When the Indian River Shores Town Council voted 3-2 on Monday to accept a $4.84 million winning bid – far less than a recent $7.7 million appraisal – for a 5.2-acre oceanside parcel owned by the town, it marked the culmination of a three-year effort by luxury developer and home builder Howard Gutman and The Lutgert Companies.
The Naples-based firm, with high-end communities up and down the west coast of Florida and in North Carolina, has long wanted to acquire a foothold in the Vero Beach barrier island market.
“We had an interest in the Surf Club property, but we were still in our due diligence phase when that came up. The timing just wasn’t right,” said Megan Raasveldt, a sales associate with Dale Sorensen Real Estate who represented The Lutgert Companies in the Shores purchase. “Indian River Shores is exactly the type of community we were looking for.”
“We’re excited for the opportunity we have here in Indian River Shores and look forward to developing a project the community and The Lutgert Companies can be proud of,” Gutman said after the council’s affirmation of the auction results.
Raasveldt said residents can expect a West Indies-style community similar to Lutgert’s Residences at Mercato development in Naples, with an architectural style and feel like that at Orchid Golf & Beach Club. The price point, Senior Vice President Mike Hoyt said, will be upwards of $1 million per residence and the timing, if all goes well, will be months, not years.
“We’d love to be able to have something on paper to sell this coming season,” said Hoyt, who grew up in Vero Beach and graduated a Fighting Indian before leaving for the University of Florida and ending up on Florida’s west coast working for Lutgert. “Ideally, we’d like to start construction on a model sometime in the coming year, probably right after the first of the year.”
That will mean working with Town staff to hone a site plan and going before the Shores Planning, Zoning and Variance Board over the summer to gain approvals. It’s still undecided whether The Lutgert Companies will offer 12-18 single-family homes, or opt to develop a multi-family community of condominiums or townhomes. The parcel is zoned for up to six units per acre for a potential total of 30 units, but Town officials expressed a definite preference for a lower density, single-family development.
Mayor Brian Barefoot offered his vision of a road up the center of the parcel with a cul-de-sac, five homes on either side of the street and three to four homes facing the ocean, noting that would result in a density “in the teens” of units.
Hoyt acknowledged that Barefoot was pretty close to one of the options Lutgert’s engineers had looked at, and he handed out schematics of two density studies on large sheets of paper to the council. The single ocean-access dune crossing permitted by Indian River County would most likely be at the end of the cul-de-sac, at the north-south midpoint of the community, Hoyt said.
But for the Shores Town Council, the fact that the bidding for the parcel did not even reach $5 million was clearly a disappointment.
The fact that the county only signed off on one dune crossover, as opposed to the three crossovers requested by Shores officials last month, was thought by some to have reduced the price fetched by auctioneer Wesley Davis when the parcel went on the block last Saturday, with nearly 100 people watching the live auction under a white event tent set up on the property.
Last year, an appraiser valued the parcel for $7.7 million. Davis, Town officials and the buyer all said the price paid for the property might have been closer to that figure with three beach access points.
Indian River County’s unwillingness to permit the trimming of overgrown sea grapes was another bone of contention, with town officials saying the grapes block the ocean view and reduce the desirability of the parcel.
Councilman Dick Haverland proposed that the council reject Lutgert’s bid, readdress those issues with the Board of County Commissioners, and then offer the property for sale with the sea grape and dune crossover matters cleared up.
“There’s no rush to sell this property,” Haverland said. Barefoot ultimately agreed, saying county staffers were mistaken in their advice to commissioners and that the Shores would need to “educate the staff.” He voted with Haverland to wait and try again.
But the balance of the council approved the sale, resigned to their failure to secure more cooperation from the county.
Next Tuesday, the County Commission will consider whether or not to exercise its right of first refusal and purchase the property for the county, or to let the sale to Lutgert run its course.
The Shores acquired the parcel from the county in 1993 in a land swap agreement after the county purchased it from developer Ed Schlitt at a deep discount. Schlitt’s family and the residents of Pebble Bay and Pebble Beach Villas, wanted the Shores to honor an agreement made with the county – but not passed down in the deed to the Shores – to provide public beach access on the parcel.
In fact, the Schlitts and some neighboring residents lobbied for the oceanside acreage to be kept as a park, but after months of hand-wringing, packed council chambers and compromise, the Town Council agreed to set aside a 5-foot-wide beach access path owned by the town on the south end of the property. Land will need to be cleared for this, and mature palm trees and fencing bordering Pebble Beach Villas removed, as the fencing and trees encroach on the town’s property.
On top of his $4.4 million winning bid, Lutgert will pay a 10 percent buyer’s premium – for a total selling price of $4.84 million – plus any title insurance and closing costs, according to the terms of the auction. Davis and his company Indian River Auctions agreed to refund one-fifth of the buyer’s premium back to the Town, making the Town’s net proceeds $4,488,000.
The Town had pledged to cover up to half of a pre-approved $35,000 marketing budget if the parcel had not sold, but once a closing takes place, the Town will be off the hook for the cost of promotion and newspaper advertising.
“This property can go on the tax rolls as of Jan. 1,” Davis told the council and the public gathered Monday morning to hear the council’s decision.
The next issue to be decided, once the closing is final on June 16 as now expected, is how to allocate the proceeds of the sale, with town officials and residents already speculating about which type of investment vehicles might be best suited for the town’s long-term financial goals. Davis mentioned that the town could also use the money to fully fund its pension liability – an issue that Haverland has focused on during his two terms in office.
