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Lawsuit reveals failed relationship between developer and Tampa Housing Authority

TAMPA — One of the city's signature urban renewal projects is embroiled in more controversy.

The Housing Authority is being sued by a developer who agreed to a $7.4 million contract to buy land and develop a hotel and residential block as part of the Encore project on the northeast edge of downtown.

The Housing Authority in July terminated its contract with Pinnacle Group Holdings after giving it two years to close on the deal, officials said. The Tampa development firm, owned by Frank DeBose, had paid a $50,000 deposit for the land and subsequently paid $250,000 in additional deposits to extend the closing date.

In what may be a first step toward a damages claim, Pinnacle is suing the Housing Authority, saying it failed to fully comply with a public records request. It is seeking records that would show that the agency was working behind the scenes to get another developer, Miami-based Related Group, to take over the project.

"Pinnacle certainly believes it had a valid contract to pursue the purchase and no grounds existed for the termination of the contract," said Pinnacle attorney Tucker Byrd. "What we're asking is let's see what was going on with other parties."

Housing Authority officials said the contract with Pinnacle was terminated because the firm defaulted on a $10,000 deposit required for the most recent contract extension, which was signed in April. It was the 10th revision to the original contract. There was also doubt that Pinnacle was ever going to come through with the project.

That decision did not go for approval to the Housing Authority's governing board because it was made by Central Park Development Group, a development entity composed of the Housing Authority and Banc of America Community Development Corp., said Leroy Moore, the agency's chief operating officer.

"As we got longer and longer into the contract, we kept saying to them, 'the extensions are going to stop,' " he said.

He denied that the Housing Authority has another developer lined up and said the agency complied with the public records request.

"They feel we have negotiations with other people to offer these lots and that's just not the case," Moore said.

In its lawsuit, Pinnacle claims that housing authority officials failed to produce key documents, including communications with Related.

The Housing Authority does have a relationship with Related. It hired the firm to be its developer partner for West River, an ambitious plan to revitalize the area west of the Hillsborough River into a walkable, mixed-income community.

Housing Authority records show that Related officials toured Encore and the West River project site in October. The visit to Encore was to show the agency's most recent projects and was focused on West River, Moore said.

The Housing Authority will soon be engaging a land broker to begin the process of finding a new developer for the two Encore parcels.

Pinnacle signed the purchase agreement in October 2013. It called for a 380-room hotel and 50,000 square feet of retail space on one lot and 60,000 square feet of office space, more retail and 300 apartments on the other.

The fallout between Pinnacle and the Housing Authority is not the first setback for Encore.

In June, the Housing Authority fired its contractor, the Siltek Group, midway through construction of the $25.6 million Tempo apartment block.

In a letter to the firm, agency officials said Siltek did not employ enough construction workers or comply with inspectors and that the project was behind schedule. It had also installed drywall before the building was closed off to rain.

There was also concern about the involvement of Siltek project manager Rene Sierra, who plead guilty in 2015 in a multimillion- dollar kickback scheme involving affordable housing in South Florida.

Another Encore building, the Reed, developed leaks in at least 25 apartments less than one year after it was completed. The Reed is a senior apartment block also built by Siltek.

Contact Christopher O'Donnell at codonnell@tampabay.com or (813) 226-3446. Follow @codonnell_Times.

Lawsuit reveals failed relationship between developer and Tampa Housing Authority 03/10/17 [Last modified: Saturday, March 11, 2017 8:41pm]
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