For sale – 22 parcels of unfulfilled hopes.
“We’ve been hamstrung by the (Securities and Exchange Commission’s) investigation,” Mayor Greg Oravec said. “There was really nothing for us to do. We just had to stand by.”
But what can be seen as a final remnant of Port St. Lucie’s Great Recession woes is for sale. Last week Toronto’s Avison Young said it had been chosen by a court-appointed receiver to sell about 20 acres at City Center along U.S. 1 and Walton Road.
The properties have been tied up by federal actions against Lily Zhong, a New Zealand developer who purchased the land in 2013 when the former owner went bankrupt. She paid $500,000 and was supposed to also pay backlogged special assessments.
Four years ago, Zhong weaved a story the city wanted to hear – she was going to build a $380 million mixed-use facility that would fulfill a vision the city had when it took out about $25 million in bonds to build infrastructure for the City Center. The city is still paying off those bonds with a special assessment district it created to get the vision moving.
The Zhong properties make up about half of the 40 acres in the City Center’s special assessment district.
The SEC, however, said Zhong was weaving a scam to get foreign investors to pay for her to have a lavish lifestyle. Zhong and the SEC settled the case last year. She was facing several counts of violating the Securities and Exchange Act. She accepted what amounts to probation and surrendered assets, including the Port St. Lucie properties.
Before and while the investigation and settlement were going on, the properties racked up about $25 million in back taxes and special assessments for the infrastructure the city built with bonds.
Now the properties could sell as a lot, or individually. Oravec said he hopes that Avison Young finds a buyer who’ll take the lot.
“Someone that has the money and experience to achieve the original vision of a mixed-use development,” Oravec said. “That’s the ideal. There’s ideal and then there’s great and good.”
In other words, if several buyers come forward to buy the parcels separately, the mayor won’t complain.
But, there remain the bonds for the infrastructure the city is paying for, along with back property taxes. The city manager, Russ Blackburn, said it’s likely any prospective buyers will want to get some of that debt excused.
“There’s such a high special assessment bill, for some of these properties to go back into the market, they’ll probably ask the city for some to be forgiven,” he said.
The special assessment fees are about $18 million of the $25 million. When prospective buyers show up with specific development proposals, along with any requests for the city to reduce the assessments, the City Council will have to consider them. Oravec said he’ll give any proposals to nix some of the debt a good listen.
“I think, especially for the right development concept, some of what’s outstanding – I think it’s too heavy,” the mayor said. “It puts the property upside down (in value).”
City Center properties have four owners, including the City of Port St. Lucie. The Port St. Lucie Civic Center is part of City Center. Bonds for building the infrastructure were issued in 2006. They were refinanced earlier this year.
The city doesn’t have cash into any private-use buildings at City Center as it did with Tradition Studios and the Vaccine & Gene Institute of Florida laboratories, which is also in Tradition. The city sold Tradition Studios to Christ Fellowship for $13 million after its original occupant, Digital Domain, went bankrupt. The city is attempting to sell the former VGTI facility under the name Florida Center for Bio-Sciences.