Luxury condo developer gets 6-month extension, will seek more minority subcontractors – News-Press

Editor’s note: This story has been rewritten from its original version to clarify the role of Suffolk Construction in an agreement between developer Soho Sight LLC and the Fort Myers Community Redevelopment Agency. 
The developer of a luxury condominium complex in downtown Fort Myers will get a break on the start of construction while its contractor searches for minority-owned businesses it can hire for parts of the work.
Fort Myers city council members, sitting last week as commissioners of the Community Redevelopment Agency, agreed to give the Soho Sight LLC of Tampa, developer of Palmera on the River, a six-month extension on starting the project. 
In an agreement with the city, Soho Sight LLC was to begin work by Dec. 31. The start date has been extended to June 30, 2022, with completion one year later. 
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In seeking the extension, the developer also cited unforeseen delays due to the COVID-19 pandemic, the need for design improvements, and a longer than anticipated permit review process. 
During the extension, developer Soho Sight LLC promised that minority subcontractors hired for the job will get 10% of the  the work.
The developer had committed to hire minority contractors for 15% of the project.
Finding enough minority contractors to reach that goal has been difficult. The  Community Redevelopment Authority will work to help more minority businesses qualify.
“The goal is not to only be 10 percent, the 10 is to give you a guarantee that I don’t think any other city project has,” said Soho’s lawyer, Bruce Strayhorn of Fort Myers.
Palmera on the River is planned as a 221-unit community to be built at First Street and Evans Avenue. Its projected cost, when the project was approved, was $56.6 million.
In addition to the construction delay, Soho also asked for a reduction from 15% to 10% in its original commitment to hiring minority businesses for 15% of the work.
One local minority business executive, Ishmael Rolle of South West Florida Professional Contractors Inc., told the CRA board that reducing participation by minority-owned companies would be a “stab in the back” to minority contractors.
“How is that going to help minorities in Lee County, at least as far as business is concerned?” Rolle said. “How is it going to prove that the city of Fort Myers is behind the minority businesses in our area?”
Suffolk Construction, a Boston-based contractor with an office in Estero, was hired to build the apartments and has been seeking minority contractors.
The company ran daily newspaper advertisements during an 11-day period in late September and early October seeking minority enterprises to bid on subcontracting work. 
The original construction timetable was set when a tax concession for the developer was originally approved for a break on its property tax payments.
The tax break, called tax increment funding, lets the developer of the project use part of its property tax payments on the new buildings to pay construction loans.
Created to stimulate construction, especially in distressed areas, the TIF program has also been used for several high-end projects in recent years.
Those high-end projects include the  318-unit recently completed  City Walk, which cost  $75 million; the $56.6 million First Street Apartments, a 274-unit apartment complex planned at the former site of the United Methodist Church; and The Irving a $25.5 million, nine-story development approved last month to bring urban hipsters to downtown Fort Myers.
City Council member Fred Burson, who has a long career in commercial development, said sometimes it is difficult to find qualified contractors to reach the 15% minority contractor objective set by the city.
“It’s not because they didn’t try. It’s because the respondents weren’t qualified to do the work that needs to be done on the project,” Burson said. “When you add it all up at the end of the day they can’t get to 15%, but it’s not because of lack of trying.”
Community Development Director Michele Hylton-Terry told the board that more can and should be done to help minority-owned businesses participate in the program. 
“We have (minority businesses) that are operating at different levels, and I believe we can provide assistance to help them participate,” Hylton-Terry said. “Just because they are registered does not mean they are able to participate at the level that’s required. What can we do to shore them up? I think there are things we can do.”
Some suggestions for improvement came from Roy Kennix, owner of a minority business and a development consultant for an affordable housing complex in Dunbar.
Kennix said providing timely notification of bidding opportunities and direct technical assistance in preparing competitive bids, as well as assistance in cost estimating — an essential component of successful construction bidding — would help businesses qualify for more work.
Members indicated that a workshop session would be set in the future to discuss changes to the program.
The CRA board also approved the sale of the right to build a Marriott Corp. franchised hotel in downtown Fort Myers. 
The project was given initial approval in October 2020 and approved for tax increment funding that would mean the developers could use 95% of the increase in property taxes generated by the hotel to pay back construction loans.
Ownership will be transferred to a new entity, 30% of which will be controlled by David Frye through FTM Hotel LLC. Despite holding a minority share in the new ownership, FTM Hotel will control the project as general partner.
“The bottom line is the controlling parties of the new entity are the developers,” said CRA attorney Berk Edwards. “That is something we have always strived for, to see that the group that brought forth the application will call the shots.”
With only six members present, board members were unable to approve the assignment for sale of the development agreement for the City Walk at West End project.
City Walk has been built, and the sale was scheduled to close Dec. 9. Council members were stymied by 3-3 votes on how best to protect the city’s interest in $5.5 million in tax increment financing provided to the project. The issue was deferred to a future meeting.
Some commissioners worried the city could potentially lose money if the new owner rather than the redevelopment authority gets the right to take insurance payments or eminent domain proceeds.
“I don’t know why we should be in a weaker position when it’s not fully explained to me why we need to be in a weaker position,” said board member Fred Burson. “I don’t want to be changing the TIF agreement to asking us to step back from something they agreed to when they came in looking for the award.”
City Walk includes 318 residential units, a garage, 14,000 square feet of office space, and a 12,000-square-foot amenity center.

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