Lawsuit expected
The final vote tally differed a bit from the previous two, but, on Nov. 2, the majority of the Sarasota City Commission once again denied Sarasota developer Matt Kihnke the ability to construct the 18-story mixed-use structure on Palm Avenue that originally was dubbed the Obsidian and then renamed the 1260 N. Palm Residences.
It has been designed with 14 condominium units, one per floor, with retail spaces on two levels.
In seconding Commissioner Jen Ahearn-Koch’s motion to reject the recommendation of an attorney who had served as a Special Magistrate in mediating a settlement between Kihnke, who is the principal of 1260 Palm Properties LLC, and the city, Vice Mayor Kathy Kelley Ohlrich explained, “To me, this is a matter of compatibility.” She added that the 1260 N. Palm Residences would be “totally out of scale” with the other buildings on Palm Avenue.
The tower would be about 327 feet tall.
She specifically cited No. 4 in the city’s Standards of Review for site plans, which addresses “ways the configuration of the development can be changed,” including the intensity, density, scale, building size, mass, bulk, height and lot coverage.
“We’ve been shown today that there are ways this [project] can change,” Ohlrich pointed out.
Prior to the start of the presentations that afternoon, Ohlrich had asked Clearwater attorney Jay Daigneault, who advises the commissioners on public hearing procedures, whether the Standards of Review still would apply, given the Oct. 19 recommendation of the Special Magistrate.
Daigneault replied, “They’ve already played a part in your hearings to this point.” However, he added, “The role they play today — I’ll be very honest with you — is not entirely clear the way the statute is written.”
Daigneault was referring to Florida statute 70.51 — the Florida Land Use and Environmental Dispute Resolution Act (FLUEDRA) — that had resulted in the recommendation.
Nonetheless, he also explained that the prior proceedings on the proposal would be part of the hearing record for Nov. 2.
What the commissioners were being asked to do that day, Daigneault said, was to modify, accept or reject the recommendation of the attorney who served as the Special Magistrate in the mediation: Mark Bentley of Tampa.
In a 141-page document he provided the commissioners, Bentley wrote that their denial of the project on May 4 was “substantively unreasonable,” as “it was excessive and went beyond what a fair-minded person would consider sensible”; and that it was “inconsistent with the governing legal standards.”
“[T]he record shows that the Project met all published standards, including compatibility, and that 1260 Palm did everything reasonably possible to minimize the Adjustments and mitigate their effects,” he wrote. [He was referring to adjustments to city Zoning Code regulations that city staff and the city Planning Board had granted the developer]. Bay Plaza and other opponents asserted that the building was incompatible because of its height,” the Special Magistrate continued. “The height complies with the Sarasota Zoning Code … and Bay Plaza presented no evidence that the building height would adversely affect Bay Plaza or the surrounding community. [Bay Plaza residents] also urged that 1260 Palm needed to ‘do better’ on pedestrian frontage, parking, loading, and trash service to justify the adjustments. The record, however, shows that 1260 Palm had taken all reasonably available measures to address those issues,” the Special Magistrate added.
Bay Plaza residents would be just a few feet away from the 1260 N. Palm Ave. building, at its closest points to their structure, graphics have shown.
The financial loss issue
In explaining her decision to vote for the Special Magistrate’s recommendation, Commissioner Liz Alpert not only stressed the potential of a multi-million-dollar legal settlement in favor of the developer — an even greater concern, she noted, in light of city budget issues that have lingered since the 2024 storm season — but also testimony from Kihnke, the developer.
Kihnke told the commissioners that he will be at a financial loss if he cannot construct the project, given the deterioration of the existing one-story commercial properties that he rents month-to-month on the eight parcels where the condominium tower would stand.
Sarasota attorney Robert Lincoln, who was representing Kihnke, stressed to the board members, “What you have now, as your staff has told you, [is that] all these adjustments are required for anything that would get build on this property over two stories. There isn’t a way to make it better.”
