Where's downtown?

Where's downtown?

urban living by Jean Gruss | Editor/Lee-Collier

Creating a downtown from scratch can take decades and sometimes the economy will dictate whether or not it can be successful. Just ask the entrepreneurs in downtown Cape Coral.

Days before a recent arts festival in Cape Coral that drew 100,000 visitors, the most frequently asked question to the organizers' phone line was: Where's downtown?

That anecdote crystallizes the challenge Cape Coral has in creating a sense of place in the area it has designated as "Downtown."

Despite attracting thousands of people to events such as the arts festival, many people don't think Cape Coral has an urban area.

It's a cautionary tale that many developers might heed: It takes years to make a downtown thrive and developers who venture there need that special combination of money, patience, timing and political astuteness to make any project work. What's more, urban areas are often buffeted by economic trends that are beyond their control.

In Cape Coral, the recent speculative boom and subsequent bust in the real estate market hampered efforts by civic-minded downtown entrepreneurs to boost the area's economy. Today, a dozen projects from condos to shops are on hold until the market returns.

The peninsula of Cape Coral in Lee County is still suffering from its reputation as one of Florida's biggest land scams. About 40 years ago, developers cleared 115 square miles of scrub on the Lee County peninsula, dug 400 miles of canals and sold cookie-cutter residential lots to out-of-state residents. Little thought was given to proper planning and a downtown was never created. Today, it's the biggest city in Lee County, dwarfing Fort Myers across the Caloosahatchee River.

Cape Coral's downtown was once a small commercial area where a businessperson could put two parcels together and open a store. It was never designed for today's large commercial developments. Downtown Cape Coral is bounded on the north by S.E. 44th Street and S.E. 46th Lane, on the east by S.E. 17th Place and the Caloosahatchee River, on the south by Miramar Street and Bimini Basin and on the west by Tudor Canal and Palm Tree Boulevard. The entire area measures 432 acres and contains about 1,000 businesses and 3,500 employees.

But downtown Cape Coral has one big advantage today: Unlike many of its neighbors, the community redevelopment agency that oversees the area's development efforts is not directly governed by the city. Instead, the city council appoints entrepreneurs who have a stake in the area's success.

"The reasons for doing this is you de-politicize the decision-making process," says John Jacobsen, the CEO of advertising firm Intergraphic and the chairman of the Cape Coral Community Redevelopment Agency (CRA). One only needs to look across the river at Fort Myers, where political squabbling recently killed a major waterfront condo project.

But the city still holds sway over Cape Coral's downtown, where local landowners beg for improvements to aging sewer and water pipes. They have to vie for attention with other areas of Cape Coral, such as the Pine Island Road corridor with its new strip malls and "big box" retailers.

"Quite frankly, the CRA was treated as a stepchild from the city council and the staff," says Elmer Tabor, the owner of Wonderland Realty and the chairman of Riverside Bank. "By having its own board, we had no liaison with the city council."

Still, Tabor says, a board independent of the city outweighs any disadvantages, and relations with the city have improved. "They're single-focused," he says. "They don't have to worry about other priorities or favoritism."

'Four years of hell'

The recent real estate boom and bust created havoc with the efforts of downtown entrepreneurs. The boom created gridlock at the city's planning and permitting departments and stalled downtown projects for months, even years.

For example, Bob Peterson had been planning to build Cape Villagio, a mixed-use development that included 236 condos and 131,000 square feet of commercial space. "We went through four years of hell to get the D.O. [development order]," says Peterson, president of Island Harbour Construction in Cape Coral.

By the time Peterson finally obtained the development order in October, the real estate market had turned. "I would say, realistically, the scheduling is being reviewed," Peterson says. He estimates it will take at least through 2008 for the market to start coming back. "It's not just Southwest Florida," Peterson says. "Everyone's facing it."

But Peterson is confident the market will return and he'll be ready when it does. "We're not walking away," he says.

But some developers have walked away.

"VK Development said he's out of there," says Tabor. VK Development planned to build Cape Vincent, which consisted of 236 condos, 46,000 square feet of shops and a restaurant on eight acres. Company officials with the Wisconsin-based developer couldn't be reached.

Smaller shop owners say many customers are flocking to other areas of the city while downtown tries to attract new business.

June Hartz, owner of June's Hallmark Store in downtown Cape Coral, says sales this Christmas were below the same holiday in 1980, the year she opened her store. She doesn't fault the CRA's efforts, but says competition from other areas of Cape Coral have been the biggest challenge.

"I'm not discouraged, but it may not happen in my lifetime," says the 72-year-old Hartz.

It hasn't all been the city's fault, some argue.

The city's permit and planning departments were overwhelmed when the boom occurred. At the same time, new commercial codes were being written expressly for downtown Cape Coral, confounding planners who were used to issuing permits for simpler single-family homes. The new codes allowed for complex, multi-use buildings that included shops, condos, offices and parking. But the permitting department was a revolving door, as new planners replaced those plucked out by eager developers.

"It's not that Cape Coral wound up unintentionally unfriendly to new development," Jacobsen says.

What's more, prices for land in Cape Coral rose faster than most thought reasonable. "Because land prices were so high, it was stopping anything from getting done," says Gary Tasman, executive director of commercial brokerage Cushman & Wakefield. "I saw it get up over $100 a square foot," Tasman says.

"I'm scared to death, quite frankly, seeing what some of these people paid for dirt," says Tabor. He says those who overpaid may hold off until prices come back, potentially delaying new development for a long time.

Lull before rebound

Despite the pain, the current real estate downturn may give the city and downtown entrepreneurs time to lobby the city to improve aging sewer and water pipes. Tabor jokes that if all the guests flushed the toilets at his new Hampton Inn hotel downtown it would "suck the water out of the CRA."

As an inducement, the CRA can use tax-increment financing (TIF) to help developers offset some of these costs. TIF financing is used to help pay for some of the improvements to a newly redeveloped area, but Jacobsen says it's not designed to bail out developers who paid too much for land.

"We can't use TIF dollars to pay for bad business decisions," Jacobsen says.

Jerry Petersen is one developer who plans to try to pre-sell La Brise, a development that will include 124 condos, 10,000 square feet of commercial development, including a waterfront restaurant at the foot of the Cape Coral Bridge. The project is in the same location that used to house the sales center of Cape Coral's first developer.

"The thing that what we like is that there are not a lot of multi-family sites; it's primarily a single-family home market," Petersen says. "I think the multi-family market will be cleaned up faster."

But Petersen cautions it probably won't be until late 2009 to judge how well presales of La Brise go and what kind of bank financing he might obtain. He anticipates starting construction in early 2010 and the first residents could move in the middle of 2011. Jacobsen is helping Petersen market the property.

Petersen is not alone. New York developer Robbie Lee and his company, Island Development, is counting on the market returning within 18 months to start construction on Venetian Towers and Village Square.

"Right now is the time to plan to attract our share of the growth that we all know is going to occur," says Tasman. "One big component of that is the infrastructure."

REVIEW SUMMARY

Area. Cape Coral

Trend. Urban redevelopment

Key. Creating vibrant downtowns can take decades and efforts can be stalled by broader economic conditions.