Clearwater set to OK scaled-down apartment project on downtown bluff
The City Council will vote Thursday on revising a deal already blessed by voters.

By Tracey McManus
Tampa Bay Times
Published: Jan 30, 2024

Clearwater City Council members say they are willing to approve a developer’s scaled-down plan to build apartments on the downtown bluff, arguing it’s better than walking away from a chance to bring new residents, visitors and retail to the struggling area.

“We have come too far to stall at this juncture,” council member Lina Teixeira said Monday about the project nearly two years in the making.

In summer 2022, the council selected the Gotham Organization of New York and The DeNunzio Group of Pinellas County to build 600 apartments in two 27-story towers with retail on the former City Hall site on Osceola Avenue. The plan included a 158-room hotel on the vacant Harborview site a half-block north.

Voters passed a referendum in the fall of 2022 enabling the sale of the city land. But by then, skyrocketing insurance and interest rates, coupled with decreased revenue projections from the rental market, made the apartment plans financially unworkable by $80 million, the developers said.

The revised deal maintains the hotel but decreases the apartment units to 400 in a single tower with new terms for how much the city will pay out and what it will receive in revenue.

The council is scheduled on Thursday to take the first vote required to revise its agreement with Gotham and DeNunzio after city consultants affirmed the developers’ rationale for shrinking the project amid soaring costs.

The original deal included the developers paying the city $15.4 million for the City Hall site, the appraisal price of the land for its highest and best use, which would be condominiums. The new proposed sale price is $3.45 million, with the appraisal based on the 400-unit apartment plan.

Under the revised terms for the apartments, crafted after nearly a year of negotiations, the city would pay $17 million to construct parking spaces, the same amount as the original deal. The city previously required all underground parking, but the new terms would allow 50% of the 440 spaces to be above ground.

The Community Redevelopment Agency, a taxing district encompassing downtown, was originally going to pay $1.5 million in impact and utility fees toward the project. The new terms include an additional $2.25 million grant to be paid at “substantial completion” by the end of 2028. That sum would increase to $3.25 million if the developers buy the land by March 1, 2026, and be payable when construction begins.

If the sale does not close by that date, the developers can purchase up to six two-month extensions for $200,000 each, under the proposed terms.

If the developers do not complete the project by the end of 2028, they must pay the city $1 million in damages.

A $4 million pedestrian bridge originally pitched to be paid for equally between the city and developers is scrapped in the revised terms.

During a City Council work session Monday, Mayor Brian Aungst Sr. said developments in other cities are running into the same ballooning costs from inflation, so looking for another developer may not guarantee a better alternative.

Last summer, the city completed its $84 million renovation of Coachman Park with an outdoor amphitheater. Officials have called the apartment and hotel projects bordering the park the necessary catalysts to change downtown.

“The time is now to move forward,” Aungst said.

Teixeira said the new deal requires the city “to accept huge concessions,” but noted the outside consultants backed up the decision to proceed.

“Am I willing to risk our momentum and the success of downtown in the hopes of a better deal?” Teixeira said. “The answer is no.”

Council member Kathleen Beckman said she liked that the new terms include incentives for closing, and penalties if it is not completed by the end of 2028. The scaled-down plan will still be a “transformative project,” she said.

City attorney David Margolis said the revised terms still result in a net positive to the city over the next 30 years. The completed project will generate $2.3 million in annual property taxes and roughly $110,000 per year in estimated county sales tax revenue from the retail uses on the site, according to the consultants’ report.

Although the deal strays from what voters blessed, the revised project will be a catalyst for the area, said Katie Cole, an attorney representing the developers.

At $300 million for the hotel and apartments combined, Cole said it represents an unprecedented private investment downtown.

“Our hope is that the citizens voted to the vision of a redeveloped downtown and this is going to bring those people, whether it’s 500 units or 600 units or 400 units,” Cole said.