A foreclosure lawsuit holding the city’s single most prime piece of vacant land in litigation could be resolved later this month when the suit involving the 14-acre former Sarasota Quay property goes to trial before a judge.
The property, located at Fruitville Road and U.S. 41, has been in litigation for 21 months, after a $1 billion proposed project fell apart when Dublin developer Patrick Kelly and his partners felt the burn of the real-estate crash. They were unable to stay current on the mortgage.
Twelfth Circuit Court Judge Charles E. Williams ordered the trial to be held May 20 to May 22, with a mandatory docket sounding May 16. The upcoming hearing could mark an end to the longstanding dispute between lender Anglo Irish Bank Corp. and the previous owners, including Kelly, a Dublin developer, and partners.
Kelly and partners purchased the Quay property in 2004 for $60 million. Two years later, they doubled the size of the project when they spent $20 million to acquire the El Vernona condominiums next to the Quay site. The group later obtained city approval to construct as many as 600 condominiums in four high-rise towers, about 150,000 square feet of retail space and 70,000 square feet of office space.
Kelly’s Irish American Management development company defaulted on $110 million in loans and interest, according to paperwork filed with the Sarasota County Clerk of Court. Anglo Irish Bank brought about foreclosure action in June 2011.
A ruling favorable to Anglo Irish Bank Corp. would likely mean the Irish government-run bank would begin marketing the property between the bay and U.S. 41, at 333 N. Tamiami Trail, for sale to recoup losses.
David Boyette, the lawyer representing Anglo Irish Bank Corp., declined to comment on the upcoming hearing or the prospect of selling the 14 acres.
Over the past few weeks, a handful of investors and developers have shown informal interest in the property.
“People have heard it is going to court again and that’s why they have called and asked about (the property),” said Sarasota senior planner Courtney Mendez.
But, there are numerous challenges to building a project there — ranging from two acres of city-owned right of way cutting through the property, to necessary traffic improvements that a developer would be responsible for funding.
The parcel remains a key piece of land that could spur other development on the bayfront and downtown.
“That is the most important property in the city,” said City Commissioner Shannon Snyder.
A mixed-use development on the property would have a profound ripple effect on the real-estate market and spur other development, Snyder said. He is considering a trip to Ireland to meet with officials and speed along a resolution if the upcoming local court hearing doesn’t prompt one.
“It would radiate north into the Central Cocoanut area, Rosemary and the North Trail,” Snyder said of a project.
“We can’t do anything with the cultural district until we get that property situated,” Snyder said. “It all hinges on that one property.”
Andy Dorr, of Sarasota-based Githler Development, had been previously watching the property as a possible development site.
“I’m sure a lot of people would be interested in it,” Dorr said.
As for Githler Development making a pitch, Dorr said it is too early to tell.
The Quay land is considered one of the best tracts for development statewide, with bay views and close proximity to downtown and upscale hotels the Ritz-Carlton, Sarasota and the Hyatt Regency Sarasota. In March, West Palm Beach-based the Kolter Group submitted plans for a two-tower hotel and condo project just south at the corner of U.S. 41 and Gulfstream Avenue.
Even if a judge assigns ownership, potential buyers would have to clear several hurdles before developing the land.
It took Kelly two years and $3 million in engineering and architectural costs to draw up a plan and reach a development agreement with the city. It would take a new developer just as long.
“The party who wants to buy it needs to have faith they can create something enticing enough that the city will agree to,” Dorr said. “They will have to design a project and go through site plan hearings and development agreement hearings.”
Over the past few years, at least two development teams have pitched plans to build on the former Quay, but those projects never neared fruition — due mostly to the lengthy foreclosure legal action.
In addition to Anglo Irish’s legal action, there are outstanding mortgages, which could also affect the title to the property. The property is currently in the name of Irish American Management.
The property Kelly and his partners purchased for $80 million in 2004 prior to the real-estate crash is now likely worth a fraction of that.
Dorr estimates the property is worth somewhere between $15 million to $20 million. “It’s a huge fall,” Dorr said.