Signature H Property Group, the developers of the "New Errol" project, presented their massive undertaking to the Apopka City Council Tuesday night. The project, which would completely transform Errol Estate, includes:
A redesigned championship golf course
A 15,000 square foot clubhouse with restaurant
A boutique lodge hotel
A two-acre water park
Outdoor parks and trails
264 new residences
A resort-like Adult Living Facility
It was also learned that the project would cost $150-million to construct in total and that the 10-year projection for the project is expected to net $121 million.
The City Council was cautiously optimistic and voted 4-1 to approve the Ordinance (2581) on first reading. This moves the project to a state review, but before the voting, there was significant skepticism and hard questions asked of Signature H.
"For us the responsibility here is... I kind of feel like I'm the father whose daughter's heart has been won and now we have to have "the talk"," said Commissioner Doug Bankson. "It is our responsibility to be skeptical. Are there any holes? Because this is a big issue... this is tremendous. Anyone who sees this would want this to come to Apopka. We would love to work together on this. But the big question is can you produce?"
Bankson asked about Signature H's experience in golf course development or projects similar to this.
"Personally none," said Helmut Wyzisk III, President, and COO of Signature H Property Group. "That's why you bring somebody in like Steve Smyers. He's done courses all over the world. And then you've got a great superintendent who has built courses with Steve Smyers. They've done this before. They have a track record. No one is looking at us saying 'Are we going to draw a design? Are we going to engineer it? Are we going to shovel the dirt?' That's not our expertise. You get the right guys in the room for that."
Steve Smyers is a world-renowned golf course architect based out of Lakeland that is contracted to oversee the redesign and redevelopment of the Errol golf course, according to Signature H.
Bankson also asked about the funding for the project.
"As soon as this is re-zoned, the value of this property goes up a lot," said Wyzisk III. "So we're able to subordinate the project with the value of the property. So the property itself goes into the deal, so that provides us equity funds initially to start building out the amenities, building the clubhouse, building the water park... starting with the amenities first so we can get the high dollar value that we want for our residentials.The rest of it is debt financing. As this started to go public, we started getting calls from a hand full of people that were interested in this project, and we've been vetting them the last few months, and it's only picked up. We'll be coming out next week with an announcement as far as who we selected as a financing partner who will go forward with us."
Bankson remained troubled by the lack of experience Signature H brought to the project.
"If you come in saying we've already done this type of project and here is the proof it's much easier to make that leap. Not to cast aspersions on you, but it's not unreasonable to say you don't come with credentials of having done this before, although you come with a great team in place."
Wyzisk III pointed out the unique nature of this project as reasoning for a lack of experience.
"To your point as far as having done this and experience... the reality is ... no one has. No one comes to you and says 'I'm in the business of re-developing golf courses. I'm going to corner that market. This is brand new. To think that two or three people are going to steer this is a joke. This requires a team and I think that is one of our strongest assets... we're business-minded entrepreneurs ... we're problem solvers. We're not golf course developers. Team building is within our skill set, and that's what we've done. But this is truly the last opportunity for this golf course to ever operate again. It will close on September 4th, and if this project doesn't go through, I can confidently say it will never open again. It just won't."
Wyzisk's father Helmut Wyzisk Jr., the Chairman and CEO of Signature H Property Group, explained further.
"This is like a wheel with spokes. It only works if all the elements are together. If you pull the ALF, if you pull the water park, and you pull the revenue stream, it doesn't work. If any of that stuff was modified, then we wouldn't even be here today. When we take the model and the refinement the City has done, it's just gotten better and better. I can assure you there is not a doubt in my mind, or in Signature H Property that this project will be funded before we get this rezoning done. So there's your assurance. This plan has come together so well and with so much support, and it's a good business model. Because the reality is from our perspective, we could just build 800 homes...forget the golf course. There's no risk to us. We'd do exactly what you said. We'd go to Pulte or KB Homes. We'd plot-out a plan and that's it. We've got no risk. We make $40-million and leave the city."
"That's what we don't want," said Bankson.
"But that's what I'm saying," said Wyzisk Jr. "This is going to happen either way. The property is not going to sit there. On September 4th it closes... it's done. But this plan has not even thought of that process. That's not even on our radar. That shows you we have confidence in this business model."
Commissioner Kyle Becker also displayed a significant amount of doubts toward Signature H. He was also the lone dissenting vote.
"Conceptually I love the idea. I'm a golfer myself. I think for the community this is a value-add. But what the presentation lacks is who you are at Signature H. As a company, you haven't done a project like this or scale...so can you shed light on what you have done? In terms of a company."
"In terms of the company, this is a new venture for us, so we are a collaboration of the individuals you see in the front row and more," said Wyzisk III. "What I said before about team-building...so we are entrepreneurs first. But if you look at this, it isn't just a real estate project. This is a business model, so we came at this as businessmen... as entrepreneurs."
"And that sounds nice," Becker responded. "But when you're seeking finances to do a project, the first thing they ask is 'What do you do for work? How do you make money? How are you going to repay the debt you're asking me to give you?...How do you answer that?"
It's real simple," said Wyzisk Jr. "We're subordinating the property into the deal. You're taking 400 acres of property that will be rezoned with no debt on it - zero debt - and you're subordinating it to an equity player."
"So how much is the land worth currently?" Becker asked.
"We will be able to make that public to you...," said Wyzisk Jr.
"It's on the property appraiser website," said Becker before Wyzisk Jr. finished his answer.
"We're doing a pre and post appraisal of the property," Wyzisk Jr. said."
"So you don't know how much it's worth?"
"It doesn't really matter what it's worth right now," said Wyzisk Jr. "We know the value today as it sits (zoned) Parks and Recreation is not very much."
