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City Marketplace in Receivership; Public Sale of the Palm Coast Development Set for August

| July 8, 2011

Most of City Market Place's 125 storefronts are still empty, but the development has been more successful at finding tenants than other new commercial developments in Palm Coast. Click on the image for larger view. (© FlaglerLive)

Developer Bhagwan Asnani’s hold on City Market Place, the 167,000 square-foot, four-building commercial development on Cypress Point Parkway that’s been home to Palm Coast’s city government since November 2008, is coming to a close. A Flagler County Circuit Court judge on June 1 granted a foreclosure order on the entire property.

A public sale of the property is set for August, at which time it will go to the highest bidder.

The changes won’t affect tenants: the property may be changing hands, but it’s not going anywhere. And Palm Coast’s plans to build a $10 million city hall of its own are no longer a priority, with public opposition weighing heavily against the project and compelling the city to stick with its current arrangements, at least for now.

Asnani defaulted on a $9.4 million loan from Branch Bank and Trust Company (BB&T) in January 2009. He has since battled foreclosure, arguing that he had built two of the four buildings with his own money and attempting to exclude them from the foreclosure order. In court papers, Asnani claimed BB&T improperly took the two buildings as collateral after the bank extended him an additional $3 million loan to finish the two other buildings.

Orlando-based Asset Preservation group was appointed receiver, and on July 5 distributed letters to every tenant in the complex, saying it would manage the property and take all rental payments due beginning July 5. Thomas Alday, the receiver, visited tenants this week, saying nothing would change for the moment, and even inviting some tenants to make proposals to re-negotiate their rent and suggesting that there was an interested buyer.

Asnani charged rent with wide disparities for the same square footage, depending on the tenant, in attempts to help tenants establish themselves or grow. He was well-liked by tenants and known to be flexible to their needs, but his management was also erratic, and his focus on City Market Place wavered as he battled foreclosure, letting the property decay.

At one point, tenants were filling the ground floor of the two-level development rapidly. According to papers filed in circuit court, the development had revenues of $2,419 in the third quarter of 2008, just after it opened (with Dominic’s Deli as its inaugural tenant). The city’s move to the development in November 2008, filling 11 percent of its space and paying $20,000 a month, helped push revenue to $40,000 in the final quarter of that year, and accounted for most of the $80,000 in the following quarter. But tenants kept coming, and by the middle of last year, with the majority of storefronts still empty, Asnani was pulling in $174,000 in revenue.

The development became an arts hub, with the Hollingsworth Gallery (originally with just one storefront, now with four) anchoring something of a cultural community, with Mia Bella Academy of Dance, Fred Astaire Dance Studios and the Flagler County Art League following suit–and soon, a live theater. But tenants have also been quitting, including Fred Astaire, which closed there two months ago.

Revenue has also flattened out since the second quarter of 2010, hovering between $174,000 and $178,000. Asnani did not return several calls this week.

Three tenants interviewed Friday were not concerned with the change-over, carrying on business as usual and hoping for steadier days and higher-quality tenants in the future.

“I was building this out when it was still a dirt parking lot,” Pete Tavolachi, owner of Dominic’s Deli, one of the more recognizable destinations at City Market Place, said. “I want to be here for a while. We like Palm Coast. It just has a lot of hiccups. If you have hiccups all day long, you’re eventually going to get sick of it.” He had no overt complaints about Asnani. “I wish him the best, but my little world here is the deli. This is my life. This is what I live and breathe.”

J.J. Graham, owner of Hollingsworth Gallery on the second floor, wishes that whoever takes over in the end recognizes the potential of the place as a cultural destination. “The first thing they should do is change the damn name,” Graham said. “It’s the most generic name. Marketplace gives the wrong idea, because it’s not just a marketplace. There’s all kinds of culture around here.”

The development was originally known as City Walk until Universal Studios filed a federal lawsuit in May 2010, charging trademark infringement over the name. The case was settled that November, after the name had been changed to City Market Place.

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41 Responses for “City Marketplace in Receivership; Public Sale of the Palm Coast Development Set for August”

  1. lawabidingcitizen says:

    I guess build-it-and-they-will-come no longer applies. Palm Coast is well its its way to becoming Section 8 heaven.

