Pinellas County out $3.4 million on failed plan for townhomes
From: http://www.tampabay.com/news/growth/pinellas-county-out-34-million-on-failed-plan-for-townhomes/1197262 (accessed 18 October, 2011)
LARGO — Seven years ago, two local businessmen promised to turn a construction scrap yard into a 200-unit gated townhome community, with 40 homes set aside for affordable housing.
Pinellas County, eager to boost the supply of affordable housing, loaned the businessmen’s company, Crest Capital LLP, $3.4 million to buy the land.
Today, only trees and weeds have grown on the 18.4 acres that were home to Terra Excavating for more than three decades.
And Pinellas County is still out $3.4 million, with no certainty that the money will ever be repaid.
The money came from state affordable housing funds. In July 2010, with work still not started, the county won a civil court judgment against Crest Capital for $3.4 million plus interest. It still hasn’t collected a dime.
Yet the county never foreclosed on the property, located in the Greater Ridgecrest area just west of Largo, and won’t say why.
And the county didn’t try to buy the land when the property was up for auction in a tax deed sale last month. Instead, the acreage was purchased for only $133,600 by Green Energy for North America LLC.
Letting the property go to a deed sale wasn’t an oversight, said Dennis Long, chief assistant county attorney. “We have a strategy, and I’m not in a position to discuss that,” Long said.
The county’s actions confuse Nick Kotaiche, former vice president of Terra and one of the businessmen involved in the failed housing project.
And at least one neighbor, Mildred “M.C.” Garrett, 77, has doubts about the county’s strategy, which she says “wasn’t too good for the last 35 years.”
“We put up with an awful lot of dirt and noise” when Terra had the property, Garrett said.
Besides the court judgment, the county still holds a mortgage on the land, located at 134th Avenue and Trotter Road. Certain liens are wiped out in a tax deed sale, but government liens are treated differently, Long said. And the county believes it still has a lien.
If that’s the case, the county may be able to foreclose on the property, but the legal team is still analyzing its game plan.
“We haven’t finalized our approach as to whether foreclosure is even an option,” Long said.
A mortgage and a developer agreement between Crest Capital and the county were signed by George Farrell in October 2004. Kotaiche, along with Farrell’s company Milmarson Development, were partners in Crest Capital.
Until March 2006, Milmarson had a 50 percent stake in the property, according to Farrell’s testimony in his personal bankruptcy case. That’s when he sold his interest to Kotaiche and one of his partners for $50,000, he said.
Kotaiche, who said he now works in health care, takes some blame for the failed housing project.
“I should have done more homework,” said Kotaiche of St. Petersburg. But mostly, he faults the county, claiming it inflated how much people would pay for the townhomes. Since the cost to build the homes was much greater than their sale value, Kotaiche said, “No one would finance it.”
Anthony Jones, the county’s community development director, disagrees with Kotaiche’s assessment, but wouldn’t comment further because of pending legal issues.
Decades as a construction landfill may have created extra challenges on the property. One local developer pulled his deposit after he learned it would cost an additional $3 million to $4 million to stabilize the site, according to Farrell’s testimony.
The St. Petersburg Times wasn’t able to reach Farrell, who may not be living in the United States. In his blog, “Success by George,” he talks about his new life in Costa Rica.
As far as the $3.4 million goes, Kotaiche said Terra got that money, not him, when the property was sold to Crest Capital.
Altogether, Farrell made about $130,000 on the deal, Kotaiche said.
Three years ago, Farrell touted the Pinellas project as a wealth-building deal in a book he wrote called the Angry Black Man’s Guide to Success, according to Farrell’s sworn testimony in his bankruptcy case. He boasted in the book that he was able to make a profit by getting an 18-acre borrow pit valued at $700,000 rezoned for a townhome development appraised at $5.3 million.
The future of the site is still in question. Mark Yegge, whose company bought the property at the tax deed sale, initially eyed the site for a solar farm. But prospects for such a business in Florida are not great right now, he said. The Belleair Beach resident and his partners are exploring various options, including a project with affordable homes.
“Regardless of what we do, we want to make sure the neighbors are all happy with it,” Yegge said.
Shirley Jamison, a resident who opposed the gated community years ago, just wants it to fit the neighborhood, which has mostly older single-family homes.
“There’s a bunch of older folks in this area,” said Jamison, 65. “We don’t want anything coming in to interfere with them.”(emphasis added).
Times news researcher Caryn Baird contributed to this report. Lorri Helfand can be reached at firstname.lastname@example.org or (727) 445-4155.