"$1.8 million, which represents a 58%decrease from the last time it sold for $4.5 million," said Becker. "How much do you anticipate the total cost to construct the golf course, water park, lodge, clubhouse and the assisted living facility? The total operation?"
"The entire project is about $150-million when you add the residential and everything over four years in the market study," said Wyzisk II. "But I think what you're getting at is how will you fund the amenities. Is that what you're trying to get to?"
"Absolutely," Becker answered. "If you're saying the basic economics of the deal is going to cost $150-million to construct all of these capital assets, the land value you're saying you're using for equity and subordinate positioning is not anywhere near that value, I'm wondering how you are selling the value to those who are investing in the project?"
"Obviously you have a business model and an operation," said Wyzisk Jr. "Basically you're doing an economic analysis. You're looking at a 10-year model revenue stream. So there will be a combination of equity financing and debt financing, so quite simply we believe that the property will put off enough revenue stream to justify that. We project $121 million in net profits over the next 10 years. That's why we're doing it. So if you're looking at it from a developer's perspective, you either take $40-million and run or you operate it and make $121-million over 10 years."
"Who will be operating it?" Becker asked.
"There will be multiple operators," said Wyzisk Jr.
"Do you have those online?"
"They are under consideration," said Wyzisk Jr. "We haven't made decisions like on the ALF. I think we answered that question earlier."
After the difficult questioning process, the meeting took public comments from the audience, which was largely positive towards Signature H judging from its applause, and the majority of public comments that expressed support for the project.
Before returning to the Council's final comments before voting. Wyzisk Jr. explained that he appreciated the hard questions, and vowed to address them before the next stage.
"All of these concerns and questions are valid, but all of them will be dealt with at the next level before the development plan is submitted. We are very aware of all these issues that have been brought up tonight."
Apopka Mayor Joe Kilsheimer was pleased by the research done by the commissioners and expressed an interest to move forward.
"I think all of the elected officials on this Council have done their homework, and I think all of the questions asked are valid questions. I think the process that we're going through is about finding safeguards and we've got three more cracks at this to get it right before they are allowed to proceed. Tonight has not been entirely pleasant for the applicant, but probably necessary in terms of putting questions on the table that the community needs to address before we proceed. So at this point, I'm willing to accept the staff recommendation to move forward."
Becker was still not convinced Signature H could overcome their lack of experience.
"If this were an emotional response, I would be in favor of it. The idea, the concept, the plan... I say great. My challenge is there is no history of performance and no history of facilitating talented teams like they say they need for this project to succeed. They're entering a business that in their own language is a dying business. So you add risk on top of the fact they have no history with these projects. There is no disclosure of who the investors are or how much the property is worth. They have no plan for who will run these assets when they are actually in play, and the value of the property is speculative based on future land use. With all that said I just don't have a level of confidence."
Bankson was also unconvinced but wanted to give Signature H more time to prove their case.
"I think these are all valid points, and where we are at is an opportunity for the applicant to answer all of those concerns. But you're saying you can't make those announcements now, but before we're at a place where it's absolutely green-lighted, there's still a safety measure to explore and give you an opportunity. I will say it's not a personal matter, but if someone came to paint my house and presented me with a beautiful picture of that house, but they've never painted a house before, I would be skeptical. As someone stated, that's not trust, but a leap of faith. So I would ask that you present us with resumes of each party to show they do have that level of expertise. I would want to see more of those proofs that you say are coming between now and the next step."
"Renovations for the new Errol Estate development brought forward many questions and concerns by the residents and the commissioners," said Commissioner Diane Velazquez in a statement after the vote. "The common concern expressed was the assurance the proposed project would be sustainable at the enormous cost, as presented. The developers assured us all the financing was there and they are planning to make announcements very soon as they move forward with this proposed planned project. Last night's vote allowed this project to move one step forward. The planned development will be sent to
Tallahassee for review by the Florida Department Economic opportunities staff. While this project is under review, the city staff will review the safeguards around this development. In my opinion, projects like these invigorate Apopka and its communities. It is a partnership the City of Apopka welcomes and supports for economic growth in our City."
Becker remained unconvinced of the viability of the project but showed signs of optimism in a statement after the vote.
"I realize there are a number of Errol residents that fully support the plan laid out by Signature H, and I share their enthusiasm about what is being proposed, as it would mean a new chapter in that community, preservation of the golf course, and a place for Errol families to enjoy time together. However, my job is to ensure the project is viable and to protect the interest of our residents. At the time of the vote, the applicant did not have a clear answer for who would be paying for this endeavor, nor who would be operating the proposed golf course, lodge, or water park; details I think would be available at this stage of the process, especially when considering the applicant has never taken on a project of this scope or scale. I do respect the will of our Council, as well as the investment of time by both the applicant and Errol residents, and look forward to the next phase of this process."
Both the Wyzisks were happy with the outcome, but realize there is a long way to go.
"Our team is very pleased with City Council's decision to move forward with our plan for New Errol," said Wyzisk III. "They examined our plan closely, asked questions, and ultimately agreed with the recommendation of their staff to move our project forward for State review. We’re pleased, but we still have a few steps to go. This wasn't just a win for us, but also for the Errol Estate community and Apopka. The plan for New Errol has enormous support from the community and that was clearly demonstrated to City Council tonight."
"We heard the types of thoughtful questions you would expect from a City Council," said Wyzisk Jr. "Sure, a few were a bit premature considering how early we are in this process, but the good thing is that we now have some foresight of what they’ll want to be answered when we come before them next time. This vote gives Errol a chance to save the golf course and revitalize the community. Without this vote, I am confident the failing course would permanently close.”
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