  2. palmcoastvoter says:

    So lets get this straight. Our City Hall is in a FORECLOSED STRIP MALL!! And people still say we dont need a permanent city hall. A professional looking City Hall. Any serious potential developers are going to look at Palm Coast and just laugh. Its time for a change.

  3. palmcoaster says:

    One more very important fact is that if we, The City, buys this complex there will be and income from the rent paid by the several tenants to help pay off any mortgage/bonds needed, if so. What a good deal and we keep by now our City Hall in the very center of Palm Coast and handy to most. We, the people, will make the money on this deal and not once more the Town Center Developer. City will also do a great job maintaining the complex in tip top condition.

  4. palmcoaster says:

    City should buy Market Place on the auction day, real cheap. Use part of the City Hall funds available or will be easy to get a loan with the 20,000/month rent we are paying now plus the additional tenants rent income. Is the best deal we can take advantage now, not only to save but furthermore make a load of $$ on it. Us the people will make the profit for once other than the Town Center Developer. Is a no brainer and a great deal for the people of Palm Coast. C’mon Nets and council buy the complex in the auction and thank you, if you do. We keep our city hall in the heart of Palm Coast handy to all and if in few years from now, the economy improves then City can build its Hall in Town Center after selling Market Place to a huge profit. Great deal!

  5. Anita says:

    Having lost our delightful little Wine and Cheese Pairing Shop and the wonderful jazz sessions, a place I had hoped would morph into a trattoria or New Orleans style restaurant, I envisioned Market Place (and I totally agree with J.J. Graham about the name – Boooring!) as Palm Coast’s answer to New York’s SoHo or West Village – charming, a little quirky, diverse and always ingteresting. That possibility still exists, especially if the current tenants stay put, and that includes City Hall, at least for awhile. Savvy entrepreneurs looking to invest in Palm Coast aren’t necessarily interested in the beauty of your city hall, but in the health and type of businesses, and the clientele you attract. This area could serve as a wonderful niche in the strip mall desert between Key West and St. Augustine. Envision flower-filled planters in front of shops, the soft gurgle of recirculating water in a fountain, a few well-placed trees – a place to be visited often and enjoyed.

  6. Liana G says:


    Excellent! We just have to ensure that the starting priced at auction is not rigged. You know like those wetland/marshland purchases the city made for millions of dollars when they were appraised and worth less than a few $100,000. Also, looks as if it won’t be long before the PC Data building is reverted back to us, so we’ll have yet another choice/original city hall back!

  7. Art Woosley says:

    This article brings with it a clear message, which is, that our state, our county and our cities should all immediately cease spending money on their frivolous wish lists. Only priority issues, issues which concern the health and safety and well being of our communities should be addressed at least until such time things stabilize.

    Example, our Federal Government is at this very moment in a similar position as that of Mr. Asnani for those who may not know, it too is on the verge of a major default. Combine this with the European Union which = (Titanic ) a ship that could possibly sink within the next year, and you realize, regardless of (local spin) etc. this is not the time for these smaller governments to spend.

    Crying wolf maybe, let’s all hope so ?

    Only time will tell as to how this plays out, one thing is certain however, this is a big wolf, and it is now global, therefore our local politicians need to think outside the box of (Flagler County), and start looking at the big picture, before they assume any more debt.

    The European Union is currently standing on very thin ice, and if that ice breaks, it could well take down much more than the EURO.

  8. tjm says:

    Personally I think the City should buy it and become a Landlord. That way our cost of housing city government will go down, WE DO NOT NEED A HUGE CITY HALL COMPLEX SO THEY CAN FOREVER HAVE THEIR NAMES ON THE WALLS OF CITY HALL.

  9. Alex says:

    We must buy this place and with the commercial renters we can keep the cost of running the Palm Coast Government DOWN.

  10. John Ell says:

    Since I reside in another community it is probably not relevant for me to say how or what should be done about the City Walk, err, excuse me, I mean the marketplace property.

    So I won’t suggest that it is absurd that the very descriptive name, almost generic, of City Walk was challenged by non other than Universal. What a joke! It’s like the kettle calling the pot black.

    Another thing that I won’t mention is that those who believe that the City of Palm Coast should pick up title to the property, may ask themselves (if they have ever been in business) what the first question for survival should be. That question is, in a declining economy – with the worst yet to come – will there be sufficient revenue to keep the property solvent? If not, guess what, the debt will simply be passed on to the taxpayer. GO PALM COAST.

