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Ebb and Flow
Battered by Storms,
Florida Panhandle
Sees Property Boom
Damaged Homes, Businesses
Spark Redevelopment
;
TV Coverage Lures Buyers
Mr. Allen Vows to Stay Put
By EVAN PEREZ
Staff Reporter of THE WALL STREET JOURNAL
October 25, 2005; Page A1


EASTPOINT, Fla. -- Of the eight hurricanes that battered Florida in the past 14 months, two severely affected this isolated area of the Panhandle -- flooding homes, closing schools and badly damaging what had been its economic engine for generations: a string of waterfront oyster-processing plants.

While Hurricane Wilma largely spared the area after making landfall yesterday near Naples, the series of powerful storms has left many beleaguered residents here and across Florida wondering if it was time to abandon hurricane country. But rather than make the region less attractive, the spate of storms is fueling an extraordinary level of new economic development across Florida and the Gulf Coast.

In July, eight properties straddling bay-front Highway 98 -- one of only two remaining stretches in the area where working fishermen are permitted to offload their catches -- were snapped up in a set of rapid-fire deals valued at $19 million. Some properties changed hands twice in a day. Nearby, in a seafood-processing district in the town of Apalachicola called Two Mile, a developer has proposed an even bigger deal to buy storm-wrecked oyster houses with stunning views of a sheltered inlet where ospreys, alligators and tarpon thrive.

The potential buyer, a group led by Colorado developer John Carroll, says the properties, left in shambles from recent storms, would make way for a development valued at more than $100 million, featuring condos, shops and boat slips catering to second-home buyers. Other owners of old seafood businesses, restaurants and mobile-home parks that sustained damage from recent storms have been swarmed by lawyers and real-estate agents representing investors who envision similar high-end projects on what is now prime waterfront land. Alarmed, county commissioners here last week placed a temporary moratorium on any new hotel units, including condos that would be primarily rented as hotel rooms, while planners study the impact on the county's growth-management plan.

Hurricanes often bring economic growth in their wake, as governments and developers converge to rebuild what the storms wash away. But here along the shores of Apalachicola Bay the series of storms has tipped the balance against the long declining oyster business -- and the culture that goes along with it.

The area's real-estate boom, which is echoing across the Gulf region, has been driven by a combination of factors. Media coverage of the storms introduced the area to a new national group of buyers with pent-up demand for waterfront homes. With land scarce in already-built-up areas, some of these remote locations look cheap by comparison. Meanwhile, owners whose properties were severely damaged and seafood workers looking for work in more vital industries have been leaving the area. Development is also getting a boost from government efforts to provide relief to storm victims in the form of millions of dollars in new infrastructure spending.

"These storms have always been part of living down here," says Mr. Carroll, 39 years old, who helped build residential developments in Colorado and Kauai before landing in Florida. "If you live...in Atlanta, a relaxed place on the coast -- with the Gulf right at your doorstep, and boating and fishing -- doesn't become less valuable because of storms."
[map]
Signs of the Gulf Coast's long-term economic desirability are already apparent in the destruction zone left by Katrina -- stretching in unprecedented scale from New Orleans all the way across coastal Mississippi and Alabama. Hundreds of thousands of refugees still wonder when they will be able to return home. But that hasn't stopped furious planning and debate on what will be one of the largest simultaneous real-estate development efforts undertaken since European settlers arrived in the region nearly 400 years ago.

In Mississippi, Gov. Haley Barbour asked former Netscape Inc. Chief Executive Jim Barksdale to help coordinate a planning process for the counties of his state that were devastated by Katrina. He also sought help from Andres Duany, the arect behind the pedestrian-friendly New Urbanism school of land-use planning made famous by the town of Seaside, Fla. Mr. Duany this month convened more than a hundred arects and city planners in heavily damaged Biloxi, Miss., to discuss what the rebuilt version of the state should look like.

In New Orleans, real-estate speculators betting on a big comeback once the city's levee system is upgraded are already prowling deserted streets looking for deals, while multiple reconstruction task forces, created by the governor, the mayor and the city council, jockey for influence over planning the city's future.

