Time Running Out For Non-Conforming Condo Projects In Gulf Shores

By
Real Estate Agent with RE/MAX of Orange Beach

Time Running Out For Non-Conforming Condo Projects In Gulf Shores
By Clayton Wallace in Condo Owner Magazine
Developers of eight condo projects in Gulf Shores have been given a deadline of Oct. 10, 2008, to acquire a building permit or forfeit approved site plans. According to city officials, if the site plans are forfeited, the density of subsequent plans could be reduced dramatically, thereby endangering the financial viability of the projects.

When the city of Gulf Shores enacted its "Envision Gulf Shores" zoning plan to limit building height and density in the city, it received high praise from most people. Officials said the goal of the plan was to limit development along the city's beachfront areas. One goal of the plan was to create a pedestrian-friendly area at the foot of Ala. Highway 59. Other goals of the plan were to head off potential problems such as miles of side-by-side condo towers and the increased traffic congestion that would go along with the high density of these developments.

While the plan was met with general approval, not everyone was so quick to praise the Envision Gulf Shores plan. When city officials decided to enact the zoning restrictions, developers had already designed a dozen condominium projects in the city's beachfront area that were higher in density than the new laws allowed. "These developments were all zoned either BTB (Tourist Business Mixed Use) or BTL (Tourist Business Lodging) and allowed a maximum density of 42 units per acre," Gulf Shores Community Development Director Steve Foote said. The new zoning regulations cut the allowed density for some of these parcels to as little as 10.5 units per acre for BTB zoning and 12 units per acre for BTL zoning.

According to Foote, the plans for these 12 projects were submitted on March 22, 2005-the last day applications could be made before the new zoning laws took effect. Foote said these developments have come to be known as the "March 22 projects." Because of the zoning changes, he said these developments became "non-conforming" the day after their site plans were filed.

According to a chart Foote provided to Condo Owner, the 12 non-conforming condo developments were West Shore, Laguna Cay, Graceful Palms, Armada Pass, Majestic, Crystal Breeze, Wave, Patel, Surf Rider, East Beach Lifestyle, Sea Oats and Georgetown.

Much of the underlying land for these projects was purchased right after Hurricane Ivan in September 2004, in the midst of a real estate buying frenzy. In the intervening time, according to Gulf Shores City Council Member Steve Jones, building costs went up substantially, while prices dropped dramatically in the real estate market.

According to Foote, a developer has one year from the time a plan is approved to begin work on the project. He said the city will usually grant a maximum of two six-month extensions, making a maximum time limit of two years for a development to obtain a building permit. However, Foote said, "Because of the sluggish real estate market, these developers began to ask for more extensions beyond the normal two years."

Jones said he and other city council members may not have been particularly fond of some of the developments, but because the developers filed their site plans before the zoning change and were out substantial sums of money, they were hesitant to deny site plan extensions.

The sluggish real estate market has taken care of several of the projects in the past year. Since last year, four of the projects have let their site plans lapse. East Beach Lifestyle was the first to expire on Sept. 26, 2006. The developers of that project did not ask for a site plan extension after their initial year had run out. The West Shore, Graceful Palms and Surf Rider developments all followed suit in subsequent months.

In April, city council members voted to grant the Sea Oats project a site plan extension until Oct. 10, two years after they first approved the site plan. That vote sparked debate on how long these site plans should be extended. On May 7, David Bodenhamer, a partner with Young's Suncoast Realty and former Gulf Shores mayor, asked city council members, on behalf of Armada Pass, Majestic, Wave, Laguna Cay and Crystal Breeze, to extend the site plans
of all the non-conforming developments until May 2009.

Gulf Shores City Council Member Robert Craft introduced the idea of a hard deadline for all the projects, but said the May 2009 deadline was a longer deadline than he had anticipated.

City council members heard developers and city staff members debate whether it was fair to have a uniform deadline or deadlines based upon individual filing dates. They also heard debate on how long the site plans should be extended. City council members voted May 14 to extend a uniform deadline date of Oct. 10, 2008, for developers to obtain building permits for their developments.

Foote explained that the deadline date was not arbitrary. "It was the date of the longest previously approved site plan extension. It was for the Patel condo." He said that project was granted an unusually generous two-year site plan extension last year because although it was non-conforming, the project was "more in line with the Envision project than the other projects."

Besides the sluggish real estate market, Foote said developers have one more potential obstacle before a building permit can be obtained. City council members passed an impact fee ordinance two weeks after granting the site plan extensions, increasing building costs by 1 percent. "These projects will all have to pay our impact fees in order to get a building permit," he said. "This will take away the speculation of a developer who, in the past, may have pulled the building permit to buy time and then sit back to see what the market would do."

If the non-conforming projects do not obtain a building permit by the deadline, Foote said the developers will have to re-submit projects that fall within the scope of the Envision Gulf Shores plan. "They'll have to abide by the rules just like everyone else," Jones said.

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