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Clearwater asked 50 developers to pitch ideas for its waterfront. Two responded.

Some, including major developers in Tampa, cited Scientology's downtown real estate hold as a hindrance.

CLEARWATER — In May, city consultants invited local and national developers to submit preliminary ideas for redeveloping three sites along the downtown waterfront.

Amid 20 city-owned acres set to be transformed into Imagine Clearwater, a $64 million park overlooking the Intracoastal waterway with a garden, a bluff walk, concert green and event plaza, are three parcels — ripe for hotel, residential and retail development.

But of the 50 developers the city contacted for ideas, only two responded with proposals. While Imagine Clearwater is still in the design phase, this early disinterest frames the work city officials have to get developers to respond to the formal request for proposals that are expected to be issued late this year or in early 2021.

It also underscores the challenge in creating a vibrant urban center out of a downtown that has floundered for decades with vacant storefronts as its largest property owner, the Church of Scientology, continued to expand.

Between 2017 and 2019, companies tied to Scientology bought nearly 100 commercial properties within walking distance of the Imagine Clearwater footprint, giving the church considerable control over what businesses, if any, fill the buildings around the city’s future revitalized park.

The commercial properties are currently on the tax rolls, as they are not being used for religious purposes, but the companies that own them have left many of their new buildings and lots empty.

“When you’re looking to invest in a city where you have, I won’t call it a religion, I’ll call it a consortium of folks, that have a ton of money, that can take a ton of property off of the tax rolls whenever they feel like it, it’s a huge unknown. And that’s no place I want to go,” said developer Ken Stoltenberg. His firm, Mercury Advisors, has built multiple projects in Tampa’s Channel district, but declined Clearwater’s invitation this year to submit a proposal for its downtown waterfront.

Related: RELATED: How Scientology doubled its downtown footprint in three years

Bowen Arnold, principal of Tampa-based DDA Development, was not contacted by Clearwater. But he said the church’s dominant ownership surrounding the waterfront gives him concern about how whether retail or residential projects on the city’s waterfront would be successful.

“When you develop something like mixed use property, you have to look at who’s going to come in there,” Arnold said. “You want to have the most open market possible, whether it’s retail, condos, office. Downtown Clearwater today does not necessarily represent the most open environment, partly because of the presence of the church and their real estate holdings.”

In May, city council member Mark Bunker proposed the city ask the FBI to investigate Scientology’s rash of downtown real estate purchases for alleged racketeering. None of his four council colleagues supported the effort.

Assistant City Manager Michael Delk said he believes uncertainty over the plan’s design has affected investor confidence. In April 2019, the council voted to replace an uncovered band shell in the concert green with a 4,000-seat covered amphitheater. The venue was a campaign issue in the council election this year, with many of the 13 candidates running for three council seats promising to nix it.

Related: RELATED: Imagine Clearwater slows to a crawl as band shell redesign stalls entire project

The election results, however, secured the future of the covered amphitheater. In June, the council voted to move the amphitheater from the west side of the park to the north end, and to scrap the addition of a fifth level to the Main Library.

The changes meant significant edits to the design documents, prolonging the design phase which had been near completion, Delk said.

The city has also not yet decided where it will build a new City Hall. With the Main Library, which is within the Imagine Clearwater footprint, one of the 10 sites being considered, Delk said that is yet another variable complicating the project’s direction.

“I think what would lend confidence to us downtown is commitment to a vision, commitment to implementation of a vision, confidence in our ability to create a great public space and attractive waterfront for the community,” Delk said. “I think right now that’s something we’re struggling with, but hopefully as we settle on our direction with the redesign of the park, as we settle on our direction with how we’re going to move forward with City Hall, it will allow us to show that level of confidence.”

With the design still incomplete, Delk could not confirm when the three waterfront sites will be put out for a formal bid to developers. The lease or sale of sites will also have to be approved by voter referendum, which Delk hopes to have on the March or August 2021 ballot.

The council still has to decide whether the referendum will pose a question about a chosen developer’s specific plan for the properties, or a general question allowing certain uses that would then guide a bid that would go out to developers.

Mayor Frank Hibbard said this early disinterest from developers means the city has to examine what kind of incentives could attract developers while protecting the public property.

“It’s about how do you structure a deal where it is enticing enough where it mitigates the risk,” Hibbard said. “I wish we had a number of developers that were interested and lining up, but I still have hope for the sites.”

Both development groups that responded to the city’s invitation this year already have investments in downtown.

Illinois-based GSP Development, which built the 1100 Apex apartments on Cleveland Street, submitted a concept to build a 107-unit apartment with ground-floor retail on the former Harborview site. The firm did not submit concepts for the former City Hall site or the adjacent Pierce Street lot, the two other redevelopment sites on the waterfront.

The second submission was from the team of Missouri-based Sixty West and Clearwater firms OppZone Capital and The Ring Workspaces. Ring founder Daniels Ikajevs owns several properties downtown, including One Clearwater Tower, where the city is leasing the sixth floor for its temporary City Hall.

The group proposed building a 162-room music themed hotel with ground-floor retail on the former Harborview site. They pitched a 225-room hotel and condo project with ground-floor retail for the former City Hall site and a 240-unit apartment for the Pierce Street parcel.

Edmon Rakipi, co-principal of Opp Zone Capital, said downtown’s untapped potential, just a few miles from the success of Clearwater Beach, makes the waterfront redevelopment project appealing for his team. He said he does not see Scientology’s presence as a hindrance, given the blank canvas of the pristine waterfront property.

“When you look at it from a long-term investment perspective, it’s pretty safe,” Rakipi said. “Clearwater has one of the nation’s best beaches, and the opportunity to take on three projects right across the bridge form that is pretty exciting. Being able to provide housing and food and beverage and some retail space in the area is something we all thought this area needed.”

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