Developer invests $500,000 to get Main Street Landing project moving again

NEW PORT RICHEY — Threats of a lawsuit, frozen negotiations, defaulted deals: The City Council and the developers of Main Street Landing have not had the cheeriest of working relationships.

So imagine the council's surprise Tuesday night when, in the middle of the city's depressing budget talks, developer Ken McGurn pledged $500,000 toward construction of the stalled downtown project by the end of the year — and to finish it soon after.

McGurn told council members he'd be putting at least another million dollars, much of it from his own pockets, into a site that stands now as a concrete shell with a chain-link facade. By January, he estimates the first building might have a roof. By next summer, it might even have a few tenants.

The $20 million, three-floor complex of townhomes, flats, shops and a restaurant will still need a lot of work — and a deep-pocketed financier — before it can get off the ground. The site's only standing building needs $3 million and months of work to reach completion. But McGurn said he's confident his initial investment will look like a smart gamble to lenders that could help free up credit — and provide a big future payoff for the project later.

"This project will not be finished within the next six months, but it will finish," McGurn said. "The economy will get better. And we'll be there when it gets better."

McGurn's promise resembled an act of reassurance for a city once impatient for results.

Pitched in 2004, the Main Street Landing project was supposed to be a retail center and condo complex on the west bank of the Cotee River. But as financing fell through amid the real estate recession, the city's redevelopment launchpad project stalled indefinitely.

Ironically, the bum economy helped the project restart. Since March, five construction workers preparing the site have been paid with federal stimulus money funneled through the state's $200 million Back to Work program.

David Hamilton, the Pasco-Hernando Workforce Board's operations management consultant, said McGurn told the board he would pay a small share of workers' benefits and wages and employ them after the program's end date in September.

For McGurn's commitment, the program will pay wages for four workers and one supervisor at a base pay of $15 an hour for six months. Using federal funds, the county will pay $109,000 in labor, of which McGurn will pay about $7,500 — or 7 cents on the dollar.

But the project's money woes aren't over. To fund construction, McGurn said he will sell or borrow against properties he owns across the state. He's also investing $400,000 he earned from refinancing his home in Gainesville. McGurn also recently paid $100,000 for development costs like equipment rental and architecture work, bringing his total investment to over $500,000.

"You look at it and say, 'Where's the money?' " McGurn said. "It just disappears."

Still, he said he's optimistic that his investment will win him some credit from commercial lenders slow to dispense money during the downturn.

"I've been through several of these," said McGurn, 64. "It will get better, and we'll be one of the first projects to be there to support it. I just have to convince the banks that."

McGurn told the council that seven to 12 workers will lay the foundation for other buildings this month, construct walls and columns in August, start masonry and build stairwells in September and install the precast concrete slabs of the second floor in October. By November, crews will begin tapping into underground plumbing and electrical networks.

If the project goes as planned, McGurn said, he'll want a few things from the city: A share of any property tax increase to help him secure bank financing, equal incentives offered to other developers, brick pavers and streetscaping, even a waiver of city fees.

With the exception of offering financial help — most of the city's redevelopment funds for next year will go toward debt service for a $7 million loan — council members seemed eager to support the site. Mayor Scott McPherson even offered to hold a special city meeting to discuss how best to help the project to completion.

"I'm reasonably optimistic. I don't think it's a slam dunk, but he's showing some good faith trying to move the thing forward," Deputy Mayor Rob Marlowe said Wednesday. "If he can get it finished, it could be really be a very nice anchor for downtown. The trick is getting from here to there."

In 2004, McGurn, his wife, Linda, and former Pasco County Commissioner Peter Altman proposed the project's Tuscan-themed townhomes and waterfront shops at a cost of $14 million. McGurn, whose McGurn Management Co. helped redevelop downtown Gainesville, told the city that construction could begin as soon as they secured a final lot.

"Putting the land together is the hardest part," McGurn told the Times. "People say, 'We don't want to sell.' That's been our issue."

Not for long. Rising construction costs doubled the price estimate, then tripled it. Design tweaks stalled work. The council in 2006 rejected a bid for additional money, effectively freezing new work. Two years later the city even considered suing McGurn for failing to finance and finish the project.

Last year, McGurn asked for a $1.45 million loan for the project, which the city denied. But McGurn said he still believes his "gamble" will pay off when the economy recovers next year.

In an e-mail to the city Monday, McGurn wrote, "I will try to explain that I am not really crazy to be doing it now when everyone else is running from real estate."

Contact Drew Harwell at dharwell@sptimes.com or (727) 869-6244.

Developer invests $500,000 to get Main Street Landing project moving again 07/14/10 [Last modified: Wednesday, July 14, 2010 9:54pm]

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