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What's old is new again in Snell Isle
By SCOTT BARANCIK, Times Staff Writer SNELL ISLE -- After selling ABR Information Services for an impressive $750-million in 1999, Jim MacDougald's golden touch seemed to tarnish. A sailboat company he bought swiftly sank. A $3-million investment he made in a treasure-hunting company has yet to yield a priceless artifact or even a bit of bullion. It looked as if there might be no encore to ABR, the health insurance processing company he co-founded with his wife, Suzanne. But MacDougald, 58, might be on firmer ground with his latest venture: Shore Harbor Properties LLP, a company that buys modest homes on St. Petersburg's upscale Snell Isle, replaces them with luxury houses and -- he hopes -- sells them for a net profit of 8 to 10 percent. They're called "teardowns," and it's a strategy being used by a growing number of Tampa Bay area builders, especially those doing business in high-demand neighborhoods such as South Tampa and Belleair Bluffs. It's expected to be a major approach to future development in Pinellas County, the state's most densely populated county. With the stock market's malaise and the renaissance of downtown St. Petersburg, more and more buyers are willing to sink their nest eggs into Snell Isle real estate, longtime resident and real estate agent Cary Bond Thomas said. "Everybody is just converging on these elderly people as they're going feet-first out," she said. "We have no inventory here. It's a nightmare." MacDougald's approach isn't typical. He and former ABR executive Joe Lukason pay cash for the teardowns, such as $470,000 for a beat-up waterfront home on Monterey Boulevard, then get financing from First Union bank for the construction. Most developers don't have that kind of cash and have to obtain a mortgage for the teardown. And rather than custom-building new homes for specific buyers, the partners are finishing the houses before putting them on the market. Building "on spec," or speculation, is a risky strategy, they say, but one that poses fewer headaches and takes about half as long. "The care and feeding of a guy you're building a house for is a lot harder," MacDougald said. "They'd just drive you crazy." MacDougald should know. He and Lukason both built million-dollar homes on Snell Isle in the past few years. Both are now selling their homes to build even bigger ones there -- MacDougald's on three adjacent waterfront lots. The pair take several measures to reduce risk. They add features they say most well-to-do families seek today, such as a swimming pool, high ceilings, state-of-the-art wiring, a large master bedroom, walk-in closets, crown molding and Mediterranean-style roofs. They put in a gas line to the pool in case the buyer wants a heater. They offer both electric and gas options in the kitchen. And they take few aesthetic risks. Want red walls or carpet? Put them in yourself. "Inoffensive beige" is the standard. "We decided to be, shall we say, as uncontroversial as possible," MacDougald said. "You do things that nobody's going to hate." Teardowns were not MacDougald's first choice. A self-described history buff, he wanted to restore older Snell Isle homes to their original glory. But like the waterfront home that MacDougald and Lukason eventually bought at 1354 Monterey Blvd., many houses built in the 1950s and 1960s have substandard wiring and plumbing, no central air conditioning and no swimming pool. Many were in disrepair because their elderly owners were unable to maintain them, much less improve them. "We're going over and buying houses that are not worthy of redemption," MacDougald said. At the same time, federal law severely limits the amount of money that homeowners in flood or hurricane zones can spend on home renovations and additions without having to meet the higher standards required for new construction. "The scope of (renovation) work is limited by that," said Don Saunders, whose Saunders Construction Co. is renovating a number of Snell Isle homes. Additions may have to be done piecemeal. Expensive features may have to be scaled down. Still, MacDougald and Lukason say it's not easy to find appropriate targets for teardowns. Nice homes in good shape will cost too much to buy, raze and rebuild, making the new homes uneconomic. Parcels less than one-quarter acre in size will not allow the pair to build the 2,500-square-foot to 4,500-square-foot homes they want. Lukason, a one-time developer of subdivisions, brings experience MacDougald lacks. It only goes so far, however. He and MacDougald must build on odd-size lots, not cookie-cutter shapes they design themselves. And they can't show potential buyers a model home ahead of time. MacDougald is realistic about the future. Given the small inventory and limited churn on Snell Isle -- the Pinellas County Property Appraiser identified 1,261 residential parcels there -- four or five homes a year is probably as much business as they can do. Although he would eventually like to build homes in downtown St. Petersburg, too, he said, "I don't think this is scalable into a big business." Nonetheless, he's enjoying the tangible nature of home building. "I've been in the service (sector) my entire life," he said. "My company is gone. The name isn't even there anymore." -- Scott Barancik can be reached at barancik@sptimes.com or (727) 893-8751.
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From the Times Business report
From the AP
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