Unrealized potential

College landings, owned by Eckerd College, has so much potential that real estate agents see a can't-miss prosect. So why did the site fail, driving out the college's president?

Personal Finance editor HELEN HUNTLEY E-mail: Click here Archive

By HELEN HUNTLEY

© St. Petersburg Times, published June 28, 2000

ST. PETERSBURG -- Only a sea gull's cry breaks the quiet at College Landings, where residents of the pastel pink townhouses have fled north for the summer or holed up indoors with their air conditioners. Roads dead-end at weed-covered mounds of dirt, hauled in for construction that ground to a halt four years ago in a financial and legal morass.

But when St. Petersburg real-estate agents drive by College Landing's Pinellas Bayway entrance, they don't see a failed development. They see opportunity.

"I LOVE that property," said Liz Wallace of Realty Executives. "I think it has such potential."

Poul Hornsleth of Caldwell Realty echoes her sentiments, calling it "some of the nicest property in all of Pinellas County." The location, he says, is dynamite: on Boca Ciega Bay, near the Gulf beaches, close to Interstate 275 and right next door to Eckerd College, which owns the land.

But instead of a hoped-for financial windfall, the project has been an albatross that already has cost Eckerd $9-million. Half of that money came out of the college's endowment fund, which Eckerd acknowledged last week has been severely depleted without the knowledge of its board of trustees. The discovery of the dwindling endowment led to the resignation of chief financial officer J. Webster Hull and the sudden retirement of president Peter Armacost.

How could a plot of land with so much potential fail so spectacularly? Why did a development that was supposed to include as many as 260 units stall at 52?

The college and developer Richard Benware point fingers at each other in thick files at federal bankruptcy court in Tampa, where the case lingered for more than two years. Real estate professionals say the developer did a poor job of marketing the project while the college's insistance on leasing the land instead of selling it scared off potential residents. Homeowners, too, blame both sides.

"If you don't get a good developer, and you're not paying attention, you get a mess," said Alan Henry, a leader of the College Landings homeowners association. "The developer put the college in a terrible spot."

What is undisputed is that under Benware's direction, the development company used college land as collateral to borrow millions of dollars it never repaid. Benware, a Clearwater developer who built his business converting rental apartments to condominiums, was replaced at College Landings when the project ended up in bankruptcy in 1996.

The college is suing some lien holders and is being sued by others as it tries to settle claims and clear title to the land. The complicated process is expected to drag on for at least another year.

In bankruptcy court filings, the college accuses Benware of deceiving lenders to get construction advances. They say he convinced the college's former chief financial officer, James Christison, to sign documents indicating that the college had received checks it never got. Benware even brought documents he wanted signed to Christison's home when the administrator was recovering from back surgery. The college also claims that one of Benware's employees forged a contractor's signature on statements that subcontractors had been paid when they had not.

Benware could not be reached for comment, but he previously blamed the college for costly delays. And even homeowners critical of Benware agree that the college mishandled the project.

"These guys had no clue about business," said Gene Menendez, one of the homeowners. He said that until recently, it has been difficult to get anybody at the college to make decisions regarding the property.

"Dealing with the college is like a ball game," he said. "You're batting the ball back and forth and nothing ever happens."

When construction began at College Landings in 1993, Eckerd officials thought they could have their cake and eat it, too -- generating income by leasing the land without giving up control of the property. The leases, which contain many restrictions, expire in 2106.

"One hundred years from now, the college has the option to rethink the thing all over again," Eckerd president Armacost said at the time.

The leases were created in part to mollify critics who opposed commercial development of the 78-acre parcel on the northwest corner of campus. Most of the college's land was a gift from the city of St. Petersburg that came with a restriction against its sale or lease for non-college purposes. Although the restriction was later removed, commercialization of the campus was still a sore point among some people on campus and in the community. It didn't help that the first development on the parcel, the College Harbor retirement center, was a financial failure from its conception in 1983.

Both College Landings and College Harbor were envisioned as integral components of Eckerd's Academy of Senior Professionals, a program that brings together students and accomplished retirees.

But the lease arrangement was a tough sell.

"Many people are very comfortable leasing a car, but they don't seem to understand the concept of a land lease," said Ben Friedlander of Big Ben Realty. His company currently has listings on three lots at College Landings, priced from $60,000 to $185,000.

Although common in Hawaii, residential land leases have never been popular in Florida and are not well understood. Friedlander said that in the nearby Vina del Mar development on St. Pete Beach, houses built on leased lots sell for less than those on comparable lots buyers can purchase outright.

"I don't think the pricing at College Landings reflected the land lease situation," he said.

In 1994, the townhouses were priced from $147,000 to $250,000, with buyers also expected to pay monthly maintenance fees.

Marvin Rose, a housing industry consultant, agreed that prices were high at the time, considering the leases and the fact that most of the townhouses do not have a view of Boca Ciega Bay.

"The lease was a serious marketing problem," he said. "After they sold the unit and the location, they had to go sell the whole (lease) concept, which was difficult. . . . They just didn't have the experience and the marketing muscle."

They also were trying to sell homes in a real estate market less vibrant than today's, said Anthony A. Polito, director of the Tampa Bay region for American Metro/Study Corp., which analyzes housing markets nationwide.

"It was just a combination of price points and where we were in the market," he said. "Now we're seeing a lot more upper-end townhomes than we did then."

Nothing is currently under construction at the College Landings site. Eckerd trustees say they want out of the development business and are considering their options. They also say they are now willing to consider an outright sale of the land under College Landings rather than leasing.

"The leasehold experiment definitely had problems," said their Jacksonville attorney, George Ridge.

The success of pricey projects nearby at Dolphin Cay and Bacopa Bay offers hope that a revamped College Landings project could succeed.

"If an experienced developer went in there with the right pricing, a sophisticated marketing program and the right product, they could do very well there," said Rose, who publishes the Rose Residential Reports in Tarpon Springs. "Sites of that size in south Pinellas County are rare."

Eckerd president Armacost, whose 23-year tenure officially ends Friday, said he still believes it could succeed.

"It's still a good idea," he said. "We just didn't implement it very well."

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