Buoyed by a supportive property management company, residents of a beleaguered mixed-use project are riding high after buying low.
When more than 200 residents of Signature Place, a 36-story condo tower in downtown St. Petersburg, gathered in May to celebrate the completion of major capital improvements to the building, many of them also felt vindicated.
That’s because Signature Place, clad in scaffolding for years and despite its notable name, had become an eyesore and developed a reputation as a poor real estate investment. Completed in 2009 amid significant hype and the recession brought on by the housing market crash, the building became embroiled in a lawsuit when the Signature Place Condominium Association, alleging myriad construction defects, sued the developer, Joel Cantor, and several other entities connected to the construction.
In an interview with the Business Observer, Cantor denied fault and questioned the validity of the association's claims. He characterized the dispute as "a typical argument with a contractor about who's going to fix what." (See sidebar.)
Either way, nearly a decade later, property values are on the rise and the building has attracted a dynamic mix of residents ranging from retirees, empty nesters and young professionals to members of the Tampa Bay Rowdies soccer club — who play across the street at Al Lang Stadium.
The building's turnaround is a also lesson in perseverance and shows how a savvy, committed coalition of residents, aided by a property management company that refused to bail out on the troubled project, overcame steep obstacles and now reaps the rewards. The behind-the-scenes work also resulted in several business lessons, namely communicating through a crisis is always a must-do.
“What owners and residents put up with was amazing,” says Al Carrico, president of the Signature Place Condominium Association’s board of directors. “And you have commercial businesses on the first and second floor — when they were looking out their windows, they were looking through scaffolding, and so you can imagine what type of business interruption that caused.”
Carrico, who spent 38 years working in the insurance industry for State Farm and moved into the building in 2013, says it’s normal for problems to show up during the third-party inspection process that occurs when a developer hands over a finished building to a homeowners association.
“When I initially looked at this place, I looked at it as an investment. I wanted to get great value, and there’s no doubt that I did.” Marco Lerra, a property investor and resident of Signature Place in downtown St. Pete.
“These problems are not unique to Signature,” adds Marco Lerra, a property investor who moved to Signature Place in April 2017. “Every building has something that has to be worked out after the developer has signed off on everything.”
But Signature Place’s structural issues went beyond what were considered run-of-the-mill shortcomings, condo owners contended. Crumbling exterior stucco caused by missing control joints, thin walls between units, water leakage and improper plumbing installations were a few of the alleged faults.
“The contractors had shorted their processes,” Carrico says. “They didn't add the proper rebar; they didn't use the right screws. During the construction stage, when the markets and everything crashed, the contractors were trying to get out as cheaply as they could.”
The lawsuit against Cantor’s now-defunct Gulf Atlantic Communities, Lend Lease Construction, TLC Engineering and architecture firm Perkins & Will was settled out of court for an undisclosed sum. A call to Jeff Aman, attorney for Cantor and Gulf Atlantic Communities, went unreturned.
The settlement, however, was not enough to pay for all of the work needed for the building, which will likely cost $12-$15 million when complete. Residents, in turn, were hit with a special assessment of $8.7 million.
Rhonda Blakeman of FirstService Residential Inc., the Dania Beach-based firm that manages Signature Place, says there was “grudging acceptance” of the special assessment — though she “got yelled at a lot” because of it. A few residents chose to sell, or rent their unit and move out, while more than half remained.
FirstService stayed, too, and so did Blakeman, who’s been a fixture at the building for the past four years and was closely involved in the rehab process.
“I’ve been here for the battles,” she says. “The good thing about that is that the whole entire property has been gone over with a fine-toothed comb … there really are no surprises for us. Everything was addressed. Everything has been repaired. In essence, it’s like a brand new building and probably, in my opinion, even though I’m not a contractor, one of the best-built buildings in Pinellas County.”
To achieve that, FirstService and the board enlisted Fort Myers-based contractor RL James to perform the repairs, based on a forensic inspection process led by Davis Construction Consultants. Residents also got involved, forming ad hoc committees that met every month with representatives of RL James and Davis as repairs progressed.
The buy-in was remarkable, say Carrico and Linda Snyder, the board’s former secretary and a Signature Place resident since 2011. They say 45 to 50 owners — about 25% of the building’s entire ownership — contributed to the work of the various committees.
“Usually you get around five people to step up and do all of the work,” Carrico says. “When you’ve got 45 or 50, it’s a lot easier to get things done.”
One of those people is Lerra, who says he paid $565,000 in cash for his two-bedroom unit on the 18th floor of Signature Place, and today its value is about $735,000 — a 30% increase. Lerra saw potential in the building and became part of the Signature Ambassadors, a group of residents who volunteer to take real estate agents and prospective buyers on tours of Signature Place.
“A lot of people who bought here bought with cash,” Lerra says. “Because of the construction liens, it wasn’t easy to get a conventional loan. When I initially looked at this place, I looked at it as an investment. I wanted to get great value, and there’s no doubt that I did.”
Snyder adds, “The majority of us wanted to live here. The majority of us chose this building, so there’s a sense of community, a sense of pride in ownership.”
ON THE REBOUND
Blakeman is no stranger to property management, having spent 15 years working for Hyatt prior to FirstService, which employs more than 200 people in the Tampa Bay area and topped $30 million in revenue in 2017.
“With new construction, you’re going to have issues rear their ugly heads as time goes by,” she says. Developers of mixed-use projects like Signature Place, she explains, are in business to sell residential and commercial units, not prevent long-term problems.
But in the case of Signature Place, the building’s trials and tribulations mean “things that don’t normally get fixed got fixed,” Lerra says. “We know what we have here now because we know the work that was put into it. The inspection process took a really good look, a forensic look, at what went wrong.”
Sans scaffolding, “the building can now speak for itself” for the first time, Carrico says. “Property values have skyrocketed. I would suspect we’ve gone up an average of 15%.”
Unfortunately, something of a hangover effect from the lawsuit and rehab work lingers. That's why the work of groups like the Signature Ambassadors is only just beginning.
“I don’t think the property values are where they should be yet; they’re just not,” says Lerra. “It was all like a bad dream, but I think we are nearing the end. I would argue that it’s a better building than any building downtown, because of the forensic work put into finding any possible problems. That just doesn’t happen normally.”
Blakeman says the negative rumors that swirled around the building haven’t hurt sales too much. “If a unit goes up for sale, it sells within two weeks,” she says, adding that only seven units were available in mid-September.
Did FirstService ever consider giving up on Signature Place? “Absolutely not,” Blakeman says. “Signature is very near and dear to a lot of people at our corporate office, and a lot of employees have been here for many, many years. Our chief engineer started in 2007, when it was just dirt.”
Blakeman says important business lessons can be gleaned from what FirstService and the residents of Signature Place went through. “Transparency — helping people understand what was going on, why it was going on and what needed to be done,” she says. “You just listen to people.”
Additional communication based on that transparency was also critical. The condo association’s board of directors, Blakeman adds, took the information from FirstService and ran with it, organizing meetings with attorneys and forensic engineers who were involved with the case so fellow residents could receive regular updates. That started in 2015 and continues today, even as the work is winding down.
“We’re pretty much fixing everything,” says Blakeman, “every issue that we have. Residents see the light at the end of the tunnel, and now the building is a showpiece.”