In this working-class stretch of the Florida Panhandle, Hurricane Ivan, which landed near the Alabama-Florida border in September 2004, sent tidal surges that damaged some waterfront seafood-packing houses. Then Dennis, which barreled ashore east of Pensacola in July, sent massive waves on a 185-mile journey that finished off many of the seafood businesses on the Eastpoint waterfront. Yesterday, Wilma caused only a higher than normal tide here as it slammed into the southern end of the state.

But over the past year, sales of existing homes in this section of Florida have surged, outpacing famously hot markets such as Miami in both percentage price increases and volume. Waterfront property remains less expensive here than in South and Central Florida or the Carolinas.
[SeaHouse]
A demolished seafood packing house on the waterfront in Eastpoint, Fla., where a storm surge from Hurricane Dennis has cleared the way for residential and retail development, which oyster fishermen fear could cut off their access to the oyster rich Apalachicola Bay.

To the west, past the condo towers sprouting like awkward beachfront palms in places like Panama City Beach, neighborhoods in more developed areas that were devastated by last year's Hurricane Ivan and beaten up again by Dennis have been deluged by buyers. These bargain hunters are looking for damaged property either as a way to acquire their dream waterfront property cheap or as speculative investments.

Real-estate agent Debi Freed says some hurricane-wrecked homes near Pensacola have sold two and three times in recent months as investors buy a home, make minor fixes -- or none at all -- then flip the property at substantial gains from the rapidly appreciating market. In neighborhoods where the hurricane wiped clean prime lots, eager investors are more than ready to ignore the hurricane history.

With such enormous changes under way, though, it may be impossible for the southern states to retain what remains of traditional coastal cultural ways and local economies.

Nowhere along the Gulf Coast are those tensions more clear than they are here on the coast of Apalachicola Bay. For more than 100 years, hurricanes were a big part of why relatively few people called this place home -- let alone an ideal vacation spot. It is too hard to reach, too backward for sophisticated city folks, too "natural" with regular cycles of harsh weather and armies of bugs rising from the swamps. Only a local economy relying on the arduous work of harvesting oysters and shrimp endured through the decades, providing work to locals who mostly eked out a defiantly independent, subsistence life.

For over a century, the bay's 7,000 acres of rich oyster beds dominated life on this triangular cape jutting into the Gulf of Mexico. The languid bay provides a livelihood for the hundreds of men and women who set off at dawn in shallow boats for solitary days of backbreaking work harvesting oysters, an industry that peaked decades ago.

In November 2003, several waterfront seafood-business owners appeared before the Franklin County Commission, which governs several fishing towns including Apalachicola and Eastpoint. Their goal: to loosen zoning restrictions on their properties to allow for development other than seafood-related uses. The owners, most belonging to families that had worked in the industry for generations, came armed with snapshots of nearly a dozen seafood businesses that had been shuttered in recent years. They argued that the zoning rules, which were instituted in the 1980s to protect the seafood industry, were now depressing the value of their properties. Land off-limits to residential development sells at a discount, they said, if it could sell at all.

The meeting was an early sign that land, rather than water, was coming to dominate life here. Today, waterfront lots sell for more than $1 million and some home sites several blocks inland, located in what for years was almost exclusively home to Apalachicola's poorer African-American residents, are fetching more than $100,000.

Early last spring, months after Hurricane Ivan crashed ashore east of here and with the real-estate market suddenly on fire, the Eastpoint waterfront owners finally got their zoning change. While residential development was still off-limits south of the east-west Highway 98, it will now be allowed in part of the seafood district across the street.

Behind the scenes, Bruce Millender, who comes from an oystering family, was busy orchestrating a deal of his own. In late June, his company, Heritage Coast Properties LLC, closed on several pieces of real estate, including those of fellow owners who showed up at the November 2003 meeting. Then in rapid succession, Mr. Millender's Heritage Coast sold the same properties to Eastpoint Redevelopment LLC, a company registered in Fayetteville, Ark.