“These are the smallest adjustments that will be possible … to develop the property,” Lincoln pointed out of the plans for the 1260 N. Palm Residences.
Mayor Trice asked Alison Christie, manager of the Development Services Department, about that comment.
“The majority of the adjustments,” Christie explained, are necessary for vehicular access from Palm Avenue. The width of the driveway for the 1260 N. Palm Residences, Christie continued, necessitated “the greatest decrease in retail, habitable and parallel facade coverage.”
Thus, Christie said, any development on the site what would require on-site parking would have to have the same — or greater — level of adjustments. In accord with the Zoning Code, she added, that would be any building — residential or commercial — with more than 10,000 square feet of space.
“Is it theoretically possible to replace the existing building … with a two-story, retail structure, restaurant, art gallery, yada, yada, yada?” Trice asked.
“Yes,” Christie replied.
“And fitting that footprint [Christie had presented in a graphic]?” Trice inquired.
“Yes, less than 10,000 square feet,” Christie told her.
“So that would be possible with maybe no variances, no adjustments?”
“Potentially, yes,” Christie replied.
“So something is possible that might be economically viable?” Trice inquired.
Christie said she could not address that.
Then, referring to testimony from the project team that Kihnke is not “getting the kind of rent from the current tenants as might be expected,” Trice continued, “I’m wondering how much of that is a result of [the last four years of anticipation] that that building would be demolished …” For example, Trice said, a person might not have wanted to sign a lease “for anything lucrative … and pay massive rent” if the person thought Kihnke was going to demolish the structure.
Kinhke told Trice that multiple concerns relate to the existing Palm Avenue structure. For example, he said, “We never know if we’re gonna have an event where there’s an issue with the building itself.” He added, “The roof needs to be replaced. We’ve got holes in the roof … You literally walk inside, you look up, and you see sky.”
Summing up the situation, Kihnke said that given the current condition of the building, “I can’t justify any more rent than what’s in there right now.” He further noted that he is charging rent that is “far under market value.”
Therefore, he added, he had talked with people who deal in the value of what is known as Class A tenant space, to find out what rent he could expect if he constructed a new building for commercial space. A one-story building, with less than 10,000 square feet and no need for parking spaces, would represent a loss of about $650,000, he said.
When Trice asked him about constructing a two-story building, he responded, “We have to provide parking,” along with “all of the same adjustments that we’re asking for right now.”
‘Nothing has changed’
On Nov. 2, Commissioner Ahearn-Koch reminded her colleagues that she had cited multiple sections of the Standard of Review in her denial motion after the second hearing that the board members conducted on the plans for the structure, “and nothing has changed …”
Mayor Trice confessed to being “of two minds” on the issue. “My apologies to the Bay Plaza people,” she said: “You are a small subset of the city.”
Moreover, Trice added, “I’m weighing the pros and cons of legal action.”
Part of what persuaded her to join Ahearn-Koch and Ohlrich, she said, was the fact that “that section of downtown is a bit of a jewel box.”
Commissioner Kyle Battie also talked of Palm Avenue — and St. Armands Circle — “as our kind of, like, Rodeo Drive, if you will.”
Trice just could not support the idea of having the garbage from the tower set out on the street for collection, in view of guests of the nearby Art Ovation Hotel, she explained.
(Project team members have discussed their efforts to try to find a better way of dealing with the garbage, since the building’s design constraints prevent the entrance of a city garbage truck into the parking area to pick up the trash.)
Commissioner Battie joined Commissioner Alpert this time in voting in favor of the Special Magistrate’s recommendation that the board accept the mediated plans.
Battie, too, talked of his concerns about the prospect of a significant court award to Kihnke over the decision that day, if the vote went against Kihnke. At one point during the board members’ discussion, Battie referenced the issues surrounding the project as the “cluster-you-know-what.” (The U.S. military is credited with creating the term “clusterf**k” to mean “a complex and utterly disordered and mismanaged situation” or “a muddled mess,” as Merriam-Webster defines it.)
