DUNEDIN — City commissioners have granted an eight-month construction delay to a developer struggling to secure financing for a $15 million residential-retail complex in the historic downtown.
Construction was expected to begin this month on a two-story apartment building set over ground floor retail on a lot across the street from Mease Dunedin Hospital, property that has sat empty for nearly six years. Construction was expected to take a year.
Following a lengthy discussion last Thursday, the commission granted The Pizzuti Companies’ request to delay construction until April 15.
The city purchased the property at the corner of Main Street and Skinner Boulevard for $2.1 million in the fall of 2003. It originally was considered as the location for a consolidated municipal service center. But city officials later determined its best use would be for a signature urban development complex, a mix of residential, restaurant and retail spaces to create an inviting gateway into its historic downtown.
In 2006, the city issued a request for proposal and in February 2007 selected The Pizzuti Companies, based in Ohio, as the developer.
Since then, the proposed $15 million project has gone through several delays as the economic recession soured plans.
Following the advice of staff, city commissioners last year voted to lease a city-owned section of the four-acre plot to the developer for just less than $1 million. The council also approved the preliminary site plans to build a two-story apartment complex, 124-unit apartment complex, one of the largest in this community’s history. The project will extend the city’s Main Street’s retail corridor eastward and bring more foot traffic downtown.
The reworked project has also gone through numerous public hearings where some residents expressed worries about parking and the prospect that the large building would dwarf the city’s collection of single-story retailers.
Because of the developer’s determination to see the project through, staff recommended an eight-month extension to enable Pizzuti to secure financing, City Manager Rob DiSpirito told commissioners.
“While there might be some concern expressed about the city granting an additional extension,” DiSpirito told commissioners, “it is the staff’s recommendation … that an extension to April 15, 2015 is warranted.”
DiSpirito continued, “Over the last six months, staff has met numerous times with Pizzuti regarding the goal of initiating the Gateway project. The meetings included a comprehensive discussion of a recent market analysis on the feasibility of planned apartments, as well as securing financing for the overall project.”
After reviewing the most recent information and the current market climate, Pizzuti remains committed and confident that the planned mixed use project can be successful, according to DiSpirito.
Joel Pizzuti, the development company’s president, told city commissioners, one of the greatest challenges is the lack of local comparisons for multi-family dwellings to secure a loan.
In addition, stringent restrictions by banks and financial institutions since the economic downtown have hampered his ability to secure financing for the project, he said.
Pizzuti said he still believes the proposed development project can be successful. He is seeking a local investment partner, who is in tune with the local commercial real estate market to help move the project forward. However, the search to find a partner will require additional time, he told the commission.
“We are in discussion with several firms that we believe would complement our team, Pizzuti told city officials. “...In order to secure this partner we require additional time to work through this process.”
DiSpirito told commissioners that denying the request to postpone the construction start could have many pitfalls given that Pizzuti owns land adjacent to the city’s property that’s expected to be part of the long-term development strategy.
In the current economic climate, the city manager noted, “Financial institutions would be more comfortable with lending if risk is shared, and a local presence would make managing the project more efficient and responsive.”