A Miami developer offered to buy the Port St. Lucie City Center project if it can cut deals to reduce $24 million-plus in back taxes and assessments on the 21 acre-tract on U.S. 1.
AHS Residential LLC offered $750,000 for the land, subject to settlement agreements with St. Lucie County Tax Collector Chris Craft on the back property taxes and the City Council on the accumulated assessments.
AHS Residential wants to close the sale 30 days after receiving City Council approval for the City Center site plan for a hotel, 1,086 residences, 252,820 square feet of retail and 247,000 square feet of offices.
“A lot of it is going to depend on the city,” Juan G. Fernandez, AHS Residential’s corporate counsel, said Monday. “This is very preliminary. We’re interested, they know we’re interested, but that’s the extent of it. We really have not discussed timelines.”
It’s the second offer on the 21 acres in City Center seized by the federal government in November 2015 as part of a fraud investigation. A Hollywood developer made an offer in August 2018, but didn’t follow through.
“I think it absolutely demonstrates there’s interest in the property,” City Manager Russ Blackburn said about the offers.
The sale would set the stage for Port St. Lucie residents to realize their long-held dream of an downtown entertainment district anchored by the Civic Center and its massive parking garage.
“We’ve been very consistent that the City Center, the original vision, is a vision that really benefits our community,” Blackburn said. “It included restaurants, multi-family housing, office space — a mix of uses. We think that is still what ideally should happen on that parcel.”
The City Center project started in 2001 with the idea of redeveloping the old Village Green Shopping Center at U.S. 1 and Walton Road. But the project got derailed by the Great Recession and a shady developer.
The U.S. Securities and Exchange Commission seized the 21-acre tract in November 2015 as part of the proceeds of a scheme by property owner Lin “Lily” Zhong to defraud investors in a federal visa program.
The property languished until a distressed real estate specialist, Biscayne Atlantic of Hollywood, made an offer in August 2018. However, the company dropped the deal without starting talks with county and city officials about the back taxes and assessments.
The 21 acres have an assessed value of $5.7 million, county property appraiser records show.
The property’s carrying costs for 2018 total more than $2 million, city records show. That includes $1,871,152 in assessments, $135,996 in property taxes and $9,806 in stormwater drainage fees.
AHS Residential, which had been talking with Biscayne Atlantic about the residential land in City Center, submitted an offer for all 21 acres on April 18 to the receiver managing Zhong’s assets for the SEC.
The SEC receiver, Michael Goldberg, of the Akerman law firm in Fort Lauderdale, could not immediately be reached for comment.
The deal hinges on the talks about the $24 million in back taxes and assessments.
“Obviously our offer considers there will need to be some negotiations,” Fernandez said Monday. “But I really don’t know what that’s going to look like or what it’s going to involve. Only as the discussion develops will we start learning more about the nuances of the deal.”
“This is an expression of interest,” Fernandez said about the letter of intent. “We’re serious about it. We’d certainly like to develop one of our projects there. We really want to give the city an opportunity to let us know what they’re thinking, what they’re envisioning and see if we can come to an agreement.”
AHS Residential specializes in developing, building and managing apartment complexes for middle-class workers, the company’s web site says. The company builds on sites with easy access to transportation, employment, good schools, recreation and entertainment.
AHS Residential owns complexes in Lake Worth, Pompano Beach and Miami-Dade County, the AHS Residential website says. It is also building apartments in West Palm Beach and Miami.
“We’re looking to expand into other areas,” Fernandez said Monday. “We like the market and we like the location, so we’re starting to take a look up there. This is a site that is attractive to us potentially.”
City Center is within two miles of St. Lucie Medical Center, Port St. Lucie High School, Savannahs Preserve State Park, East Port Plaza, Holiday Inn and several restaurants, stores and shopping centers on U.S. 1.
“Certainly, that’s part of the reason why we’re interested in the location,” Fernandez said. “There are centers of employment and there seems to be a lot of economic activity and development. It all plays into our decision-making.”
Obtaining a loan from a bank or the state or federal government to finance the construction of the project won’t be an issue if AHS Residential decides to purchase and develop the City Center project.
“We do not require any third-party financing as all equity is sourced in-house,” Fernandez said in his April 18 letter to the city and the receiver.
“Most of our projects are held in our portfolio long term so attention to detail and pride of ownership are important,” Fernandez letter said.
“The vast majority of our residents are in law enforcement, education, hospitality and the medical industry as well as many government employees,” Fernandez said in his letter.
Tenants typically have household incomes ranging from $60,000 to $98,000 per year, the said.
The complexes offer a common area with meeting and recreational space as well as a pool and fitness center, the letter said.
It is up to Goldberg and ultimately U.S. District Judge Joan Lennard, who is presiding over the case against Zhong, to approve or reject the proposed sale.
If the AHS Residential deal also fails, the City Council should consider buying the 21 acres from the SEC, said Mayor Greg Oravec.
That would give the City Council the power to determine how City Center develops, as it is doing with 1,160 acres the city acquired in Tradition Commerce Center in June 2018, Oravec said.
“I’m curious to see this play out,” Oravec said. “It behooves to work with the receiver to analyze this proposal.”
“But if this should fail … I don’t want to have to do a ‘State of the City’ address where City Center is a top priority and we can’t show results,” Oravec said. “So this, year, if it’s not this party, it doesn’t follow through, I want to have the conversation of exploring the takedown of City Center, just like we did (Tradition).”