  11. palmcoaster says:

    I am glad…that the majority here see the positive vision of our City government buying the Market Place is the perfect deal.

  12. palmcoaster says:

    John city rent at 20,000/month will pay for any loan…And if they use part of the 10 million that city already has for a new city hall then will be saving 20,000/month in rent, plus generating rental income to pay for maintenance and repairs and nice revenue to save…etc.

  13. Binkey says:

    Payment would be about $50000.00 a month over 30 years on 10M. Then there would be insurance and up keep, utilities on the empty units. I would certainly try to get it cheaper than the 10M

  14. palmcoaster says:

    Binkey correct, but we don’t know the asking price of the bid and or how much may drop on auction.
    Empty units still have to use and pay utilities? Sure city pays some renters insurance anyway now…
    For the whole complex will be higher of course but as well, will be if the City will build a new City Hall in Town center. This complex has businesses paying rent and the city hall in Town Center won’t.
    City has the 10 million saved for City Hall and probably just a partial of that, will be enough to bid and get Market Place. Just make a good bargain offer. Nothing to loose there.

  15. Binkey says:

    I agree they should try to get it at a bargain price. even at 10M it’s probably a good price.

  16. Layla says:

    Art Woolsey, I could not agree with you more. We are on the verge of financial collapse and our own citizens posting here want to spend, spend, spend.

    How could anyone want to do this when less than half our population are paying taxes? I think I have a pretty good idea about why this country is in such bad shape.

    Nothing to lose? Just our shirts.

  17. Lin says:

    Can’t believe so many people here want to open the taxpayer’s pockets without thinking about all the ramifications.

    Property values are still dropping.

    If the City is the property owner & paying 50,000 rather than 20,000 that is quite a difference monthly.

    If the City is the property owner, who is paying the commercial property taxes? No collections possible there.

    If PCD does go out (would hate to see it, but…) we could just move the city offices back there. We don’t need another Taj in this County. What we need is tax-PAYING healthy businesses.

  18. Art Woosley says:

    Thanks Layla, common sense would say that there is yet another shoe to drop, but as always, many people are very quick to grasp at straws, often done without giving much thought to the long term consequence.

    This is after all how our county got stuck with the Ginn hangers etc.etc.

    First of all, what on earth does the city of P.C.or even the county for that matter, know about turning a profit, or even operating a property investment such as this ? After all please remember, that Mr Asnani is a man with great expertise in this field, and even he evidentially could not pull it off ?

    No disrespect, but in truth all of our local Flagler governments are currently costing you the working public, retired residents etc. hundreds of thousands of dollars a year.

    Much of this money being spent on hair brain ideas/ schemes etc. most being presented by a multitude of players i.e sub-groups, pushing their own agendas as a win win deal, I would ask you this, how many of those proved benificial to you the resident ?

    This is one of the major the reasons why they the local governments have the current budget troubles, as they say in Washington DC (” It is not a revenue problem, it a SPENDING problem “).

    Prudent government officials, need to get a grasp on what is taking place on the world stage today, and curtail non- essential spending, then to also buckle their seat belts, as this global ride may well get more bumpy before it’s over.

  19. Yogi says:

    This city took a bath on the last city hall deal with Palm Coast data. Gov. employees are not the best business people. The best business people are out in the private sector running their businesses. Cities need to govern and let private business take care of business deals. If things get bad enough the city and county may have to consolidate all their services. Money doesn’t grow on trees and the world won’t buy our debt. Watch the bond auctions. The fed has stopped printing so the Treas can sell the junk. No buyers….. and interest rates go up. The tax base/revenues is shrinking and nothing can stop it, ……so should the size of local government.

  20. J.J. Graham says:

    I am a business owner here at city marketplace and have been for 3 years. The city should consider purchasing this place. They should offer affordable rent on the second floor for businesses that are involved in cultural pursuits, this would increase the value of the lower level rentals. Cities rooted in culture weather economic turmoil more so than those without. People will continue to want to retire here if there is a level of sophistication in our cultural. Palm Coast is already becoming known as an arts community we need to support that. 50,000 a month could easily be met and then some, with the right strategy.

  21. Dee says:

    Palm Coast is a dump. As long as the neighborhood signage is still painted teal, nobody will take this place seriously.