Attorney Lincoln, representing the developer, acknowledged during his presentation that the board members were “free to reject [the Special Magistrate’s recommendation].” However, he added, “I have to say I don’t think it would be a good idea.”
Noting that the FLUEDRA law serves as an alternative to litigation, Lincoln continued, “Litigation will result” if the majority again voted not to allow the project to be built.
Further, Lincoln called Special Magistrate Bentley “a well-respected attorney who’s expert in these legal areas. … I’ve used him before, and he’s ruled against me in another FLUEDRA proceeding. So there’s no situation where I would have believed that he was biased.”
Sarasota attorney Morgan Bentley, once again representing the Bay Plaza Owners Association, pointed out to the commissioners that, regardless of the vote, “There’s gonna be a lawsuit. So put that to one side; it doesn’t matter.”
‘Even smart people get things wrong’
During his Nov. 2 presentation, Lincoln contended that the Bay Plaza Owners Association had not provided legally supported evidence that the project had not met all of the necessary city standards, including those in the Zoning Code. “We put on evidence that it met all the requirements,” he continued, “including compatibility, and the staff agreed.”
He did bring up the garbage collection issue again, noting that the city manager had issued a waiver to allow “the trash to be picked up either on the street or in the alley down the street.”
Lincoln pointed out that the project team even had asked the city’s Solid Waste personnel whether pickup trucks could be used to collect the garbage inside the parking garage area, instead of the city’s full-size trucks, “and they said, ‘No.’ ”
Moreover, he told the commissioners, Bay Plaza’s garbage goes on the street for collection.
Taking his turn in front of the board on behalf of the Bay Plaza residents, Sarasota attorney Morgan Bentley, pointed out of the Special Magistrate, “he’s a very smart guy,” joking, as he did in May, that Mark Bentley is his cousin.
“But even smart people get things wrong and miss the mark,” Morgan Bentley continued, “and he missed it badly this time.”
Morgan Bentley asserted that the adjustments sought for the 1260 N. Palm Ave. “involve requirements that [the project team] cannot meet.”
Then, for emphasis, he added, “Let me repeat that: By definition, this project does not meet your code. This is one of these … ‘Emperor has no clothes’ arguments,” Bentley said. If they had met all of the Zoning Code requirements, he continued, “They wouldn’t be here. So do not forget that. Retail frontage … the habitable floor space — all of that, they missed, and they missed it by a wide margin.”
In accord with the code, Bentley said, “If you want an adjustment, you have to propose something that meets or exceeds the requirement being avoided. … Not one is bering proposed in this [situation].”
The team members had argued that no other adjustments could be offered, Bentley pointed out. Yet, he stressed — with use of a graphic — the team changed the plans “over and over again.”
The graphic showed the changes to the site plan since it originally was proposed in 2022.
Moreover, Bentley emphasized to the commissioners, “Just ’cause [city staff members] think [something the project team said is correct] doesn’t mean it’s right. And just because Mark Bentley from Tampa, Florida, thinks something doesn’t mean it’s right. You are the deciders.”
Noting the Special Magistrate’s assertion that the commission’s denial of the modified plans presented in May “was substantively unreasonable,” Bentley added that the project had been presented in detail, to which the commissioners listened.
“You’re not being arbitrary,” he told them. “You have given this a lot of oxygen. And to say that you’re unreasonable, that no fair-minded person could consider your decision sensible, is kinda crazy. It ignores your role in this process.”
As for the “economic unreasonableness” that the Special Magistrate cited, Bentley continued, “You can build [on the site]. You have an economically viable use of this property. … We will defend that case every day of the week and twice on Sunday, because it’s just not true.”
During his rebuttal, attorney Lincoln told the commissioners that Morgan Bentley is not a land-use lawyer, “and this is not his area of expertise. It’s mine.”
Yet, George Scarfe of Hoyt Architects of Sarasota, who designed the condominium complex, talked about the fact that the plans had to comply not only with the city’s Zoning Code but also with the Florida Building Code and the National Electric Code, as well as the city’s own engineering design manual.