After being pushed back by the Fort Myers City Council, a developer seeking to complete the purchase of city-owned property slated for a Joe Farmer’s Market has turned to the courts to finalize a deal that has been ongoing since May 2018 .
Local developer, Johnston & Johnston, is asking a judge to force the city to close the deal for a 36.64-acre property at 5600 Lee Blvd. it has been going on for over four years due to a number of issues, including mineral rights and ownership issues.
The problem now, according to the lawsuit, is the city council’s decision in late June to postpone the closing of the sale in order to obtain a new appraisal. This despite a seventh amendment to the contract which modified the terms of the agreement and the sale price, both to the benefit of the city.
The property in question is on Lee Boulevard and off Buckingham Road in Lehigh Acres. Johnston & Johnston told city officials Farmer Joe’s intended to take up 10 acres for its second store and employ up to 400 people. As part of the commitment to bring the grocer, the developer has agreed to make traffic improvements in the area.
The initial sale price, agreed in 2018, was set at $2.5 million, but Johnston & Johnston agreed to increase it to $2.75 million as part of the seventh addendum to be voted on. Johnston & Johnston also agreed to pay the full sale price all at once rather than in three installments as originally agreed.
The issue that kept a majority of council members from approving the addendum and setting a date to complete the sale was that the property’s most recent appraisal was completed in 2016, long before the recent land boom. That valuation came in at $3.17 million, several hundred thousand dollars less than the previous, updated sale price.
The majority of council members are concerned that, given current land prices, the city is not getting fair market value for the property. “We’re just leaving tons of money on the table,” Darla Bonk, who represents Ward 6, said at the June 21 meeting.
In its 42-page lawsuit, Johnston & Johnston argues that there is a contract in place that has been amended many times over the years and always approved by the board. The city, he says, must honor that. And, the developer argues, the decision to get another appraisal is a way for the city to find a new buyer, who will pay more.
The city, according to the lawsuit, has already received an offer of $3.1 million.
Johnston & Johnston “clearly believes that, pursuant to law enacted in the State of Florida, that a binding contract exists between” it and the city of Fort Myers, the lawsuit states. The city “apparently, through its actions in failing to close and requesting a reassessment, presumably to sell the property to a third party, thinks otherwise.”
The developer, in the lawsuit, goes on to say that he has a “valid and enforceable contract” and that he has complied with all the terms of the agreement while the city “has interpreted the contract in a different manner and refuses to complete the transaction”.
“As such, (Johnston & Johnston) needs a judicial declaration of its rights that it is a viable buyer, (a) all contractual rights under the contract and (it) has demonstrated that it is ready, willing and able to enter into the transaction, but for the actions taken by (the city).
City officials did not respond to a request for comment.
While it’s easy to focus on the drama at the Fort Myers City Council meeting on June 21, the fact is that this sale has been troubled since shortly after the signing of the sale agreement on May 16, 2018.
Johnston & Johnston, which has rented the property since November 2004, says much of the problems causing the delay were the fault of the city. The problems, according to the developer, began when the city was unable to provide a “valid, negotiable and insurable title” as required by the contract.
The problem was that the title contained “underlying oil, gas and mining rights, as well as entry to the property for the exploration and recovery of those oil, gas and mining rights.” This led to the first endorsement to the contract, extending the closing date in a good faith effort to allow City to resolve title issues.
This addendum was unanimously approved by the board and signed on November 8, 2018.
“Unfortunately,” the lawsuit alleges, the city “was unable to correct title defects during the initial period of the first addendum.”
This led to a second contract amendment which again extended the closing date. It was also unanimously approved by the board and signed in March 2019, according to the lawsuit.
Over the next two years, even though the COVID-19 pandemic halted development and halted in-person government work for months, the city and Johnston & Johnston continued to work through the complicated process of obtaining rights and the parties continued to discuss how to move forward with the sale.
Eventually, concessions were agreed, with the developer agreeing to accept title and assume tax liability for the rights clearance as well as pay $83,518.43 in rent between completion of due diligence and closing.
This created the third rider to the contract, according to the lawsuit. The Fort Myers City Council took up this addendum at a June 7, 2021 meeting. It was at this meeting that Johnston & Johnston told council members that Farmer Joe had taken 10 acres and brought in the 300 to 400 jobs.
A public hearing was held and the board, again, unanimously approved the latest addendum, according to the lawsuit.
All was well until Johnston & Johnston discovered during their due diligence that the original description of the property was incorrect. Lee County, he found, “by condemnation action” had created a 30-foot-wide “gap” between the property and the Lee Boulevard right-of-way. This meant that the property had no access to Lee Boulevard.
Again, the city could not convey “good, negotiable and insurable title”.
“Representatives for (Johnston & Johnston) and (Fort Myers) have met and again, in good faith and consistent with their intent to complete and complete the transaction, have indicated that (the city) will take steps to resolve the existing defect in their own title,” according to the lawsuit.
“At no time has (the city) indicated that it will not complete the transaction or take any action to correct the title.”
A fourth addendum was created and unanimously approved by City Council on August 19, 2021.
Over the following months, complications continued to worsen, leading to a fifth amendment, which was unanimously approved on November 8, 2021, followed shortly thereafter by the sixth amendment approved on December 12, 2021. .
Between the approval of the sixth addendum, the creation of the seventh addendum, and the June 21 meeting, Johnston & Johnston on May 6 paid the city the agreed sum of $83,518.43, according to the lawsuit.
On the same day, an attorney for the developer received an email from a city staff member stating that “the contract dates may be expired and we have a ‘challenge’ by an attorney saying the contract has expired. Please call me. When do you think the closing deadline is? »
Johnston & Johnston went ahead with preparations to finally complete the sale, unhesitatingly in the belief that the town staff were working towards the same goal.
Then came the June 21 meeting.