SUBJECT/RECOMMENDATION:
Title
Approve the Sixth Amendment to Contract for Sale of City-Owned Vacant Land between the City of Clearwater and Lake Belleview Development, LLC. for real property located at 1454 South Martin Luther King Jr. Avenue, and authorize the appropriate officials to execute same and such requisite documents necessary to effectuate the sale. (consent)
Body
SUMMARY:
The City of Clearwater posted RFP/Q #43-22 as an opportunity for a developer to acquire and develop city-owned property located at 1454 South Martin Luther King Jr. Avenue for use as affordable and workforce housing (Pinellas County Property I.D. #22-29-15-00000-320-1300). On December 1, 2022, Council authorized staff to negotiate a contract for the sale of real property to Habitat for Humanity of Pinellas County, Inc. and Clearwater Neighborhood Housing Services, Inc., together, as the selected developer of the real property located at 1454 South Martin Luther King Jr. Avenue. On June 13, 2023, Council approved a contract for sale of city-owned vacant land. The Developer will be assigning the contract to a single asset entity, Lake Belleview Development LLC.
Per the contract, the development shall be consistent with Developer’s response to City of Clearwater RFP/Q 43-22. The developer shall construct 24 units of mixed-income, owner-occupied townhomes with 50% of the units reserved for households with total household income up to 80% of the Area Median Income (AMI) as determined by the United States Department of Housing and Urban Development, and the remaining 50% reserved for household with total household income up to 120% of the AMI.
The developer’s response to RFP 43-22 identified a $1,240,170 cash gap in addition to the requested donation of the property, therefore Exhibit B of the contract specifies the City agrees to commit to the donation of the parcel, valued at $525,000 and a contribution of an additional $357,585 for a total direct subsidy of $882,585 (half of the total direct subsidy identified as required in the response). Due to market changes, the developer increased their request from Pinellas County to $1,015,025 which was approved. The total development costs is estimated to be $9,577,613.50. Sources of funding include owners Equity ($996,611.73), Penny Funding ($1,015,028), City of Clearwater ($882,585: $357,585 in direct subsidy and land donation valued at $525,000) and permanent debt financing ($6,683,388.77).
Additional requirements provided by Exhibit B establishes terms and conditions that the developer must meet prior to and after closing. Per the exhibit, all pre-development activities must be completed prior to closing including, but not limited to, funding commitments, site approval, and building permits.
Unforeseen development challenges had pushed the original proposed timeline and required a contract closing date extension to December 31, 2024. Due to Hurricane Helene and Hurricane Milton, the developer had not procured funding approval from Pinellas County, which is a requirement for closing. The closing date was then extended to on or before April 30, 2025. The funding request for the project was reviewed and approved by the Pinellas County Board of County Commissioners in February 2025. The developer then requested an extension to on or before July 31, 2025, to obtain permits, obtain commercial loan approval, and finalize closing documentation. In June 2025, the developer requested an extension until December 31st to obtain building permits, complete negotiations for a stormwater easement from a neighboring property and complete the platting application process for Duke Energy.
Following approval of the extension, the developer identified a conflict with the contract requirement to obtain all building permits prior to closing. Under the City of Clearwater’s development code, a final plat must be recorded before building permits can be issued. However, the recording of the final plat cannot occur until infrastructure and site work are completed. As a result, the developer requested that the City remove the permit contingency and allow the closing to proceed prior to final permit issuance.
The Fifth amendment included contract language that grants the City the right, at its sole discretion, to revert ownership of the property if the project fails to meet contractual timelines, assigned the contract to a Limited Liability Company and extending the closing date to June 30, 2026. Additionally, the fifth amendment assigned the contract to developer’s special purpose entity, Lake Belleview Development, LLC.
Due to financing challenges and operating agreement negotiations, the developer is requesting an extension of the closing date to October 30, 2026.
APPROPRIATION CODE AND AMOUNT:
Funding is to be provided by State Housing Initiatives Partnership (SHIP) Program and Revenue Recovery Funds provided by the American Rescue Plan Act - Local Fiscal Recovery Funds. No General Fund monies will be appropriated. If needed, staff may utilize Housing Trust Funds in place of SHIP funding.
USE OF RESERVE FUNDS:
N/A
STRATEGIC PRIORITY:
Objective 2.4 - Supports equitable housing programs that promote household stability and reduces the incidence of Homelessness within Clearwater.