Mr. Millender said in an interview that he remains a partner with Eastpoint Redevelopment that will construct 135 condos across Highway 98 from the bay on a spot that includes several shuttered seafood businesses and trailer parks whose residents are being cleared to make way for the high-end homes.

Harley Allen, owner of one of the last functioning seafood-processing houses on a once-smelly seafront in Apalachicola, is feeling isolated these days. Not only were many nearby seafood businesses destroyed by Dennis's waves, but other neighbors have been cashing out. The Seafood Reef restaurant across Highway 98 has been sold to investors who plan condos. The Copelands trailer park a few yards down was sold recently to Mr. Carroll, who plans a New Urbanist-style development of houses, shops and a mini-town square for a Saturday farmer's market.

Mr. Allen has received numerous letters offering to buy him out, but he vows to stay put. "I ain't selling," he says dismissively. "I don't care how much money it is; I'd probably spend it and then I'll have nothing."
[Rising Tide]
Still, the sudden surge in development pressure has accelerated the arrival of a day of reckoning for the struggling seafood industry. A bay that boasts of supplying 10% of the oysters in the U.S., and 90% of Florida's, has seen its iconic industry in a steady descent. The oyster catch fell 35% by weight between 2000 and 2004. Oystermen who made $10 a sack of oysters five years ago, get $11 to $12 today, while their fuel costs have doubled.

Meanwhile, many oystermen have become part-timers, spending more and more time making much better wages doing construction work. Florida's agriculture department, which regulates the industry, says it sold 714 oyster-harvesting licenses for this year's season, down nearly 25% from four years ago. Some local seafood dealers quietly are importing cheaper oysters from other areas of the U.S. for frozen packaging that usually ends up in stews.

Meanwhile, the government response to the storms is helping lay the groundwork for the real-estate boom. This summer, during the cleanup from Hurricane Dennis, state road workers were busy moving inland a four-mile scenic stretch of Highway 98, this region's lifeline. It's a project pushed by St. Joe Co., Florida's largest land owner, which has been busy in recent years converting its vast timberland holdings in the region into high-end housing and commercial developments.

St. Joe says it is picking up the cost of moving one stretch of the highway and is pushing the state to relocate dozens of miles of the scenic route to protect it from storm surges. Florida, in a move aimed at helping evacuation, recently built a new causeway bridge across Apalachicola Bay to St. George Island, mostly home to million-dollar beach mansions for visitors from Atlanta, Birmingham, Ala., and other landlocked big cities in the region.

But critics point out that any improvements in hurricane evacuation that comes with the new roads and bridges will likely be offset by increases in the population of vulnerable areas. "This is federally funded urban renewal for resort areas," says Alan Pierce, a planning department administrator in Franklin County, where Apalachicola is located.

Ms. Freed, the real-estate agent with Weichert Realtors Sunsouth in Pensacola, said that in July she was driving back from Birmingham where she had evacuated during Hurricane Dennis, when she began receiving cellphone calls from prospective buyers. They were looking for "as is" hurricane-damaged properties. Since January, she says, she has sold 30 to 40 hurricane mangled houses.

"It's like we got on the map with the storms," Ms. Freed says. "We're getting investors from Massachusetts, Colorado, Oklahoma -- places we never saw buyers from before." Recently, one such buyer from Oklahoma bought a property for $200,000 and sold it weeks later for $395,000, Ms. Freed says.

Rick Evans, a utilities contractor who lives 20 miles inland, went looking for property after Hurricane Ivan and found one amid the carcasses of houses ripped apart in a neighborhood called Grand Lagoon, west of Pensacola.

He bought a two-story house, with its waterfront walls collapsed by either a wayward boat or wood pilings from nearby docks, for $500,000 and is now making repairs. He plans to move in around Thanksgiving. Recently, he says, he turned down an offer of $1 million from a buyer who didn't mind that some of the hurricane damage hadn't yet been repaired.

"I've wanted to live on the water for 20 years," he says.
Write to Evan Perez at evan.perez@wsj.com

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