By William Hladky, FloridaBulldog.org
Almost $1 million in taxpayer loans may never be repaid due to the forced sale of Sixth Street Plaza, centerpiece of Fort Lauderdale’s ambitious plans to revitalize the Sistrunk Boulevard corridor, at a public auction on May 5.
Broward County Circuit Court Judge Carlos Rodriguez ordered the sale of the troubled 22,825-square foot office and retail plaza at 900 NW Sixth St. in November at the request of Davie-based Regent Bank.
Regent Bank gave Sixth Street Plaza Inc. and its president Maria J. Freeman a nearly $2.3 million mortgage in 2005 to construct a “flagship” project as part of Fort Lauderdale’s efforts to revitalize the Sistrunk Boulevard corridor. The Sixth Street Plaza opened in 2010, but has never been successful in attracting more than a handful of long-term tenants.
Freeman, a general contractor, is vice chairman of the Fort Lauderdale Housing Authority.
At the same time in 2005, the South Florida Regional Planning Council loaned $300,000 to Sixth Street Plaza. In 2008, the Fort Lauderdale Community Redevelopment Agency (CRA) loaned the project an additional $447,990 and made a second loan a year later worth $250,000.
Unfortunately for taxpayers, the loans by the planning council and the CRA are “subordinate,” meaning that if the public auction does not raise more than the $2.1 million owed the bank, no monies will be left over to repay them. Zillow, an online real estate database, places the value of the Sixth Street Plaza building at 900 NW 6 St. at $905,275.
The South Florida Regional Planning Council is a quasi-governmental agency set up to address regional problems in growth, land development and transportation. The Fort Lauderdale CRA is one of nine city CRAs in Broward County that direct tax dollars to areas to clean up slum and blight. The Sistrunk corridor is called the Northwest-Progresso-Flagler Heights area. The city commission sits as the CRA board.
A WAY TO RECOUP?
The CRA may be able to recoup their investment if it buys the plaza at auction, said Frank Schnidman, Professor of Urban and Regional Planning at Florida Atlantic University.
Schnidman told FloridaBulldog.org that by owning the plaza, the CRA would both avoid the $9,513 a month in office rent it now pays to Sixth Street Plaza and control the balance of the property so it could find tenants to “put feet on the street.” Once the vacant tenant space was filled the CRA could sell the property to a private buyer, allowing the CRA to recover the purchase price and return the property to the roll, Schnidman said.
The CRA offices are located on the second floor of the Sixth Street Plaza.
Fort Lauderdale Mayor Jack Seiler said in an interview that the auction price of the Sixth Street Plaza will influence what the city does. He declined to say whether they city would consider bidding. The commission, sitting as the CRA board, will discuss the matter on Feb. 17.
Escalating costs plagued the Sixth Street Plaza project.
In November 2005, Regent initially loaned Sixth Street $1.45 million. Seven months later, the loan was modified and increased to $1.9 million. In December 2007, the loan was modified again and increased to almost $2.3 million.
The CRA made its first loan of nearly $450,000 to the project in June 2008. It had already had contributed $400,000 for infrastructure improvements. The $400,000 was a grant, not a loan.
According to the CRA minutes, then Fort Lauderdale Mayor Jim Naugle noted that the project had encountered “various problems” and wanted Freeman to personally signed the loan, saying that without it the CRA would be “guilty of malfeasance.”
A PERSONAL GUARANTEE
Freeman personally guaranteed the loan. The minutes did not elaborate on the problems.
Thirteen months later, on July 7, 2009, Freeman was back before the city commission asking for another $250,000 in CRA tax funds.
The money was needed primarily to pay off mechanic liens, but this time Freeman faced a different commission. Jack Seiler had replaced Naugle as mayor and Romney Rogers had joined the commission.
An audiotape of the meeting reveals that Seiler and Rogers grilled Freeman and Alfred Battle, CRA director for the Sistrunk corridor, for 90 minutes.
Rogers pointed out that Freeman’s project was $3.2 million in debt and the Six Street Plaza was appraised at $2.4 million. “So you’re underwater $800,000 at least…Has anyone really crunched the numbers?” Rogers asked. Battle admitted such an analysis had not been done.
Seiler asked, “If we don’t give this money, you’re essentially going to lose the property?”
Freeman didn’t answer the mayor’s question, but said, “The project has done what it is supposed to have done as far as its ability to attract tenants.”
Bobby DeBose, who also had joined the city commission, came to Freeman’s defense. “We need to commend her for jumping in,” he said, calling Sixth Street Plaza a “flagship” project that was needed to revitalize the “blighted,” predominately black Sistrunk Boulevard corridor.
“We know it is difficult,” he added.
Rogers said Battle and his staff “should be all over this thing and more involved…It shouldn’t have gotten this far…If it is a flagship you should treat it like a flagship.”
FREEMAN A ‘PIONEEER’
Turning to Freeman, Rogers said, “You’re a pioneer…I applaud you for that…but maybe you should have reached out (to the CRA)…quicker…I see a real problem coming down the pike…I’m sitting here looking at this package and I’m not feeling good about it because I don’t have enough information to make a prudent decision.”
Rogers nevertheless voted to approve the second CRA loan with the stipulation that Battle made sure Freeman settled the mechanic liens and paid any other outstanding bills. Only then Commissioner Charlotte Rodstrom voted against the loan.
Seiler told FloridaBulldog.org he voted for the second CRA loan to salvage the Sixth Street Plaza project. “If we did not assist with the loan, the property would not be able to survive,” the mayor said, adding that the loan shored up the project in the middle of the recession.
Freeman is well known to city hall and Broward political circles. In addition to her service on the Housing Authority, she has served on the CRA’s Northwest/Progresso/Flagler Heights Redevelopment Board, the city Marine Advisory Board, the city Planning and Zoning Board and the city Planned Unit Development Zoning District Advisory Committee.
Freeman is also active politically. The Sun-Sentinel reported that in August 2012 Freeman hosted a fundraiser for Dale Holness who later was elected to the Broward County Commission.
The second CRA loan did not stabilize Freeman’s finances. She filed for Chapter 13 bankruptcy protection in April 2012, but her petition was soon dismissed due to her failure to file additional paperwork. She filed again nine months later as a reorganization bankruptcy under Chapter 11, claiming she “has experienced difficulties caused by the significant downturn in the real estate market.” That action is pending
Since September 2009, city CRA minutes reflect no further discussion about the Sixth Street Plaza.
Nevertheless, Seiler said that city staff kept him informed about Sixth Street Plaza’s financial difficulties and its pending foreclosure, although he did not know Freeman had filed for bankruptcy protection.
Sixth Street Plaza’s financial troubles came about from the lack of tenants, Seiler added.
Even with the plaza’s foreclosure and the pending public sale, the mayor believes the Sistrunk corridor will prosper. The property has increased in value and the improving economy may make the plaza a good investment for whoever takes it over, he said.
Cheryl Cook, South Florida Regional Planning Agency’s loan program director, said Freeman has not repaid the planning agency’s loan. “You know we will be paid last,” she said.
When contacted, Freeman said, “I am working with my bank.” She declined further comment.
Battle would not be interviewed, but issued a statement via city public affairs officer Petula Burks.
“We will have an agenda item dedicated to this issue on Feb. 17 during the CRA meeting. Our conversation with the CRA board/city commission is expected to include a discussion about the status of the foreclosure and our lease,” the statement said.