Tuesday, July 28, 2009

Termination Letter

See PDF Attachment to read the termination letter.

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View as PDF: termination_letter_20090727.pdf

John R. Jacobsen's response to termination letter


To: City Council, CRA Board of Commissioners

From: John R. Jacobsen

Date: July 28, 2009

Re: The next phase of the negotiation process for the former Golf Club Property: posturing and/or bluffing

Last night, July 27, 2009, I received a copy of a letter from the Ryan Companies on behalf of Florida Golf Ventures to the Trust for Public Land unilaterally terminating the Purchase Agreement with the Trust. TPL and Florida Golf Ventures had signed a Purchase Agreement on April 7, 2009, after months of negotiations for a purchase price desired by Florida Golf Ventures, and to be confirmed by an agreed upon appraisal methodology.

We understand that one of the major delays in the negotiation process has been the unwillingness of the appraiser to provide a professional opinion of value. This unwillingness by the appraiser has resulted in a serious problem in determining a value under the Agreement. Florida Golf Ventures sought a value we understand that was in effect seeking a bonanza based upon the unsupported allegation that they could place a regional mixed use shopping/office complex on the Golf Club parcel--with a mixture of densities and intensities so huge for the site that no realistic market study would come close to justifying this dream, unless you were to say that this truly "transportation access-challenged site" could capture ALL of the market demand for the entire region, and then some. The appraiser and the parties were unable, as we understand, to come to an agreement on methodologies on which to base the appraisal that would justify such a value, and therefore the appraisal has yet to be completed.

Despite that, as we understand, TPL made a firm offer based on a previous appraisal done for Florida Gulf Ventures’ bank over a year ago when the property was in the process of refinancing. While the CRA is not privy to the negotiations between the two parties, we understand there had been some progress made.

This unilateral termination by Florida Golf Ventures in no way ends the negotiations, as we believe this is just another strategy on the part of the seller to try to get a higher price or an attempt to negotiate without TPL’s involvement, and directly with the CRA in the hope that the CRA will offer a better price than one offered by the Trust. We believe that the Trust will remain open to further discussion despite the termination of this Agreement, and look forward to a new round of talks between TPL and Florida Golf Ventures.

It is important to note that the termination letter indicates that there are some basic misunderstandings on the part of the seller. This may have been wishful thinking on their part or simply a desire to get a price higher than an appraisal would justify. “Florida Gulf Venture entered into the agreement with the understanding that TPL, with its resources and relationships, had access to state, federal and private grants to fill any gap between the community's expectation and ours. To date, we have not seen the benefit of your relationships to fulfill those early commitments.”

Any state, federal or private grants that TPL would seek would be on the CRA’s behalf for the ultimate purchase of the property, not as a gift to the investors to meet any made-up value they placed on the property above what the property was worth. It is also important to make clear that this process was not about the “community’s expectations and ours,” as Florida Golf Ventures states, it was about negotiating a fair price based upon the appraised value of the land.

As TPL staff and CRA staff discussed at a recent meeting held with the knowledge and consent of Florida Golf Ventures, without an appraisal, and with Florida Golf Ventures having prepared a preliminary plan that was not approved by P&Z and such denial affirmed upon appeal to Council, the only document that provided any indication of value was the appraisal done more than a year ago on the same property. This is the appraisal that the owners commissioned in relation to the refinancing of the property, an appraisal that TPL had permission from the owners to show the CRA staff.

As we understand, TPL’s offer, based upon that year old appraisal, was indeed generous--but one that at least was supported by an appraisal, rather than simply a real estate speculator's dream payday.

Now that the owners have unilaterally terminated the Purchase Agreement, we will have to wait and see what they will do next.

This is likely just a step in their negotiation process. A major problem in this process to date has been that TPL with its experience and maturity in negotiating real estate acquisitions, has apparently had to deal with negotiators who are unwilling to negotiate, but with the logic of a two year old, wants what they want. This is problematic, as their apparent lack of sophistication means that we can not be sure what move they may make next--as it may be motivated by inexperience and emotion, rather than logic.

The reality of the 2009 Cape Coral real estate market rather than the mentality of the 2004-era hype may soon come to the owners, but it could take longer . . . at this point I can only suggest patience--the Cape Coral real estate market at the moment seems to indicate that little will happen with the property, and we can wait until the owners decide what path to pursue.

Do understand that as the Executive Director to the CRA, I am not speaking for the Board as it has not taken up this matter, and has deferred to TPL to use its expertise and experience to handle this matter. I write to simply update you and to express my personal opinion based upon my sporadic interaction with the TPL/Florida Golf Ventures negotiations.

Know that I remain very confident that the property will ultimately be acquired by the CRA and we will be able to begin restoration of the Golf Club. In the interim, the CRA will continue with our commitments to pursue the legal requirements that will allow the CRA to acquire the property.

A copy of the letter of the Purchase Agreement Termination Letter is attached.


John R. Jacobsen
Executive Director

Community Redevelopment Agency of Cape Coral
1231 Cape Coral Parkway
Cape Coral, FL 33904
239 549-5615