City of Clearwater approves $500K grant to help redevelop longtime eyesore downtown

City leaders signed off on a grant of up to $500,000 on May 19 to reimburse Chestnut and Myrtle LLC for construction costs of a $3.3 million mixed-use project that would redevelop the long-blighted building at 708 Chestnut St.

CLEARWATER — City leaders say they are not big supporters of a proposed development at the northwest corner of Chestnut Street and South Myrtle Avenue in downtown Clearwater.

They don’t like that the mixed-use project, which includes 5,425 square feet of commercial space on the ground floor, only has 14 apartment units. And they don’t like that it only has 17 parking spaces.

But they really don’t like the “hideous” blighted building that has stood at 708 Chestnut St. for decades.

So, in a 3-2 vote, the City Council, sitting as the Community Redevelopment Agency, signed off on a grant of up to $500,000 on May 19 to reimburse Chestnut and Myrtle LLC for construction costs of the $3.3 million project.

“This is an incredible opportunity for the CRA to not only activate and rejuvenate probably the most significantly blighted property in our downtown core, but also to incentivize sorely needed workforce, more affordable housing,” said Brian Aungst Jr., a lawyer for the group headed by Clearwater developers Raymond Cassano and Shahab Emrani.

He added that after a certificate of occupancy is attained, the developers must keep the 14 units as rental units for at least five years. If they don’t, the city gets its money back.

CRA Director Amanda Thompson said the project checks all the boxes for the city’s downtown redevelopment plan, including adding workforce housing.

Thompson added that private-sector housing projects of this nature won’t come to fruition without incentives like this one.

“The current economy does not support the construction of new multistory housing without public subsidy,” she said. “In the past 20 years, every multistory housing development has benefited from the city or CRA subsidy. I think that’s important to note.”

She added that the $500,000 grant equals about $35,714 per housing unit, which she said is a great deal.

“Typically, if you were looking at a housing project with federal or state funds, they allow up to $45,000 per unit for renovation,” she said, adding that monthly rents would be about $1,100. “So, it’s well within established practices for a per unit cost.”

Council members did not share Thompson’s or Aungst’s enthusiasm, however.

“I’m torn on this project,” Council member Hoyt Hamilton said. “Personally, 14 apartment units doesn’t move the needle for me very far as far as energizing our downtown.”

He said the money might be better used for downtown restaurants and have a bigger impact.

“But a bird in the hand is worth two in the bush as they say,” he said. “We’ve waited a long time and oftentimes, we seem to have waited for that perfect opportunity and it doesn’t seem to come.”

He said the grant would be worthwhile, though, if it proves to developers the city is committed to making a difference downtown.

“It’s not a perfect project in my eyes by a long stretch, but it’s better than anything else we’re being offered at the present time,” he said.

Other options, concerns

Without the incentive, Thompson said the applicants would renovate the structure to create a one-story office building and parking lot or just demolish it and sell the land.

Hamilton said if that was a threat, it wasn’t a very good one.

“Well, an empty lot would look better than what’s standing there right now,” he said. “I don’t have a problem with that, so that threat doesn’t hold water with me.”

Council member Mark Bunker agreed that 14 units weren’t enough, so an office building wasn’t a bad option if the city got to keep $500,000 in CRA funds.

Bunker, who joined Council member Kathleen Beckman in voting against the grant, also expressed concerns about the property’s history and what he said was its longtime connection with the Church of Scientology.

Cassano and Emrani, both members of the church and the Downtown Development Board, paid $750,000 in cash for the property in 2018.

Other council members were far more worried about the limited amount of parking — 17 onsite space and eight offsite — and what that meant for the development’s long-term viability.

Beckman said she also had concerns that the housing units only had to remain as apartments for five years.

Because of the market and nature of the project, Aungst said they would likely stay that way longer.

“This project has no amenities. There’s no pool. There’s no restaurant. There’s no bar. There’s nothing you would anticipate in a luxury condo or luxury apartment,” he said, pointing out it would be hard sell to turn them into something else.

Mayor Frank Hibbard questioned how they were going to build the concrete block complex for only $3.3 million, but said it was the developers’ risk to take.

“We bear some risk for five years and then after that, it’s really on their shoulders whether they build something that is adequate to the market,” he said.