One of St. Pete's most prolific urban developers walks away from 'Fringe' district vision
The developer says archaic zoning is the reason behind a moribund urban corridor in St. Petersburg, a city where construction is booming — and more is coming.

By Breanne Williams
Tampa Bay Business Journal
Published: Apr 26, 2024

Five blocks north of Tropicana Field in St. Petersburg lies an L-shaped string of commercial properties that have sat largely untouched for nearly a century — even as developers snap up just about every other parcel near the stadium in anticipation of the mixed-use district planned on the ballpark property.

Growth has surged in the Edge district and Grand Central district as well as South St. Pete and the Skyway Marina district. But many areas north and south of the Central Avenue spine — largely residential neighborhoods — have been excluded from that wave of development.

Jonathan Daou, who developed much of the neighboring Edge district, calls the area along Dr. Martin Luther King Jr. Street the "Fringe district." Around five years ago, Daou began buying property in the area, hoping it would become another urban destination for St. Pete. But after years of holding onto the land, Daou has started selling.

“I sold because of the zoning there,” Daou told the Tampa Bay Business Journal. “There was no willingness from the city to change any of the zoning even to be able to build retail. You could not make it make sense as retail. The only thing that makes sense there are townhomes.”

Daou and other real estate professionals say the suburban zoning in the area — and the regulations that come with it, like parking and setback requirements — make it impossible for urban, mixed-use development deals to pencil out. City officials say that the zoning there allows for up to 60 residential units per acre and up to 75 units per acre with a density bonus for including workforce housing, which they state is a substantial amount of density to work with.

The result is a moribund urban corridor in a city where development is booming — and more is coming. The redevelopment of Tropicana Field will transform the 86-acre stadium property into the mixed-use Historic Gas Plant district, anchored by a new ballpark for the Tampa Bay Rays. The Rays have partnered with Hines, an international developer, on the project and are negotiating with St. Pete and Pinellas County officials to iron out a long-term deal.

“It’s odd to use such a restrictive suburban zoning category right next to the SunRunner and within the downtown boundary,” said Mack Feldman, who sits on the board of the pro-development group YIMBY St. Pete. “We’re on a peninsula, and land is something we can’t make more of. The county and city should work together to amend the future land use to [Central Business District) and zoning category to [Downtown Center-2], which would allow for a meaningful amount of housing to be built.”

Vestiges of bygone development

The Fringe district, as Daou calls it, is a buffer between high-density downtown developments and affordable housing complexes northwest of the district.

Interstate 375 acts as a northern boundary to the area, and a group of industrial properties abutting Interstate 275 acts as the site's western boundary. James Corbett, the city development administrator, said one of the city's top priorities is maintaining and preserving the workforce and affordable housing throughout the city. He also pointed to the rarity of having affordable housing in a downtown core.

The zoning in that area pre-dates the interstates, said Elizabeth Abernethy, St. Petersburg planning director, and reflects the type of development that existed in the 1920s, when the code was crafted. The Fringe district, pockets of affordable housing and the industrial portion are zoned to reflect the uses that have been prevalent there for decades.

"We’ve been focused for the past four years on affordable housing amendments and working our way through the different areas of the city," Abernethy said. "This is just an area that hasn’t been addressed yet, but we could see the potential for change. But it’s not on the current work plan."

The city has taken several steps toward addressing the housing crisis. It expanded zoning to permit more accessory dwelling units throughout the city and is currently working to build a transit-oriented development overlay along the SunRunner stops that will increase density in bubbles surrounding each stop in the city.

Derek Kilborn, manager of the city’s Urban Design and Historic Preservation Division, said that to rezone the area, staff would need direction from city council or the administration. Private property owners could also initiate a rezoning request.

"City Planning and Development Services team members have had conversations with representatives of property owners and/or potential property purchasers but do not recall speaking directly with owners," city staff said in a statement. "In those conversations, staff provided information on the process for private individuals/entities to request a zoning change to DC-2. No applications or additional requests have been submitted since the information was shared."

Daou told the Business Journal he spent years asking the city to create a new zoning for the area. He said he brought along consultants to present multiple ideas of different projects he would have liked to bring to life there.

In the 1980s, Kilborn said, the city began creating a development strategy for downtown. After years of review, the Intown Area Wide Development of Regional Impact, which acts as a guide for downtown development, was adopted in 1988. The boundary for the Intown Area does not include the Fringe district, the multifamily developments or the industrial sites.

"Because of the investment into those multifamily housing projects, it was seen as a stable area and not an area that would be prone for redevelopment anytime because those projects and housing units were built in the late 70s and early 80s," Abernethy said. "You have these larger institutional landowners with recent housing developments they wouldn't be looking to make change."

A 'prime example' of St. Pete's zoning issues

To the east of MLK, St. Pete blooms: New development mixes with preserved buildings filled with residents and local businesses. Northwest of the stilted Fringe district is a collection of affordable housing developments — a rarity in the urban core — including projects owned by the city and two affordable housing developers.

Two of Daou’s properties in the Fringe district were recently sold to a developer who plans to build 23 luxury townhomes on the site. The buyer, developer Jeff Craft, previously told the Business Journal that buyers who prefer an urban neighborhood but don’t want to pay the price for a downtown condominium are actively seeking luxury townhomes branching off Central Avenue.

Lauren Campbell and Kyle Masterson with The Archer Group, a Tampa-based commercial real estate agency, have represented several property owners within the Fringe district. Campbell said the properties with suburban zoning should be rezoned for the downtown core to match the development directly to the east and south.

“You’re in downtown; it should reflect that,” Campbell said. “We don’t receive the phone calls we should be getting for downtown property. The only calls I’m receiving are from townhome developers.”

Masterson said the Fringe district should be a natural progression of the Edge district. But with the current zoning, developers struggle to make projects pencil out and end up looking elsewhere.

“I had a really big vision for that area,” Daou said. “It would have been amazing, but after years of work nothing changed, nothing was able to happen. Then I went up to the Union Central District. Now I’m up in North Carolina and starting to do a lot of work there.”

Campbell said the Fringe district is emblematic of the development evolution in St. Pete. There are pockets throughout the city — many of which lie near hubs of activity — that have not had their zoning refreshed in decades. Developers have to either take the gamble to invest and hope that the zoning changes down the road to allow for a higher density or focus their investment strategy on the areas the city has already studied and deemed suitable for high-density development.

Changing the density of an area could take years, and then the market could shift beyond making a project financially feasible.

“This issue is maybe the most egregious section in the city, but it’s not the only section,” Campbell said. “This isn’t a singular problem but a prime example of how density works in St. Petersburg.”

An answer to the housing crisis

Masterson said if the city is in a housing crisis, the answer is to simply increase density to allow for more housing. The city’s rising rents and home prices are evidence of an inventory issue. While strategic planning is still needed to guide the level of development, loosening the reins is the only answer.

Should the zoning in the Fringe district be changed, developers would have the opportunity to expand on the growth in the Edge district and downtown and bring mixed-use projects north toward the interstate. You would have a neighborhood with iconic restaurants, mom-and-pop boutiques and specialty retail.

Permitting a higher density in the Fringe district allows the city and the other stakeholders that own the affordable housing complexes in the area to have the option to consider redeveloping their sites into larger complexes, which could provide affordable housing to a significantly larger number of residents.

If the city desired to use the area as a step-down to the neighboring multifamily sites, they could easily do so by allowing the more dense projects but implementing a height restriction.

The Edge District is home to more than 1,500 residents and 150 businesses, according to the district's business association. That success could be replicated just north, creating a whole new neighborhood in the Fringe district — if only the city considered it part of the downtown core.