Four years after the city agreed to, and later backed off of, a deal to sell a portion of the former Apalachicola High School complex for a developer to build a low-income housing project, Denton Cove is back on the front burner.
Hearings before Circuit Judge Charles Dodson, in a Tallahassee courtroom Monday morning, will take the first step towards deciding whether the school board is obligated to sell the entirety of a nearly four-acre portion of the high school grounds at 17th Street and Avenue L to the developers of Denton Cove, to be turned into 52 affordable housing units, funded by federal tax credits.
In addition, Dodson is being asked to consider a request from a local non-profit of civic activists, Historic Apalachicola Plat Preservation Inc. (HAPPI) to intervene in the suit, which would enable them to supplement the arguments being made by the school board, whose position HAPPI supports.
“HAPPI was formed to advocate for protection of the historic grid. If this project was built, it would obliterate the grid,” said Apalachicola resident Bonnie Davis, a spokeswoman for HAPPI. “Our ultimate goal is to preserve the grid.”
At Monday’s hearing, the school board, represented by Tallahassee attorney David Willis, a colleague at the law firm of the district’s labor attorney Leonard Dietzen, is asking Dodson to grant a declaratory judgement that would obligate it to sell just 2.04 acres of the entire tract, and not the additional 1.62 acres that make up what once were streets and alleys that crisscrossed the land.
In Dec. 2014, the school board signed a deal for about $226,000 to sell this 2.04-acre portion of land, which all side agree was theirs to sell. At that same time, the city of Apalachicola signed an initial purchase agreement for about $178,000 for the 1.62-acres that were streets and alleys prior to the city vacating them when they transferred the land to the school district in the mid-1940s.
Six months after these purchase agreements were inked, neighbors that now form a core group of HAPPI’s backers rose in opposition to Denton Cove, contending the development was an outdated and ill-conceived concept that would concentrate low-income residents and create unmitigated infrastructure demands in the rapidly changing neighborhood, increasingly full of rehabbed single-family homes and an influx of retirees.
Apalachicola city commissioners then decided against vacating the streets and alleys, setting the stage for a legal challenge by Denton Cove on possible civil rights violations by the city. That suit was resolved by U.S. District Judge Robert Hinkle in the city’s favor, with no finding of Fair Housing Act violations.
Following his decision, the city bowed out of the entire matter, insisting they no longer owned the streets and alleys in the first place and were in no position to sell them. This left the school district to duke it out with Denton Cove whether they were obligated to sell just the 2.04-acre portion, or the entire acreage.
After receiving a $15,000 fee and an agreement to extend its sales agreement with Denton Cove through two more $10,000 annual payments, the school board in July 2016 rejected a Denton Cove offer to accept $310,000 for the entire parcel.
The deadline to close by July 31 came and went, and the school board went to court to seek a declaratory judgment that would obligate them to sell only the 2.04 acres specified in their original contract, and no additional land.
Denton Cove is arguing the district’s refusal to convey the entire property runs contrary to the intent of the original sales agreement, and that when the city abandoned its rights to the property in the federal lawsuit, the schools were enriched at Denton Cove’s expense, and that the company is entitled to reimbursement for this, as well as damages for “breach of the implied convent of good faith and fair dealing.”
Davis said HAPPI supports the school’s position and in addition, as their Tallahassee attorney Kent Seyfriet wrote in this motion, “has a slightly different perspective on the dispute – that of preservation of historic plats, streets, alleys and green spaces – which has led it to uncover key additional historical facts that provide a different path to the same result.
“HAPPI’s point of view and evidence could bear centrally on the court’s decision in this case,” he wrote. “Without HAPPI’s historical perspective, the court may be forced to decide this case, which has import far beyond the parties here, based o-n an incomplete record of facts.”
Denton Cove’s Orlando attorney, Rebecca Rhoden, argues HAPPI has no direct interest in the matter in litigation, and that alleging that a party will “gain or lose” as a result of the court’s judgment without factual support is insufficient.
“We believe we have a historical perspective that is critical for the court to hear,” said Davis. “The ultimate issue is whether the contract can be used to compel the school board to convey the streets and alleys. We believe we have a contribution to help persuade the court what the right answer is.”
For its part, Denton Cove has been diligent in gaining waivers from the Florida Housing Finance Corporation (FHFC) for selling to investors the roughly $9.4 million in low-income housing tax credits ($940,000 annually for 10 years) that it was first allocated in 2015.
Because of the city’s decision not to vacate the streets and alleys, and the subsequent entanglement in the federal lawsuit, Denton Cove argued successfully that through no fault of their own, they couldn’t have the project completed by the original date, and received two carry-over agreements that extended that deadline to the end of 2019.
They argued that in addition to the litigation, “the equity markets unexpectedly suffered a significant pull-back,” and that along with a rising interest rate market, Denton Cove needed more time to for the transaction to be underwritten.
In its latest request for a waiver, filed Nov. 26 with FHFC, Denton Cove’s attorney write that it is “highly unlikely” the project could be placed in service by the end of 2019, since construction, which can’t begin until the current case is over, would take between 12 and 18 months.
“The potential tax credit investors are unwilling to invest millions of dollars in (Denton Cove) if there is any chance that it may not receive credits,” wrote their attorney.
Granting a third waiver, wrote Denton Cove’s attorney, “would increase the probability that a tax credit investor will commit to (Denton Cove) and (FHFC) would recognize the goal of increasing the supply of affordable housing through private investment in persons of low-income, and recognize the economic realities and principles of fundamental fairness in developing affordable rental housing.”
Taylore Maxey, press secretary for FHFC, said Denton Cove was also awarded this year a $2.25 million viability loan for gap financing, after they successfully argued that the estimated cost of the project had grown over the past three years
Also, Denton Cove has requested an extension on deadlines with the Internal Revenue Service based on rules which allows states to provide carryover relief for developments located in major disaster areas.