On Nov. 8, Clearwater voters will decide whether the city can sell two downtown bluff parcels to Gotham Property Acquisitions and The DeNunzio Group so the developers can build a $400 million hotel, apartment and retail project.
The parcels border the 22-acre city-owned waterfront, which is undergoing an $84 million renovation to bring a 4,000-seat covered amphitheater, garden, playground, green space and plaza to Coachman Park.
The park, estimated to be completed in June, will move forward no matter the outcome of the referendum.
But city officials and supporters say the project on the ballot is the catalyst needed to bring full-time residents and visitors to the struggling downtown on a daily basis, not just for events.
“This is a game changer for downtown in a way that we have never seen in our lifetimes,” attorney Brian Aungst Jr. told the Clearwater Neighborhoods Coalition on Oct. 3. “I’m concerned... that if we pass this up, we’re not going to ever get another opportunity like this. Not even close.”
In August, the City Council unanimously approved a 30-year development agreement with Gotham and DeNunzio that will take effect if the referendum passes.
Here are the details of that deal, now in voters’ hands:
The two sites
The parcels include the 1.3-acre site of the now-demolished Harborview Center at the northwest corner of Osceola Avenue and Cleveland Street and the 2.6-acre vacant City Hall a half-block south.
Proposed for the Harborview site: a 13-story, 158-room hotel with 9,000 square feet of commercial space, including a 1,000-person conference center and a rooftop bar. A separate two-story building would include 12,000 square feet of commercial space and a beer garden.
Proposed for the City Hall site: 500 to 600 apartments across two 27-story towers. This site will have 25,000 square feet of space for ground floor retail, restaurants and cultural uses.
Between both sites, the commercial space could accommodate five to six restaurants and smaller retail.
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Where will people park?
Underground. The city required the developers to build subterranean parking so there would be no garages blocking views of the Intracoastal Waterway.
The Harborview site will include 169 spaces, 50 dedicated for city use.
The City Hall site will include 500 to 600 spaces, depending on how many apartments are built. The developers plan at least one space for every apartment.
Independently from this deal, the City Council in August agreed to buy a lot from Peace Memorial Church for $1.85 million to build a 550-space parking garage. The park will have 260 surface spots.
The development team would pay the city $24.7 million to buy the parcels: $9.3 million for the Harborview site and $15.4 million for City Hall.
The city would contribute $22 million to support the underground parking. This incentive would come out of the parking fund, revenue generated from meters and customer fees.
The Community Redevelopment Agency, which collects a special tax on downtown properties, would pay the developers’ $1.5 million impact fees.
The developers are still deciding whether to build an elevated walkway between the sites. If they do, the city would pay 50% of the cost up to $2 million.
The city is responsible for demolishing City Hall, estimated to cost $558,000, according to engineering director Tara Kivett. The city is also responsible for an environmental assessment on the Harborview property and paying for any needed remediation. Kivett said soil and groundwater samplings could cost $30,000.
The city is responsible for “public realm improvements” on Osceola Avenue like upgraded intersections. No cost estimate was available.
Clearwater Finance Director Jay Ravins estimates that the completed projects will generate $6.9 million for all taxing authorities in its first year.
Who are the developers?
The DeNunzio Group: President Dustin DeNunzio, 45, grew up in Pinellas County and graduated from Clearwater Central Catholic High School and Harvard University. He has completed residential and hotel projects on Clearwater Beach and in the Boston area and has pending projects in St. Petersburg.
Gotham Organization: a five-generation, family-run real estate firm that has developed 35,000 apartment units, office buildings, hospitals, schools and retail centers mostly in New York City. DeNunzio recruited the firm to the Clearwater project through his friendship with Matthew Picket, 31, a vice president at Gotham.
Other team members: Clearwater land use attorney Katie Cole; Belleair-based owners representative Joe Burdette; Behar + Peteranecz Architecture of St. Petersburg; Tampa-based Coastal Construction, Stantec, Thornton Thomasetti and Real Building Consultants.
Is the Church of Scientology involved?
While the church and its members have extensive land holdings in downtown, the developers are not members and there is no evidence that Scientology is involved in this project.
Could the developers sell the properties?
The DeNunzio Group and Gotham Organization do not have a history of flipping projects and said they do not intend to sell the bluff properties.
“We do not sell properties, we build them for generations,” DeNunzio said. “The idea is, yes, you may need to bring in a new limited partner, you might need to bring in a new finance person every now and then, but we are planning to be here indefinitely, to run the properties to make them absolutely the best they can be.”
The 30-year development agreement would permit the developers to sell the property only after construction is completed and only to a “qualified transferee.”
The agreement defines a qualified transferee as a person who: has a net worth of at least $20 million or is a publicly traded company; has at least 10 years of experience in the ownership and operation of apartments or overnight accommodations; has at least 1,000 apartment or hotel units under management or owns at least 10 hotel properties; and is not a “prohibited person.”
A prohibited person is defined as: any not-for-profit entity; any person on the Department of Treasury’s sanctions list; any person, foreign country or agency with whom a U.S. person may not conduct business with by federal law; or any person prohibited from doing business with Clearwater.
“This whole agreement is written for two purposes,” City Attorney David Margolis said. “One is to affirmatively ensure that the improvements that they are promising to build actually get built … second, once it’s built, that the public will have access to it.”
How will the $400 million be funded?
With a mix of debt and equity. Gotham has a partnership with Goldman Sachs, which has funded $300 million of equity into the New York firm’s projects in the last three years, according to Picket. No lender has been identified for the bluff project yet.
The purchase agreement requires Gotham and DeNunzio to provide the city with proof of loans as a condition for closing on the parcels.
If they default on the loans at any time after purchase, it would be possible for the lender to acquire the properties through foreclosure, Margolis, the city attorney, confirmed.
“The practical reality is there is no financial institution of Goldman Sachs’ size or Bank of America or any of these places that is going to underwrite $400 million worth of construction without having any kind of remedy attached,” Margolis said. “The risk is very small just based on the history of these (developers).”
Will this really revitalize downtown?
The impact this project will have on broader downtown is unclear. Since 2017, companies controlled by Scientology members have bought at least 100 properties within walking distance of the waterfront and at least 60 properties in the North Marina area 1 mile north. These companies spent a combined $120 million in cash on the parcels but have kept the majority vacant.
However, city officials and the developers said the hotel, apartments, restaurants, bars and retail planned for the two bluff parcels would be enough to create a regional and national destination on its own. The projects’ commercial space is also pitched as an attraction for locals and tourists who will attend events at the park’s boutique outdoor amphitheater, a first for the region.
“We aren’t going to have just one of the most dynamic areas of Pinellas County, this is going to be a focal point nationally,” DeNunzio said.
If the referendum passes, a final site plan will be submitted by April. The sale of the two properties must close by Dec. 31, 2024, according to the agreement.
Cole, the developers’ attorney, said the hotel, commercial building and one apartment tower would be built first, with the second tower following in a second phase.
Construction could take four years, Cole said.
If you go
Mayor Frank Hibbard will answer questions about the referendum at the following townhalls:
Oct. 10: 6:30 p.m., Morningside Recreation Center, 2400 Harn Blvd.
Oct. 12: 6:30 p.m., Countryside Library, 2642 Sabal Springs Drive
Oct. 13: 6:30 p.m., Clearwater Main Library, 100 N Osceola Ave.
Oct. 18: 6:30 p.m., North Greenwood Recreation Center, 900 N Martin Luther King Jr. Ave.