Downtown Daytona Beach apartment project gets $7.5 million tax break

DAYTONA BEACH — Downtown Daytona's momentum from the new Brown & Brown insurance headquarters building and a $26 million investment in Riverfront Park is about to pick up even more speed.

City commissioners unanimously agreed at their meeting Wednesday night to give a Tampa developer a $7.5 million property tax break on a planned apartment complex on north Beach Street.

Without the tax break, the Framework Group would have walked away from its plans to build 300 apartments and a 500-space parking garage on the blighted block just north of the new Brown & Brown office tower overlooking the Halifax River.

"This is what we have envisioned for downtown," said Mayor Derrick Henry. "If we let it pass by I think it would be one of the great disappointments in the history of our city."

The downtown apartment project will still need a rezoning and site plan approved next year before it can move forward. But support from commissioners appears to be solid.

"I'm very impressed," said City Commissioner Ruth Trager.

City Commissioner Paula Reed said she was also impressed that Framework Group President Phillip Smith thoroughly researched Daytona Beach.

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The incentive agreement commissioners approved Wednesday night requires Framework Group to build a minimum of 290 residential units, a 500-space parking garage and other site amenities such as a pool in a private courtyard.

The company will also be required to invest at least $80 million and acquire the property for the project within 180 days.

How the tax break will work

In return for adding the new housing and parking in the 300 and 400 blocks of north Beach Street, Framework Group would annually be reimbursed 80% of the property taxes that would be generated by the new riverfront development through the year 2036.

The developer could receive up to $7.5 million over a 12-year period after the apartments opened to renters and were added to the tax rolls. The city would still collect about $2.16 million in property taxes from the 3.5-acre development over those 12 years, city officials estimate.

The apartment complex site is in the Downtown Redevelopment Area, which allows a portion of property tax revenue created by new development to be invested back in the area. The Downtown Community Redevelopment Area sunsets in 2036, so once the apartment building opened for business that would give Framework Group about 12 years to take advantage of tax increment financing.

When the tax break deal had run its course, the city of Daytona Beach would have a large new property taxpayer. There would also be an ongoing economic impact with hundreds of new residents living downtown.

Framework Group's annual property tax bill would be about $648,000, and the city would keep about $149,421 each year throughout the 12-year agreement. After 2036, the city would keep 100% of the city property tax payments.

Once the property would come onto the tax rolls in 2024, its estimated taxable value would be $52.6 million, city records show.

'Daytona Beach is open for business'

City commissioners and all 17 people who stepped up to the podium at the meeting Wednesday spoke in favor of the project and the need to seize it.

"You can't dream it to happen," said downtown resident Chris Bowler, chief operating officer of Daytona Beverages. "You need to show developers that Daytona Beach is open for business."

Main Street property and bar owner Theresa Doan said she believes the new apartments would help existing businesses on Beach Street and Main Street.

"We need to welcome quality developers like this," Doan said.

Beachside resident John Nicholson pointed out that the community redevelopment area is 40 years old, and needs to be fully utilized before it expires.

"Now's the time to do it," Nicholson said.

Tammy Kozinski said there was a 37% vacancy rate in ground-level storefronts on Beach Street when she opened her coffee shop there 11 years ago. She said adding new housing downtown could help fill lingering empty space.

"I don't want to see more businesses leave," Kozinski told commissioners. "It's going to take more people downtown to get more people downtown."

Downtown Daytona Beach property owner and housing developer Jack White said the most recent Census results show Daytona Beach's core areas lost population while the rest of the city gained residents. Adding new market rate housing downtown would bring in more Beach Street-area residents and more of the service-related businesses, such as grocery stores, that existing residents want, White said.

More about the apartment complex

The Framework Group , a Tampa-based developer, hopes to build a six-story apartment building and seven-story parking garage. The company hopes to have the building overlooking the park and Halifax River ready for its first tenants by the spring of 2023.

The complex would have a mix of studio units and apartments with one, two or three bedrooms. At full occupancy, the complex could be home to about 450 people.

The average apartment size would be 915 square feet, and the average rent would be about $1,800 per month.

Residents would have access to an array of amenities, including cabanas, grills, a fitness center, hot tub, Jacuzzi, clubhouse and pool in a private courtyard. The parking garage would mainly be for residents, but there would be some spaces available for the public.

The project would also add some new stormwater collection systems that would help alleviate flooding in the area somewhat.

If all goes as planned, the apartments will be built on a 3.5-acre site that includes several smaller properties held by different owners. The land is under contract to purchase and could close by the end of the year.

There are a half-dozen or so aging buildings on the land that would have to be demolished to clear the way for apartment construction. A few still have active businesses in them, including All Out Powersports.

Construction could begin in the spring of 2022, and the first phase would be complete around the spring of 2023. The complex could be fully built by early 2024.

Local attorney Rob Merrell, who is representing Framework Group on the project, said new housing is needed to revitalize downtown Daytona Beach. Merrell said Smith is the right person to lead the new housing venture.

"He has a proven track record in other places," Merrell said. "He puts his heart and soul into a community. Change has really happened in other places he showed up."

Smith said he has come to genuinely like Daytona Beach.

"I want the building to be a true catalyst in downtown," Smith said in an interview before Wednesday's meeting.

The Framework Group, which currently has 2,000 units under construction in Florida, is not new to Daytona Beach. The company also built the high-end, amenity-packed Napier apartments on Williamson Boulevard. The Napier, which currently has 260 apartments, will soon be expanding by an additional 120 units.

Last year, Framework Group was also hoping to build apartments and a parking garage on the northeast corner of Ridgewood Avenue and International Speedway Boulevard. But those plans, which sought a $10 million property tax break, failed to launch.

Now the company is looking at also building affordable housing on a vacant site along Orange Avenue west of Ridgewood Avenue.

Framework Group is moving toward using the site at 544 Orange Ave. to build 14 townhomes and 48 apartments. Residents would have to show their financial eligibility.

The company, which hasn't purchased the land yet, would again ask for a tax rebate, Smith said.

The Orange Avenue project will come before city commissioners early next year.

Framework Group has also built affordable housing in other cities, including Lakeland.

You can reach Eileen at Eileen.Zaffiro@news-jrnl.com

This article originally appeared on The Daytona Beach News-Journal: Downtown Daytona Beach apartment project gets $7.5 million tax break