Fate of St. Ed’s site in Riomar is now up to Wells Fargo
STORY BY EILEEN KELLEY AND STEVEN M. THOMAS,
(Week of November 10, 2011)
The fate and future use of the site of the former St. Ed’s Lower School – a 5.5-acre parcel in the heart of old Riomar – is up in the air after ownership was transferred by the school to Wells Fargo Bank, apparently as part of a debt settlement.
The prime piece of land occupies a highly desirable location, surrounded on three sides by fairways of the Riomar Country Club golf course. But only 10 to 12 residential lots could be plated on the site, according to city officials, and the less than vibrant real estate market and zoning restrictions make development problematic – at least in the short term.
Real estate professionals say that unless Wells Fargo were to dump the property at a huge discount simply to get it off its books, a developer who bought it at its most recent asking price of $4.9 million – or even the $3.5 million Wells Fargo seems to have valued it at in the transfer of ownership from St. Eds – would have to charge more per lot than the market currently can stand.
Other proposals floated for the site, including a charter school and a club-connected retirement home, haven’t gained traction.
“It will take someone with political connections and some real vision to get anything done there, and they will probably have to rezone it,” says Ironshore Capital executive Jack Rodgers who has more than 30 years of development experience under his belt.
Children were educated at the Lower School up until 2010, when St. Edwards consolidated all its classrooms at its campus on A1A.
Facing financial difficulties resulting from an overly ambitious expansion plan launched in 1999, the school put the parcel at 2225 Club Drive across from Riomar Country Club on the market for $5.49 million.
To make the property more saleable, the school asked the city to change its future land use designation to allow residential development.
“The way it was designated, it could only have been used as a school or a public utility,” says Vero Beach Planning and Development Director Tim McGarry. “The school came and asked to have the restriction taken off and the City Council approved that change late last year.”
When the restriction was lifted, George Christopher and other Riomar residents were concerned that zoning might be changed to allow a multifamily development, which they didn’t think was in the best interest of the neighborhood.
“The city’s vision plan strongly emphasizes protecting the character of neighborhoods and multi-family would not be appropriate in a single family neighborhood,” Christopher says. “The City Council came back in May and made it clear that any residential development would have to be single family.”
While the Council’s May vote allayed residents’ concerns about increased density, it didn’t get rid of other development challenges the property would face if purchased.
“If you tear down the old school building and redevelop the site as residential, you have major cost to demo and clean up and all the costs to put in infrastructure as well,” says Dale Sorensen Jr., managing partner of Dale Sorenson Real Estate, Inc. “I think all of those reasons are keeping the value below $4.9 million.”
“That price didn’t make any sense for single family development,” says McGarry. “It you divide that per unit, no one is going to pay that much for lots that aren’t on the water. Some of them are on the golf course and it is a nice area, but it would be too high.”
Like the rest of Riomar, the school site is zoned R1-AA, which requires a minimum lot size of 15,000 square feet and allows homes as large as 5,000 square feet to be built on the lots.
Divide 15,000 into 242,000, the number of square feet in 5.5 acres, and the result is 16.
If 16 homes could be built, and the property was purchased for $4.9 million, a developers basic per-lot cost would be around $300,000. Add demolition, clean-up and infrastructure costs and the lots would have to be sold for at least $500,000 to make a profit.
But 16 lots can’t actually be plated on the parcel.
“Onsite drainage requirements and streets would take up a lot of space,” says McGarry. “Ten or 12 units would be the most you could fit in there.”
With 10 lots, a developer would have to get about $700,000 to make money reselling lots to builders, or factor that figure into the cost of a custom-built home, which seems more than the market will bear at the present time.
“A lot that size in Riomar might go for $600,000 in a good year,” says Rodgers. “And this isn’t a good year.”
“We get inquiries from people wanting to do other things, including using the existing building and adding cottages, but nothing has worked out,” says McGarry. “I have heard of everything from making it a retirement home for members of the Riomar County Club to different kinds of educational institutions.”
The country club, which is influential through its members who live in Riomar and in its own right, would likely object to another school on the site because it would restrict the sale of alcohol during school hours.
A luxury condominium development would be a good fit financially because the land and development costs could be spread across as many as 30 units, but the City Council’s revision of the comprehensive plan in May seems to definitively rule that out.
“You can’t do any type of attached housing there,” McGarry says.
A condominium plan would also reawaken opposition in the neighborhood.
“Whenever people come to me with ideas, I tell them to go and talk to the residents in the area before they go too far,” McGarry says.
“The historic building itself is interesting,” Rodgers says. “My gut tells me it could be something.”
The 1928-vinatge school is not protected by any official historic designation and can be demolished by whoever buys the property if it suits their plans, according to McGarry.
“The only thing we would require prior to any demolition would be the opportunity to document the building and look at possibly relocating parts of it. Our preservation ordinance gives us a 30-day window to take photographs and record information about the structure before it is torn down.”
Residential development is not out of the question, but seems more likely a few years down the line.
“I think the long-term prospects are excellent for the property,” says Robert Gertz, president of St. Clair Builders. “Maybe not this year, maybe not next year, but eventually there is going to be a need for lots like that.”
Gertz, who inspected the property with thought of building custom houses there last year when developer George Heaton was trying to put together a 10-home plan, says such a project is feasible if the land is priced right.
“It wouldn’t be a difficult proposition. You just have to go through the steps.”
Gertz would like to see a development with its own distinct identity built on the site but says the city planning department wants a development that will blend in with surrounding streets.
The property was taken down from the MLS when Wells Fargo got control of it in October and the price the bank tries out when the parcel is relisted will do a lot to determine the future of the site.
If the price accurately reflects the current post-boom market, taking into account how much a developer will have to spend to entitle it and sell it at a profit, houses could go up within a year or two. If the bank prices it above the market, it is likely to sit for a long time.
“They are entitled to build single family there and if the land is priced right it will sell,” says George Christopher. “We have houses in this neighborhood that sit on the market and the owners face facts and lower the price and the houses sell. Others won’t lower the price and the houses don’t sell.”
Christopher says he isn’t concerned about the specter of vacant property in the neighborhood
“St. Edwards has done a good job taking care of the property and the bank will probably do the same. If not – we had a foreclosed property with weeds growing up around it and we called the city and Code Enforcement came out and within 24 hours everything was trimmed and mowed.”
Indian River County Historian and Riomar fan Ruth Standbridge isn’t so sure. “Do banks maintain [properties they own] well?” she asks. “I think with banks, you never know what is going to happen there. I would hope this city’s code enforcement would step in if it got out of hand. But there is really no telling what is to come.”