Who knew, back in late 1999 when we were debating a potential Y2K catastrophe and watching our tech stocks soar, just how unpredictable the next decade would be? "Livin’ La Vida Loca" by Ricky Martin was one of the top songs of the year, and in retrospect, it foreshadowed the business bubbles ahead. As the Y2K scare quickly faded, we were giddy with promise of the new millennium, enjoying the marvels of our mobile phones, DVD players and fiber-optic commercial high-speed Internet service.
In December 1999, Tropicana, Manatee County’s largest private employer, began the rollercoaster ride of the decade by first deciding to keep its juice headquarters here after being purchased by PepsiCo and then, in 2004, dislocating hundreds of employees when the headquarters moved to Chicago. We marveled at the construction of one of the first new high-rise condo projects, the Renaissance, in downtown Sarasota. Arts patrons enjoyed their Van Wezel concerts under a massive tent as the hall was being renovated for larger touring shows. Longtime Bradenton Herald editor Wayne Poston had just ousted long-term incumbent Bill Evers to become mayor of Bradenton. Katherine Harris was secretary of state, and Florida elections had yet to make national news.
The first decade of the new millennium was one of extremes in Sarasota-Bradenton and a reflection of how rapidly the new global economy can turn. Beginning with the dot-com bubble and burst, a terrorist attack and two-front war, the decade delivered double-digit real estate appreciation, even after not one, but four hurricanes hit in one season. The closing years saw an international financial crisis, a real estate bust, foreclosures and rising unemployment as businesses contracted or closed. Biz941 takes a look back on the decade’s top local events and trends that shaped our business climate.
Paralyzes the Region
George Bush was reading to second graders at Emma E. Booker Elementary School when an aide whispered the terrible news into his ear. Within an hour, Air Force One would take off from Sarasota as the news of the terrorist attack on the U.S. unfolded.
Sarasota-Manatee residents with relatives living in Manhattan or working at the Pentagon agonized as they tried to reach their loved ones by telephone. Airline flights were grounded, and the New York and NASDAQ stock exchanges temporarily ceased trading. Residents waited in line for hours to donate blood at Sarasota Memorial Hospital and the Manatee Civic Center. Others contributed to the Red Cross and other relief organizations. In a show of both resistance and resilience, most businesses kept their doors open in the days following the attacks.
Flight schools, however, were grounded for two weeks after news reports revealed that three of the terrorists, Mohammed Atta, Marwan Al-Shehhi and Ziad Samir Jarrah, had moved to Venice in 2000 to train at flight schools at Venice Municipal Airport. Just three days after the attack, Tropical Storm Gabrielle blew ashore in Venice as well, toppling trees, flooding homes and knocking out power lines for several days. The storm caused more than $115 million in damage across the state.
Tourism slumped that fall as travelers avoided flying or spent holidays closer to home with their families. Beach and resort rentals declined, and restaurant revenues in high-traffic tourist areas took a dive. By January, snowbirds returned and vacationers followed through with their travel plans.
Airlines, airports and other public entities shifted their budgets to beefing up security, and the Department of Homeland Security created jobs at Sarasota Bradenton International Airport.
A Quartet of Hurricanes
There was nowhere to run, nowhere to hide, as four unpredictable hurricanes—Charley, Ivan, Frances and Jeanne—struck Florida in a span of five weeks during August and September 2004. Category Four Charley devastated Charlotte County before turning on unprepared Myakka and Arcadia residents, leaving in its wake crumbled buildings and debris that were still evident a year after the storm.
In the aftermath, businesses and residents rushed to the aid of displaced homeowners, even before Southwest Florida’s first FEMA city rose from the ground. Restaurants delivered food or set up outdoor kitchens on-site, and PGT Industries of Venice, a hurricane window manufacturer whose employees had been hit hard by Charley, leased a campground where employees could live and provided food, water, generators and stoves until they could return to their homes.
By year’s end, officials estimated the four hurricanes had caused $18 billion in insured losses, much of it just south and east of Sarasota-Manatee. Charley had passed to the south, Ivan to the west, and Frances and Jeanne to the north.
With meteorologists predicting a decade of highly active hurricane seasons to come, insurance rates skyrocketed and business policies doubled or tripled over the next few years, or were canceled. The insurance crisis killed a number of commercial real estate deals when buyers could not find insurance or were required to pay exorbitant insurance premiums before taking possession of their buildings. Business owners raised an outcry with the Florida legislature.
