Hide caption Noise meter tests showed Off the Hookah, at 314 Clematis St., registered off the charts.
WEST PALM BEACH — A renovation project to subsidize a dozen start-up businesses has turned into a $7.5 million real estate investment by the West Palm Beach Community Redevelopment Agency, which on Monday voted to buy the former Off the Hookah nightclub building at 314 Clematis St.
City Commissioners, serving as the CRA board, divided over the ballooning cost of the project. But rather than continue to spend hundreds of thousands of dollars to renovate a building the agency didn’t own, they voted 3-2 to buy the property, to sustain its transformation into an incubator and redesign the ground floor as a public pathway to the alley behind it, which the CRA hopes to enliven with restaurants or other attractions.
The purchase decision took heat from community members who felt the CRA was straying from plans to simply rent the vacant space rather than get into the risky arena of real estate investment. The critics asserted that renovation overruns were leading the board to “throw good money after bad,” as one put it, and risk public money better dispensed as grants for proven businesses downtown.
CRA Executive Director Jon Ward countered that this was the kind of project for which the CRA was created and which state law authorized. “We are in the real estate business,” he said. “CRA’s often do things in an unusual manner that the private sector would not do,” with the goal to spark economic growth, even if a project doesn’t generate profits, he said.
The purchase price of 314 Clematis would be offset by rental income from the building’s upstairs offices, and the transformed structure likely would gain value in years to come, Ward added.
He asserted the deal would not prevent other businesses from getting grants from the agency where appropriate, noting that an owner of a similarly large building on the 500 block of Clematis recently approached the CRA for a grant to help break up that space into smaller, more rentable retail spaces. “Just hearing about it has encouraged the private sector to say, ‘let’s do it.’”
A handful of public commenters took Ward to task, saying he was overselling the project and overspending.
“I’m disappointed how flip this CRA director is” about spending more than $7 million for yet another downtown public project promised as transformative, lawyer Eddie Walker said, recalling similar pitches for the library and City Hall 10 years ago. The 314 Clematis project was intended to rid downtown of nightclubs but night life is what brings people downtown after dark, Walker said.
Had engineers been brought in early in the process, the CRA wouldn’t have been in the position of having cost overruns so high they would propose buying the building instead of completing massive renovations to a rental property, he said. Economic Development Director Christopher Roog responded that an engineer did study the building, after interior demolition began.
Nancy Pullum, who leads Citizens for Thoughtful Growth, a West Palm Beach development watchdog group, said the $7.5 million price outstripped the CRA’s mandate for economic development spending.
“That’s tax dollars, it’s not pretend money,” she said. “It doesn’t play well to the audience of taxpayers out there that, because somebody goofed up, now we should be landlords. We’ve got other things to do than being property managers and landlords.”
Commissioners Cory Neering and Richard Ryles also opposed the purchase, with Neering saying the project went far beyond its original intend of renovating to get a subsidized workspace program off the ground.
Commissioner Joe Peduzzi also said he was “struggling with this” and asked if alternative sites might be found.
Roog replied that other properties were available but that negotiations to secure them would have to start from square one, delaying the project. Some start-ups recruited for the incubator project already have signed leases with the owner of 314 Clematis, anticipating the completion of renovations, Roog added.
Peduzzi ultimately voted for the purchase, with Commissioner Kelly Shoaf and Commission President Christina Lambert.