Redevelopment project stalls, ‘looks like a bomb went off' in Old Naples, drawing complaints

Article Courtesy of The

By Lauren Layden

Published December 24, 2018

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On Nov. 11, the city's code enforcement manager, Roger Jacobsen, inspected the construction site and found it in violation of four city codes, including one that prohibits "unsightly conditions" and another that requires keeping the walls of a building enclosed while demolition work is done.  
 

The notice of violation gave Zea seven days to correct the problems, but with a stop-work order still in effect, he couldn't touch the building.

Looks like a bomb’ went off

When Zea didn't remedy the alleged violations, the case ended up going to the city's Code Enforcement Board. That board, after a public hearing Nov. 29, ordered the developer to take corrective action or face fines. The board voted unanimously to levy a fine of $250 a day if Zea didn't come into compliance within 30 days.

"This looks like a bomb went off in a very prominent part of the city," board member Scott Kohls said during the hearing.

Also at the hearing, Jacobsen said the developer would need to remove the building in question and apply for a new demolition permit to fix the violations, which Zea vehemently opposes.

Jacobsen, who is also the city's harbormaster, told the Code Enforcement Board that while working at the nearby Naples City Dock, he saw the contractor busting out walls and floors dropping one by one. That triggered concerns the entire building would be demolished without the proper permits.

The Bay Club of Naples project has stalled, as the developer fights a foreclosure, stop work order and code enforcement violations he describes as "bogus."


 

Yet, the work also seems to have dragged on too long, Jacobsen said. He has received many complaints about it from neighbors who are unhappy about how the construction site looks, he said.

"The goal of code enforcement is compliance," Jacobsen said. "We would love to see him finish this building."

 

Zea did not attend the code enforcement hearing. Instead, he provided a letter to the board, stating he thought it would be "best for this arena" and that the city attorney had "recommended that I not personally appear on these matters."

No plans to demolish the building

In his letter, Zea expressed his frustration with the city. He said he didn't understand why the stop-work order was issued or why it's still in effect when there are no plans to demolish the building.

Further, Zea told the board he had followed the "belt and suspenders approach" of having a private inspector oversee the permitted work as well as working closely with city building official Craig Mole.

Zea said Mole visited the site in October and questioned the general contractor about the work being done and in an email assured the contractor that "he was good with the plans and approved what we were doing."

This isn't the first time Zea has faced permitting problems or code violations in the city. In his letter, the developer said he didn't understand "why all of the projects we are involved with have some kind of quirky outside-the-box standard that we must meet."

At the code enforcement hearing, Mole said the drawings for the permitted work didn't include any demolition. He couldn't be reached by phone or email for further comment.

Zea and his general contractor, William Must, owner of The Rock Custom Homes Inc., said the necessary permits have been issued for the work that has been done.

Building height at risk

The building that is being altered doesn't meet city code because it stands taller than 42 feet, exceeding the height limit for commercial structures in Naples. However, since the building existed before the stricter rules took effect, it was grandfathered in under the old code and considered in compliance by the city.

By leaving parts of the building up, Zea's project can exceed the city's height limit, he said in an interview with the Naples Daily News.

To get a demolition permit, Zea said, he would have to go through the city's approval process again and request a deviation for height, which he thinks he won't get.

If his project is limited to 42 feet, he said, he'd lose two penthouse condos, cutting into the profitability of the development.

There's $15 million to $20 million in value in the top floors where the condos are planned, Must said.

The proposed project includes two buildings on a little over 5 acres, with a total of 10 residential units, spanning from nearly 3,500 square feet to more than 4,000 square feet.

The development also would have about 5,000 square feet of space for retail and office uses, plus parking.

In 2015, the developer paid $2.7 million for the smaller Old Cove Professional building and $4.2 million for the larger one, often called the Remington or just the yellow building, according to property records.

In case you missed it: Luxury Crayton Cove condominiums planned in Old Naples

The north building is virtually complete, except for some of the finishing touches. It replaced a quaint but well-worn one-story commercial building at 1163-1189 Eighth St. S.

Like Zea, Must, the general contractor, said he doesn't understand what the issues are with the south building. He said the developer is leaving the stairwell of the current building in place, which will be attached to the new structure.

When it comes to removing parts of the building, the city's code doesn't say "how much is too much" to keep the nonconforming status, Must said.

Hopes for a compromise

The contractor said he met with Jacobsen at the construction site recently to try to clear up what he sees as a big misunderstanding, and he hopes the disagreement can be resolved without the requirement of a demolition permit.

"There was never an intention of taking the whole building down," Must said. "It has always been selective demolition work."

With the fate of the project in question, the lenders have become more concerned about the developer's ability to finish the development and pay them back.

On Dec. 12, Acres Capital, the loan administrator, asked the judge for an emergency hearing in its foreclosure case to consider appointing a receiver to take over the project.

In a letter to Circuit Court Judge Frederick Hardt, Tampa-based attorney Alice Huneycutt, who represents the lenders, argued there's an urgent need for a receiver to "work with the City of Naples to avoid the loss of the property development entitlements and permits."

The permit for the stalled construction work will expire Dec. 29. However, Zea said he plans to file for an extension.

The lenders estimate the potential loss at $8 million if the development rights for the second building are lost. Plans show six condos in the building, including two penthouses on the top floor.

"It is alarming that no one on behalf of the defendants attended the code enforcement hearing to defend," Huneycutt wrote in the letter to the judge.

Zea said there's no need for a receiver to take over the project and that he'll fight the lenders on it.

"I do have money to complete it," he said. "We're waiting for the city to lift its bogus stop-work order."

Zea has sued the loan administrator and lenders in U.S. District Court in Fort Myers, alleging breach of contract, fraud and torturous interference.

The dispute is over a $28.5 million loan for the project. Zea said it was never fully funded but that he was wrongly charged "100 percent of the interest" on the entire amount of the loan.

"It's outrageous. It's ridiculous. It's a whole lot of things," he said.

In the foreclosure suit, the lenders accuse the borrowers of defaulting on the loan and violating the terms of the loan agreement in multiple ways, including by failing to stick to the construction budget.

Zea said he is starting to think there's a "coordinated effort to put me out of business," with the lenders, city officials and residents working against him.

"I'm not going to go away," he said. "They are not going to get any satisfaction."

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