The state of Florida delved into the insurance business, reactivating the Commercial Joint Underwriting Association and expanding Citizens Property Insurance Corporation, both last resort public options for those unable to find coverage. With Citizens undercapitalized, Florida taxpayers now shoulder the liability of potential tax increases and insurance assessments should another major storm hit Florida.
The hurricane protection market boomed, especially after hurricanes Katrina and Rita struck the following year, but the uptick was temporary as residents weathered a quieter hurricane season, and another. Rebuilding efforts along the Gulf Coast caused construction worker shortages in Southwest Florida as well as an escalation in prices of petroleum-based products and building supplies such as plywood, asphalt and insulation.
Real Estate Climbs on
the Roller Coaster
The announcements of billions of dollars in development projects—many of them unrealized today—made headlines over the decade. In 2004, Manatee County reported $1 billion in planned construction at locations such as the former Sandpile and Palmetto’s Riviera Dunes, as Irish developer Patrick Kelly unveiled plans for the $1 billion Sarasota Bayside project at the former Quay. The dizzying pace of deals lasted into 2008 with the much-discussed and recently fizzled $1 billion Proscenium project in Sarasota.
Developers and speculators jumped into the Sarasota-Manatee’s real estate market and began buying up land early in the decade. When North Port moved to annex one of the largest undeveloped tracts of land along U.S. 41 between Tampa and Naples, 7,800 acres of the Taylor Ranch, Sarasota County flexed its growth management muscle and sued, raising concerns that public infrastructure would lag far behind population growth. North Port won, and Atlanta-based retail developer Stan Thomas, who purchased the ranch for $78 million, introduced plans to build up to 15,000 homes along with public buildings and retail centers there.
Meanwhile, rapid appreciation in home values, which peaked at more than 30 percent a year, caught the attention of investors, and the long tradition of buying and fixing up homes to sell grew into a frenzied sport. Others jumped in as novice speculators, some borrowing against the rising equity in their homes to snatch up new or unfinished condominiums with the hopes of flipping them for a high profit.
But by late 2005, some developers started scaling back plans, and housing permits dropped. Residential real estate sales slowed as buyers were priced out of the market. The correction was prolonged when the subprime mortgage crisis hit. Builders laid off workers en masse as county permitting staffs shrank.
The Isaac Group slowed the phases of its Pineapple Square in downtown Sarasota, and Benderson Development recast its major mixed-use project at University Town Center. Almost no developer, established or new to the area, was unaffected by the slowdown. While many left town, others, such as Venice developer Mike Miller, sent shockwaves through the community when Regions Bank foreclosed on his Palmetto condominium project, The Palms at Riviera Dunes.
By 2008, Sarasota-Manatee consistently ranked as one of the top home foreclosure markets in the nation. Vulture investors, international buyers and first-time homebuyers eligible for federal tax credits stood to benefit as upside-down borrowers walked away from their homes and commercial investments.
Here They Come—
and There They Go
It was an oft-repeated refrain in response to fears of overbuilding: Florida was growing by 1,000 new residents each day. Many of these new residents were affluent baby boomers choosing to retire here and reinvent themselves. They would demand the best in healthcare, travel, entertainment and personal enrichment.
Florida’s population explosion gained the state about 2.4 million residents between 2000 and 2009, with an average of 395,000 new residents 2000 through 2006. In the Sarasota-Manatee metropolitan area, where the death rate far surpasses the annual birthrate, that influx of out-of-state retirees and families resulted in a 40 percent population increase from 1991 to 2008. Relocation was, without a doubt, the driving force and economic engine of the economy.
In 2006, the model began to unravel. Skyrocketing real estate prices drove some seniors to choose less expensive housing markets in the Carolinas and Tennessee. Job layoffs and rising number of foreclosures drove workers with families to seek employment elsewhere—a phenomenon first noted when public school enrollments began to decline, especially in North Port. That year, Atlas Van Lines reported that its moving vans had transported more residents out of than into the state. Stratospheric property insurance rates and property tax increases that placed an unfair burden on non-homesteaded properties (new purchases, second homes and commercial properties) caused others to reconsider the wisdom of retiring of Florida. By 2007, a Wall Street Journal headline queried, “Is Florida Over?”
