Connerton, an ambitious plan to convert thousands of acres of Pasco County pasture into a new town of 20,000 people, is the latest casualty of the great real estate unwinding.
It's for sale. Cheap.
Cited as a national model for less automobile-dependent development, Connerton, on the suburban fringe north of Tampa, suffered disproportionately from the housing market implosion.
Its privately held developer, Dallas-based Terrabrook, wants to shed 3,500 acres it paid tens of millions of dollars for in 2002.
Original plans called for more than 8,000 homes arranged around a walkable city center. Urban design experts compared the project to Disney's Celebration near Orlando. Builders were to sell 700 to 800 homes a year. But in Connerton's four years of existence, sales have totaled 225.
"At the time it seemed like an attractive deal. That's what the market supported then," said Bill Eshenbaugh, a Tampa land broker who has followed Connerton. "But Terrabrook was stuck charging high prices for lots just as the market was collapsing."
An undisclosed Florida land investment company wants to buy Connerton by the end of the year, and the chance of the deal closing is "better than 50-50," Connerton president Stew Gibbons said Monday.
When and if Connerton sells, Terrabrook will have divested all of its Florida holdings. It also built Tampa's Westchase community, and is best known for developing Reston, Va., outside of Washington. Gibbons said he and his development team would stay on to work for the new company.
"If you look at Connerton, you've got Publix out there. You've got banks. A hospital is there. Club Connerton is in place. We've got the elementary school under construction," Gibbons said. "The fundamentals are really good."
Eshenbaugh said investors have been circling Connerton for two years, eager to scoop up lots on the cheap. But few could make the deal work profitably in the housing slump.
"How does a developer continue a project in 2009 when he's carrying 2005 debt?" he said.
Not only did Terrabrook pay too much for the land, in retrospect, but the lots carry tens of millions of dollars in community development district debt that the developer has paid in the absence of home buyers.
Development districts work by issuing bonds to build roads, sidewalks, street lights, club houses and other amenities. Each lot is assessed to pay off the debt over 30 years.
Tampa Bay real estate brokers said any sale of Connerton would include concessions from the project's bankers and bondholders. That would let the new developer start fresh with lower costs — discounts that could be passed on to home buyers who have paid above-average prices for the privilege of living in Connerton.
Connerton fits in a rough triangle framed by State Road 52, U.S. 41 and Ehren Cutoff in Land O'Lakes. In 2005, a typical home sold for $300,000. Today new homes sell for as low as $170,000.
Its two main selling points have been the 3,000 acres of nature preserve that abut the property and the future "town center" that would sport urban amenities. Gibbon originally envisioned the town center under construction by this year. Now he's talking sometime between 2012 and 2016.
"You have to have a lot of rooftops to make that work," Gibbons said. "The rooftops aren't there yet."
James Thorner can be reached at [email protected] or (813) 226-3313.