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Date of Issue: October 18, 2007

St. Joe slowing on SevenShores project on Perico Island

No lucky seven
The St. Joe Company owners of the SevenShores condominium project on Perico Island announced last week they would lay off about 80 percent of its workforce due to a stalled housing market in Florida. Last year, the company closed its SevenShores sales office, shown above, citing a lack of sales at the planned 686-unit complex. In the background, crews are at work at the site on the infrastructure for a planned retail center. Islander Photo: Rick Catlin

Islanders shouldn’t expect to see any high-rise condominium buildings going up at the St. Joe Company’s SevenShores development on Perico Island any time in the near future.

Fact is, if the current sluggish Florida housing market doesn’t make a comeback soon, it could be some years before the company even considers a start date of construction at the 686-unit complex.

The company - the largest private landowner in Florida - announced last week it would lay off 90 percent of its 900 employees, sell 100,000 acres of Florida real estate it owns in the Florida Panhandle, and scrap plans for a stockholder dividend this year.

The news may mean that Florida’s real estate market has not yet hit bottom.

St. Joe chief executive Peter Rummell indicated prices for single-family homes are still declining and until they rebound, the company has no choice but to cut expenses.

“We are dramatically changing the company to become more efficient,” Rummell said of the cost-cutting moves. “Through our restructuring process, we will significantly reduce capital expenditure requirements and operate with a leaner infrastructure,” he concluded.

Rummell said the SevenShores project, which has already been in a “go-slow” mode since last year, will be unaffected by the staff reductions and land sales.

A sign of the St. Joe times came in late 2006, when the company closed the SevenShores sales office on Perico Island due to sluggish sales. After 18 months of marketing SevenShores, the company had only taken nine reservations. St. Joe said then it would continue to develop the infrastructure of the property, but would look for private builders to construct the units.

But St. Joe’s decision to cut its work force and go slow on current and future projects came too late to save the northern side of Perico Island from the bulldozer.

The city of Bradenton annexed the property in 1999 and St. Joe - then known as Arvida - quickly announced plans to build a condominium complex on the site, which formerly contained a farm owned by the Preston family of Bradenton.

Island cities, Manatee County, private citizens and the environmental group ManaSota-88 cried foul at the prospect of a pristine and undeveloped barrier island replaced with 10-story condo buildings that could accommodate up to 1,750 people. A series of court actions challenging the annexation were quickly filed, with Manatee County and ManaSota-88 at the forefront of the civil suits.

Although all the legal challenges eventually failed, those actions tied up the start of construction for nearly four years - a time when Island real estate prices, including those for condominiums, were skyrocketing and properties were selling quickly.

By the time the road was clear for St. Joe to begin construction, however, the boom days of Island real estate were gone, replaced by a steady cycle of lower prices, declining values and fewer sales. SevenShores’ price tag of about $500,000 for its lowest-priced unit apparently didn’t draw a lot of serious interest, as Island condominiums were selling for an average of $330,000 earlier this year.

As part of its plans to develop SevenShores, St. Joe purchased the Perico Harbor Marina and plans to tear down the present storage structure and construct deep-water slips for deep-draft boats and yachts.

St. Joe has already obtained Florida Department of Environmental Protection permission to dredge the channel in front of the marina and put in more docks. The company also has site-plan approval from Bradenton for retail shops and a restaurant at the marina site. St. Joe purchased - and subsequently tore down - the former Leverock’s restaurant on the western edge of the marina property. Construction of the infrastructure elements for the retail shops recently began at the site.

St. Joe has developed numerous housing and commercial projects in Florida, primarily in the panhandle region, although in years past when it was Arvida, the company built several condominium developments on Longboat Key.