Dunedin mixed-use development 'unviable' as costs rise
By Breanne Williams
Tampa Bay Business Journal
Published: Jul 18, 2023

A long-awaited development in Dunedin has been put on hold due to increased costs that have rendered the project financially “unviable.”

The Dunedin Gateway project was planned to bring just under 100 residential units, a restaurant/retail/food hall and 79 hotel rooms on 4.2 acres at the Milwaukee Avenue, Main Street and Skinner Boulevard intersection. Construction was supposed to begin by May 20. On May 18, when it was clear that would not be occurring, the city told the developer the development agreement was suspended.

Joseph Kokolakis, the managing member of the group developing the site, told the city in a letter on June 22 that high construction costs, recent bank failures and increased borrowing costs “have simply made the Gateway Dunedin project, as currently designed, unviable.”

The original development agreement was for 81 residential units, a restaurant/retail/food hall and 79 hotel rooms. An amendment approved in June 2022 allowed for an additional nine units and added more property the developer had purchased to the agreement. In November 2022, a sixth-month extension was granted for the project.

Kokolakis told the city on April 12 they sought out new bids for the project and received proposals from two national multifamily construction firms. While the bids were within 1% of each other, both were “more than double” the developer’s budget.

“There is no amount of ‘value-engineering’ that can make up for such a significant delta and preserve the current project scope,” Kokolakis wrote.

The situation is far from unique. In St. Pete Beach, a developer pulled out of plans to build a mixed-use project on Corey Avenue. In downtown Clearwater, the development team behind The Bluffs has asked the city to allow them to scale down the project so it can move forward.

Bob Ironsmith, director of economic and housing development, and Jennifer Bramley, city manager, met with Kokolakis on July 7 to “discuss a path forward,” according to city documents. At the meeting, Kokolakis confirmed that they will be focusing their efforts on “reimagining the Gateway Dunedin Project” and intend to later present a revised project for review.

The suspension doesn’t take away any of the city’s rights with the development agreement, and the city can still chose to terminate it at any time. The original agreement was years in the making and went through “at least six public hearings,” according to Bramley.

Bramley said at a meeting on July 13 that Kokolakis agreed to submit the reimagined plan “within the next six months.” She said because of the complexity of getting the original development agreement created she believes it is in the “public’s interest” to grant a six-month suspension. Commissioners agreed and the development agreement will remain suspended until the revised plan is presented.

“This is not uncommon, as you know; this has happened in several cities,” Bramley said. “We anticipated it, given the rising interest rates and increased supply and labor costs. Mr. Kokolakis has kept us apprised of the situation all along.”