Watermark Communities, the winning bidder for thousands of prime acres in Palm Beach County, wastes little time carving up its prize.
How much growth can Palm Beach County sustain? That's the quarter-billion-dollar question being kicked around by Al Hoffman, chairman of Watermark Communities Inc. (WCI). Last December WCI put together a deal to pay roughly $250 million for 15,000 acres of real estate held by the John D. and Catherine T. MacArthur Foundation. A large portion of the tract is farmland in southern Martin County with limited development potential. But the rest -- much of it barren land zoned for high-density development -- is slated for homes, hotels and shopping centers. "Projects like these bring prosperity," says Hoffman, "and prosperity can be a good thing for everybody."
But some local officials warn prosperity could come with a price. The region's once tranquil roadways approach gridlock during peak travel times now; new development will make it worse. Some officials worry about the environmental impact of tens of thousands of new residents. Fueling their concern is an expected avalanche of new projects -- from a slew of developers. Even before closing on the land, and to help finance the huge real estate deal, privately held WCI began selling choice parcels, which fetched $130 million. Among the buyers: DiVosta and Co. and Terrabrook, both of which plan residential communities, and Catalfumo Construction, which plans a massive shopping and entertainment complex. Other parcels from WCI's MacArthur purchase are still on the market.
For its part, WCI is thundering ahead with a collection of mixed-used residential projects.
Palm Beach Gardens will have two, one with a golf course. Another will be in Fort Pierce along the Intracoastal Waterway. In Jupiter, west of the turnpike, WCI has plans for a high-end resort complex with two golf courses, hotel, retail space and upscale housing. WCI also is planning two residential developments on lands that were not part of the MacArthur purchase. WCI's Palm Beach division president, Nancy Graham, the past mayor of West Palm Beach, says the company's mantra in the growth-conscious region is "mixed-use." Combining homes, retail, office and a bit of entertainment is not only appealing to buyers, she says, but it helps reduce traffic. "Above all we want to emphasize good planning, because good planning eliminates the problems before they occur."
But good planning alone does not guarantee home sales. Some analysts wonder if the region can support so many new developments arriving at once. "I don't know who's going to live in all these homes," says Judy Shé, a real estate analyst with Ralph Stewart Bowden Inc. "I can imagine these developers beating each other over the head, competing with one another for buyers."
And there may be more players lining up to compete. Hoffman says WCI remains open to development partners and buyers. Even Jacksonville-based St. Joe Co., a rival and the losing bidder for the MacArthur land, has been contacted, Hoffman says. (St. Joe Co. Chairman Peter Rummell has complained that the MacArthur Foundation unfairly favored WCI's bid ["Developing Rivalry," August 1999]. The foundation, he has noted, owns a minority stake in WCI.)
But WCI hopes to avoid the competition for buyers, tenants and shoppers by diversifying its product offerings. No two developments, explains Graham, will target the same demographic. And developers who purchase tracts from the MacArthur Foundation portfolio are being pre-screened to avoid direct competition with WCI. "After buying land like this, no one can afford to sit on it," says Graham, "You just have to move forward, but do so carefully."
In the News
Boca Raton -- Associated Industries Insurance Services (AIIS), which runs one of the largest workers' compensation insurance carriers in Florida, announced it has found an investor to help fund its expansion into Alabama, Georgia and Mississippi. Bermuda-based reinsurance company Overseas Partners Re will provide AIIS with $23 million -- $8 million for a 22% stake in AIIS and $15 million in additional capital. AIIS is a subsidiary of Associated Industries of Florida (AIF), a Florida business lobby based in Tallahassee that represents more than 10,000 employers.
Florida City -- A plan to build an entertainment complex anchored by an IMAX theater at the gateway to the Florida Keys is dead in the water. Destination Cinema, a Utah-based company that has assembled nearly 10 acres of choice land at the terminus of the turnpike, backed out of the deal, citing reluctant investment partners.
Fort Lauderdale -- Aquagenix (OTC-AQUX), a company that specializes in the removal of unwanted vegetation from waterways, will try to reorganize under Chapter 11 bankruptcy protection. Company officials blame troubles on a failed expansion plan in California.
The recent resignation of co-CEO Steven Berrard has not slowed the expansion plans of AutoNation USA (NYSE-AN). The auto retailer and rental company announced its intention to pay $200 million in cash for 16 dealerships in five states. AutoNation USA now owns nearly 400 new-car franchises and 42 used-car dealers.
Software developer Citrix Systems (Nasdaq-CTXS) is expanding operations throughout Broward County and expects to add roughly 300 jobs over the next two years. To accommodate its growth, the company recently signed a lease for 73,000 square feet of office space in the Cypress Creek area.
Gulfstream Airlines, the little airline that could, continues its rapid expansion throughout Florida and the Caribbean. In July the company announced plans to add 400 new flights per week out of its hub in San Juan, Puerto Rico, increasing total weekly flights to more than 1,600. About 75 employees will be added in San Juan.
Hialeah -- CBS TeleNoticias, the Spanish and Portuguese language all-news network based here, has filed for Chapter 11 bankruptcy protection as part of a restructuring effort. Only days before filing, the company slashed 77 jobs, or more than a quarter of its workforce. CBS TeleNoticias, beamed to 22 countries throughout the hemisphere, is a partnership of CBS Corp. and Mexico's Grupo Medcom.
Miami Beach -- Mount Sinai Medical Center acknowledged that cuts to its 2,900-member workforce will be necessary to slow a fiscal hemorrhage. Officials say teaching hospitals such as Sinai have been hard hit by reduced federal funding.
Miami-Dade County -- In a crushing blow to Miami-Dade Mayor Alex Penelas, voters rejected by a 2-to-1 margin a proposed one-cent sales tax increase to pay for transportation upgrades. The county may miss out on billions of dollars in federal aid for new roads and mass transit expansion.
Revenge Marine, a boat repair and manufacturing company, announced plans to hire an additional 250 employees as part of an expansion program. Revenge Marine, currently housed in a 213,000-sq.-ft. facility on the Miami River, says the expansion will require a capital investment of $9 million.
North Miami Beach -- Despite strong objections from its board, privately held Oceanmark Bank has been placed in receivership by federal regulators, marking the nation's first failure of a savings bank since 1996. FDIC officials say the bank's capital had been depleted, leaving no alternative to a government bailout.
Riviera Beach -- New Gretna, N.J.-based Viking Yacht Co. announced plans to build a 150,000-sq.-ft. deep-water service facility here less than a half mile from the ocean. The facility will cater to sport fishing craft, cruising yachts and mega-yachts. Viking plans to hire 50 employees within two years at an average salary of $31,000.
West Palm Beach -- Helicopter manufacturer Sikorsky Aircraft will reduce its employment by 1,100, or roughly 10% of its overall workforce. The Stratford, Conn.-based company, which employs 520 at its Palm Beach County plant, will offer early retirement packages in hopes of avoiding layoffs. No timetable has been set.
Rep. Willie Logan's wild card status in the upcoming U.S. Senate race just got a little wilder: Logan's campaign has signed as adman Bill Hillsman, the creative force behind the TV commercials that vaulted Jesse "The Body" Ventura into the Minnesota governorship last November. Hillsman's quirky commercials included ads featuring two action figures, Ventura vs. Evil Special Interest Man. Word is still out on whether Logan, D-Opa-Locka, who made headlines when white Democrats ousted him as the party's choice for state House speaker in early 1998, will follow Ventura's lead and run as a Reform candidate.