More than four years after Vero Beach began its quest to create a dining, retail, social and recreational hub on the city’s mainland waterfront, we’ve arrived at our first uh-oh moment.
It came last week, as the City Council listened to its Three Corners marketing consultant provide the latest update of his firm’s efforts to attract developers for what is expected to be a $200 million-plus project.
And as you might expect – from a city that took more than a decade each to complete sale of its electric utility to Florida Power & Light and the former Dodgertown Golf Club property to the county – the concern again is connected to the pace with which the Vero council is moving.
This time, though, in a somewhat ironic twist, the council might be moving too fast, and pushing too hard to stay on schedule through a critical phase of the process.
Allow me to explain.
Making his second appearance at the podium in a month, Colliers International’s Ken Krasnow didn’t ask council members to again extend the deadline for developers to submit detailed proposals for the 34-acre property.
He did, however, present them with a compelling list of reasons why they might want to consider it.
Krasnow knows that, if the council stays with its Feb. 1 deadline, there’s a real possibility the city will receive only three viable, fully-completed proposals – a response many would view as disappointing, given all the hype about developers being eager to seize such a rare opportunity and jump at the chance to invest in this special piece of property.
He also believes extending the deadline for a second time, perhaps for another month or two, would increase the chances of getting more submissions, particularly from developers who say they’re still assessing the site and project.
“Time is not your enemy,” Krasnow said repeatedly at the meeting, where it was obvious he was urging council members to proceed deliberately, rather than stubbornly cling to an arbitrary deadline.
And, as he had done just four weeks earlier, when the council voted to push back the submittal deadline from Dec. 15 to Feb. 1, he again explained why.
Krasnow cited the challenges this project presents for developers, several of whom have expressed genuine interest but remain hesitant, at this particular time and under the current market conditions.
He talked about higher interest rates, soaring construction costs, Florida’s ridiculous insurance premiums and lingering supply-chain shortages spawned by the onset of the COVID-19 pandemic four years ago.
He explained that many of the developers who’ve responded feel too constrained by the terms the city included in its request for proposals.
Not only would some developers prefer to purchase the property, rather than lease it, but Krasnow said the city’s refusal to allow a residential component also has thinned the herd.
In addition, the city’s concept plan calls for the Three Corners to be developed in a park-like setting, which means plenty of open space that reduces the amount of property available for profitable development.
“The deal structure on the table for the Three Corners is unique,” Krasnow told the council, describing the city’s concept as a “very specific, very well-vetted plan that presents a lot of certainty, a lot of clarity to the market.”
Such specificity, however, makes it imperative that the city attract investors willing to embrace its vision. Or as Krasnow said after the meeting: “We need to find a developer who gets it.”
And we might have one.
Or more.
In giving his update two Tuesdays ago, Krasnow told the council the number of proposals the city could expect to receive by Feb. 1 was “in the three or four range,” but adding that as many as four of the 12 developers who were “interested and engaged” last month decided to pass.
He said there are another four to six world-class, high-profile developers that are still showing considerable interest, but he doesn’t know if they’ll be able to submit complete proposals by the deadline.
“They’re still digging through it,” Krasnow said. “We have calls with them regularly, but they’re still processing what this opportunity – specifically, the Vero market – is going to hold for them.”
That’s when Krasnow raised the possibility that at least a couple of those developers might submit incomplete proposals, just to give the council a sample of what they plan to do with the property, then provide more details later.
Would the council, if intrigued by what they saw, grant these developers the additional time they need?
We won’t know how the council will react until after all the proposals have been submitted, which will be on Feb. 1 – because the council did not extend the deadline.
Vice Mayor Linda Moore and Councilwoman Tracey Zudans initially seemed open to another extension, saying it might be worth the additional time if it’s likely to produce more and better proposals.
But Mayor John Cotugno and Councilmen John Carroll and Taylor Dingle opposed changing the date, though their reasons weren’t overly convincing.
The same goes for the argument made by the city’s Three Corners project manager, Peter Polk, who undermined Krasnow’s presentation by claiming another deadline extension would create the perception that the council doesn’t know what it’s doing.
Surely, any competent developer is aware of the current market conditions.
Likewise, Carroll contended that moving the deadline again would raise questions about the city’s position, saying developers might wonder, “Why are they extending it? Is there no interest?”
Both Carroll and Dingle, a council newcomer elected in November, then suggested some developers who were planning to submit proposals might change their minds and back out if the deadline is extended.
That’s baloney.
There’s no way two or three of the developers ready to submit proposals would drop out merely because the council extended the deadline. At least a couple of them have been waiting for this opportunity since the city got out of the electric business.
Besides, they’ve already invested big money in preparing their proposals. They’ll be there on Feb.1. They’d be there on April 1.
Then there’s this: Krasnow said the city would’ve received only one or two proposals if the council had stayed with its original Dec. 15 deadline. He projects that the six-week extension to Feb. 1 will produce three or four submissions – and possibly five, though a couple of them might not be complete and comprehensive.
Could we expect even more developers to dive in on April 1? If so, why not follow the trend?
“I believe we’ll definitely get two viable proposals on Feb. 1,” Cotugno said. “Three would be great. If we get four, I’ll be ecstatic.”
You’ve got to love his optimism.
But with inflation easing, unemployment numbers down and a strengthening economy, Krasnow said the development and construction markets are beginning to show signs of stabilizing as the Federal Reserve prepares to meet on Jan. 30.
Why not, then, wait to see what the Fed does with interest rates, which could be the nudge needed for a developer or two to commit to the project here?
Look, the city is almost certainly going to get at least three completed proposals on Feb. 1.
And, as Cotugno said, “If we get two, three, four proposals and none of them are good enough, we don’t go forward. We suspend the process, cut the grass for a while and try again.
The land is still there.”
Zudans agreed, saying a failure to get the right developer with the best plan now might require the city to review – and perhaps amend – its request for proposals before launching a second attempt.
“The one thing I won’t do, though,” she said, “is settle for less that what this community wants and deserves.”
Nor should she.
None of us should.
The Three Corners project will change the face of Vero Beach – of the entire community, really – for the next 100 years. We need it to be done right more than we need it to be done on time.
Does anyone really believe we’ll be dining and drinking on the shores of the lagoon by the summer of 2028? There will be delays, and they might not be the city’s fault.
So why rush now, at such a critical point in the process?
Time is not our enemy.