The University of Florida Bureau of Economic Research predicts that Florida will add only 37,000 residents through 2010, a 90 percent drop over previous years. The decline has impacted bottom lines and government planning, and will change the way we do business in years ahead.
A Global Financial Crisis
Hits Us Hard
A bumper crop of community and independent banks opened as Florida led the nation in bank startups mid-decade. Investor interest in new banks was high as banks were considered a relatively safe, long-term investment. As larger banks tightened credit to recover from bad loans during the real estate downtown, smaller banks with personal service stepped in. In 2005, Freedom Bank in Bradenton opened with $16.9 million, which was at the time the largest initial capital raised by a local community start-up bank. By 2008, it was one of the first to fail.
The expansion was short-lived, as loan defaults overwhelmed some of Sarasota-Manatee’s local institutions, leading to widespread losses and few failures. First Priority Bank and Freedom Bank were the first to fall in a string of closures that began in 2008. Coast Bank was one of the worst hit after writing more than $100 million in home construction loans to St. Petersburg builder Construction Compliance, which authorized construction draws before completing work or paying subcontractors in North Port and Port Charlotte. Coast was sued by borrowers and later sold to First Banks of St. Louis.
Small business owners felt a double whammy from the real estate market collapse when banks tightened regulations and their access to credit dried up. Scores of entrepreneurs who had been required to use their homes or other properties as collateral for business lines of credit saw their credit freeze when real estate values plummeted.
With Sarasota-Manatee’s economic downturn, businesses could not borrow to expand, change course or just get through the lean months. Congressman Vern Buchanan, a ranking member of the U.S. House Small Business Committee’s Subcommittee on Finance and Tax, invited Sarasota and Manatee businesspeople to testify in Washington about the scope of the problem and offer solutions.
The New Business Buzzword:
Florida was still considered a low-cost state early in the decade, but most of the national companies with large offices or headquarters here—Arthur Andersen’s tax software division, Tervis Tumblers and L-3 recorders in Sarasota, and Tropicana, Wellcraft and Beall’s Department Stores in Bradenton—were homegrown or had owners with personal ties to the area. Entrepreneurs other than real estate developers who relocated tended to be drawn to Sarasota-Bradenton’s quality of life.
In 2005, workforce and economic development advocates projected that a looming worker shortage and tight office space and industrial land market would dampen efforts to diversify the economy. But by 2006, soaring insurance rates, the high cost of land and competitive incentives from other states induced stalwart manufacturers Chris Craft, PGT Industries, Indian Motorcycles, Environmental Biotech, Ameritex Technologies, Glenroe Technologies and Sunguard Shade Structures to expand facilities and production lines out of state rather than create more jobs here.
With the real estate collapse and manufacturing layoffs, economic diversification rose to the top of the business and government agenda, and it took many forms. City and county commissions fast-tracked road and building projects. After voters rejected a tax to pay for new spring training facilities for the Cincinnati Reds, Sarasota County unsuccessfully courted the Boston Red Sox. Commissioners later approved an increase in the bed tax to fund Baltimore Orioles spring training facilities and a competitive rowing course near I-75. Meanwhile, Manatee County Commissioners sought an encouragement zone for Port Manatee that would waive impact fees and ease development restrictions around the port.
When elected, Gov. Charlie Crist promoted job creation in the green energy and high-tech sectors, and an expansion of the “innovation economy,” while Sarasota and Manatee elected officials worked to fund a renewable energy research facility. Courting firms to relocate took a back seat to economic gardening—the cultivation of local, second stage, rapid-growth businesses on track to create jobs. Chamber and community leaders advocated playing to the area’s strengths—arts tourism, green products and services that improve health and quality of life for the aging—and supporting major engines to diversify and create higher-paying jobs. ■
Notable Firsts of the Decade
Florida Power and Light installs a 1,200-panel solar array at Rothenbach Park, site of a former landfill and the largest commercial solar site in Florida. (2008)
The Manatee Chamber of Commerce is named national chamber of year. (2007)
Young professionals form networking groups at local chambers and quickly develop a political and philanthropic voice and agenda of their own. (2004)
Neighborhood advocates gain political clout and band together to promote a supermajority vote for density changes in Sarasota—which passes. (2007)
North Port passes Sarasota as the county's largest city. (2008)
The London Financial Times features Sarasota as the epicenter of the subprime mortgage crisis that led to the international financial meltdown. (2007)
A 2007 Wall Street Journal headline asks, “Is Florida Over?”
