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Sale of Largo Hotel site adds to costly losses in push to improve downtown

LARGO — It was a decade ago the city bought property off West Bay Drive that was home to the Largo Hotel.

The price tag? A hefty $775,000.

Another $30,000 later to demolish buildings on the site, it sat off the tax rolls for a decade until last month, when the commission, acting as the Community Redevelopment Agency, approved the sale to a local business owner for $50,000.

The loss adds to a growing deficit in downtown property sales worth millions of dollars that city officials say is necessary to get vacant property into the hands of developers who will revitalize the struggling area.

"At the end of the day, what we have to recognize is that this is a positive development downtown," said economic development manager Teresa Brydon. "For us to sit on a piece of property just because we weren't going to get a return on our investment — we can't do that."

The Largo Hotel property will soon be home to a larger West Florida Dance Center, said owner Tara Lynn DiSalvo. She's moving her business from West Bay Village, a shopping center just down the road, to the 0.3-acre site at the corner of West Bay Drive and First Street SW, which runs parallel to the railroad tracks.

The 9,000-square-foot building will have two stories with six dance studios, locker rooms, a classroom and new equipment, DiSalvo said. She's hoping to break ground in January and open this time next year.

The business has steadily grown since it opened in 2010 to about 270 students split into competitive and recreational groups. The studio is "busting out of the seams," DiSalvo, 44, said.

"We have to scale back on our students," she said. "We want to be able to expand."

Enter the Largo Hotel site, which DiSalvo heard about from her boyfriend, a local builder. The city had been struggling to sell the property since it went on the market five or six years ago, Brydon said. Officials spread the word through conversations and emails with the local development community and discussed it at conferences.

They got no interest until DiSalvo came along. The size, which comes out to about 13,000 square feet, and placement of the parcel were challenging factors to potential buyers, Brydon said. The site has frontage on West Bay Drive, but the only access points are off First Street SW and First Avenue SW.

"It had to be something that was a destination location," Brydon said.

They countered DiSalvo's $50,000 offer with $72,000, but DiSalvo said she needed the extra money during construction to comply with a community redevelopment district standard that buildings have to be at least two stories high.

The Pinellas County Property Appraiser valued the land at $168,400 in 2006 and about $82,000 in 2015. The city also did a private appraisal when the land was purchased, which came out to about $705,000.

Hiring an appraiser for land purchases is standard practice, Brydon said, but getting one for a land sale is not. An appraisal could pigeon-hole the price at an amount difficult to sell, she said, and the city is more concerned with the project and the value it brings to the area.

More than just DiSalvo's strong client base, the land sale keeps her business in the city and, more specifically, on the West Bay Drive corridor. DiSalvo said she was planning to move regardless, even out of Largo.

"If we leave this area, then we're taking a whole business of 200 kids and their families elsewhere," she said.

She's happy to keep her business here, she said, because she believes in the potential for the area. A few blocks from her, off Ridge Road, construction is under way on a 29-unit, two-story apartment complex. Another project that includes apartments and space for businesses is also coming down the pipeline in the 500 and 600 blocks of West Bay Drive. One building will be three stories high and another six stories with a total of 124 apartments and 40,000 square feet of commercial space.

With those projects, too, the city took big losses. Developer Indrid Agaj bought the Ridge Road site for $109,000, a fraction of the $850,000 the city paid for it in 2007. The city also owned the 500 block of West Bay Drive, which it bought for $2.45 million over two transactions in 2006 and 2007. Developer Gary Tave bought it for $200,000, which Brydon said she believed freed him up to purchase the neighboring block from a private owner for $1.5 million.

Mark Klein, owner of Clearwater-based commercial real estate firm Klein & Heuchan, said the city bought up West Bay Drive property to improve the area after the road was widened. That, coupled with the housing bubble, contributed to the high cost of land.

"There was a significant charge by the economic development portion of the city of Largo to clean up West Bay Drive and put in more, better development," he said.

In the case of the Largo Hotel site, the building demolition also contributed to lower value, he said. Commissioners voted in 2007 to raze the 99-year-old hotel and an attached building called the Rufus McMullen home for $29,4000.

Commissioner Curtis Holmes, who wasn't on the commission when the parcels were bought, said he was skeptical of the costly land purchases at the time. But now that he's stuck on the other end, he'd rather get them out of the city's hands, especially the Largo Hotel site with its access issues and small size.

"I've been gagging on every one of them," Holmes said. "But I'd rather see something than nothing at all."

Contact Kathryn Varn at (727) 893-8913 or kvarn@tampabay.com. Follow @kathrynvarn.

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