dining and a day spa, all in the hotel's classic canary yellow.

Neighbors mobilized against Rahdert's proposal for two four-story wings and an expansion of Edgewater Drive, hiring land-use attorney Ed Armstrong to give legal weight to their protest yard signs. Armstrong said Rahdert would face years of opposition.

"Years would be a defeat in and of itself," Rahdert told the Times back in 2006. "I don't intend to spend years fooling around with this."

• • •

The bank backed out of its agreement last summer, a few months after Rahdert notified the county a Dunedin firm would begin "investigative demolition" and a year before city staff would approve the final site plan.

The years of city delays proved "deadly" for the Fenway's investment, Rahdert said. It also put a hold on his other developments across the county.

"This was an awfully big bite to chew on," he said. "The four-year delay was really devastating for me personally."

In August, Dunedin commissioners approved a drastically scaled-back final plan, including 118 hotel rooms and spaces for dining, dancing and shopping.

• • •

As of the beginning of last week, Rahdert owed more than $200,000 in 2008 property taxes, nearly half of it on the Fenway. Rahdert on Thursday paid back taxes and 3 percent interest for his law firm's office building on Central Avenue in St. Petersurg and the historic Alexander Hotel fronted by Bella Brava next door. He said he may sell property to pay off the remaining $142,000 in taxes within the next six months.

"When banks stop lending, that's one sort of form of short-term borrowing," he said. "It's all just cash flow. It's like borrowing from the tax assessor for a short period of time, to wait out the worst of the economic conditions."

By April, Rahdert will owe more than $170,000 in 2009 property taxes.

• • •

The city still has confidence that Rahdert's Fenway will be a success.

"His heart has always been with all of his projects," said Matthew Campbell, Dunedin's assistant director of planning and development. "He has an incredible attention to detail. … When he puts his heart and soul in a project, he doesn't give up."

Rahdert said the city has in recent months helped him immensely with the redevelopment. The permits and approval are there, he said. Now he just needs the money.

"I don't know that there can be expectations in this economy for just about anything," he said. "Anything subject to financing conditions in this day and age is subject to a great big question mark."

Times researcher John Martin contributed to this report. Drew Harwell can be reached at dharwell@sptimes.com or (727) 445-4170.

Developer needs cash to finish Fenway resort renovation in Dunedin 12/19/09 [Last modified: Saturday, December 19, 2009 2:50pm]

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