A 2008 Time magazine story asks “Is Florida the Sunset State?”
The Ringling Causeway fixed-span bridge across Sarasota Bay (2002)
Bradenton’s new Manatee County Judicial Center (2006)
Unemployment, from an enviable low of 2 percent mid-decade to one of the highest rates in the nation, topping 12 percent
Sarasota’s Ritz-Carlton Hotel (2001)
Visits to public parks, libraries and other free entertainment outlets Janie’s Garden mixed-use housing in Newtown (2009)
Democrats and Independents in Sarasota (2008 election)
The Sarasota Quay and mid-century modern El Vernona condominiums, razed to make way for Irish developer Patrick Kelly’s proposed Sarasota Bayside (2007)
Public school enrollment, from a high of 1,000 new students per year in the Sarasota and Manatee districts to flat enrollment.
Architect Paul Rudolph’s Riverview High School (2009)
The blighted Janie Poe projects (2008)
The landmark Summerhouse Restaurant on Siesta Key (2007)
Air travelers, as the Sarasota Bradenton International Airport adds discount carriers and direct flights to the Northeast and Midwest.
College students, who have gained expanded and four-year degree programs at Ringling College of Art & Design, USF Sarasota-Manatee and State College of Florida (formerly Manatee Community College).
Slow growth or controlled growth candidates in the cities of Venice and Sarasota, after defeating incumbents on both commissions.
Community bank shareholders of banks carrying bad loans.
Nordstrom and Neiman Marcus shoppers, who were eager to welcome new stores in the still-unbuilt University Town Center.
Adjustable rate mortgage borrowers.
Sales tax reformers, who were unable to pass an amendment to review sales tax loopholes that would begin to reform Florida’s inadequate tax system.
Hockey hopefuls, after the DVA Arena Hockey Facility plan in Lakewood Ranch flopped.
Visitors who planned their beach vacations in 2005, when persistent red tide kept all but the hardiest indoors and out of the water.
Slow-growth incumbents who lost their Manatee County Commission seats to former mayors John Chappie and Larry Bustle in 2008.
Local Banks That Started This Decade
Bank of Commerce
Coast Bank of Sarasota
Community National Bank of Sarasota County
First America Bank
First Priority Bank
Florida Bank of Sarasota
Gateway Bank of Southwest Florida
Landmark Bank of Florida
Bank of the West Coast
Sabal Palm Bank
The Bank of Venice
United Bank of the
1st Manatee Bank
and the Banks That Failed
First Priority Bank
First State Bank of Sarasota
Community National Bank
of Sarasota County
What We Talked About
Victims of Art Nadel, Bernie Madoff and Neil Husani, the original flip-scam guy.
Parking in downtown Sarasota, the multiple parking garage plans for Palm Avenue, including the ill-fated Plaza Verdi partnership with Sarasota Opera.
A conference center at the fairgrounds, on Palm Avenue, on the bayfront near the Van Wezel, and in 2009, at the former site of the Sarasota Quay. Each plan had its detractors, but a common theme was the lack of public support for raising taxes to partially fund a center.
Affordable housing for workers.
The causes of red tide, with many concluding that fertilizer runoff contributes to algae bloom growth.
The 2050 Plan, New Urbanism, and Sarasota and Bradenton’s downtown master plans.
Who's In, Who's Out
Vultures and cash investors
Blogging, friending, tweeting
Regional mass transit plans
Mixed-income, mixed-use neighborhoods
Short sales and foreclosures
Low prices at the pumps
Real estate-reliant economy
Downtown Condo Projects
Those That Went Up:
Burns Court Villas
Marquee en Ville
One Hundred Central
Plaza at Five Points
Rivo at Ringling
WCI’s Tower Residences at The Ritz-Carlton
Hidden Lake Condos
Promenade at Riverwalk
Seasons at Village Green (opens in 2010)
Those That Fizzled:
Marquee on the Bay
mixed-use project on Orange Avenue
The Boulevard on Cocoanut Avenue
Palms at Riveria Dunes
Those On Hold:
Bayou by the Bay
Hatton Street Townhouses
Payne Park Village
Premier at Main Plaza
Residences at Hyde Park
401 South Orange Avenue
Back Bay Preserve
Villas at San Casciano