  22. Lin says:

    At the “Push the new City Hall build” presentations, it was said by our City that the present location of our City Hall is not practical for the employees — so why buy it?

    We do not need the expense of a money-losing shopping center. Remember our golf course?

    Coming out in the black requires a favorable economic climate (NOT) and at least some expertise at running the business (NOT).

    Yeah, why keep that teal thing going? Is that 80’s?

  23. W.Ryan says:

    Lin, The reason for the Cities negative on their current local was to justify their stance for a new City Hall. The present local is smack dab in the center of Palm Coast! As for the rental space this space provide, it is prime for cultural development that would make Palm Coast viable to businesses that are looking for relocation sites. Arts and Culture is a draw! It would also draw potential new people to PC enabling more revenue for the city.Plus the City would have the space they were complaining about.

  24. Liana G says:

    Good point Palmcoaster: “This complex has businesses paying rent and the city hall in Town Center won’t.”

    Which means that these businesses will be supplementing the city’s expenses/cost plus generate an income, similar to a homeowner renting out an empty bedroom, and schools renting out their facilities for Sunday church.

  25. Lin says:

    Yes, W.Ryan, the city used that excuse of the present city offices of being impractical to justify moving to a new build — but buying City Walk doesn’t make the offices practical — it was said that the space is chopped up and just not right for what the city needs.

    I do agree that we need more culture here and that it can generate income (look at the music & art festivals in New Smyrna Beach) — but we don’t need to spend tax money to purchase City Walk and become landlords with all the financial burdens of that prospect to encourage culture. We have Town center to hold festivals and shows — Rock N Rib fest was lots of fun. I used to go to European Village for jazz (awful what has happened to that venue). European Village failed for business reasons. There is no reason in my opinion to think that “the City” can run City Walk as a cultural venue any better than they did the Golf course.

    Let’s not spend any more taxpayer money on ventures that are best left to private enterprise. Let private business take the risks.

  26. palmcoaster says:

    I insist that the city should buy this complex the same way I insisted back when our water company was up for sale and I supported all the way that City should buy it.! Has been so far the best business that city got involved in about supplying our water. Where do you all think that the life line for our budget shortfalls comes from…? from our utility profits.The 5 million for the Town Center CRA not refunded yet and the 6.5 million at least for the Old Kings Road infrastructure improvement for the now defunct Walmart, plus the 10 million saved already that they want to spend in the Town Center City Hall?
    Go to the auction make a low offer and get that Market Place complex for a partial of the 10 million that city has and then will be saved at least the 20,000/month on rent we pay now, plus the income in all the rented units on it. This looks to me as a good deal as the utility water company we bought! Imagine all the good things and improvement city could do in many areas with a new income of maybe about $40,000 a month and only while all units not rented yet. Once Reps and Dems stop fighting in DC and concentrate on creating jobs instead, then those vacant units will start renting and then income will skyrocket.

  27. palmcoaster says:

    For the one’s here demanding to city saving money, better watch the County Commissioners about to approve the Library paint for $60,000 …etc? Who is painting it MichaelAngelo and with gold? Next:
    Peterson also argued against funding several library projects, including painting the library at a cost of $60,000, replacing lighting along a walkway to the parking lot for $11,200, and meeting room expansion, gazebo replacement and café construction — at $20,000 a piece.

  28. W.Ryan says:

    Aside from a vast emptiness of space the only other justification for Town Center(?) is to through events like Rock-n-Ribs? 10 million is was burning a hole in the pockets of City Hall. Now to avoid over runs in cost of construction and otherwise, buying City Walk would be a waste of money? In the same breath we have had good money spent on bad ideas that have yet to materialize into anything other than outdoor activities. Here is that opportunity to make that arts and entertainment venue that has been in the works for years and there is little work to do in making this happen. You have the artists, the theatre and the restaurants ( Two spaces waiting for the right tenants and Dominick’s) and you have the Second Saturday art event led by the Hollingsworth Gallery and the SECCA Tree Studio’s art gallery. For our City to be surrounded by all of this culture at one location would be a plus. Lets stop being overly cautious and look at the dynamics of this situation. I’ll bet that the returns would come sooner capitalizing on this prospect than with Town Center.

  29. Liana G says:

    I’m in favor of funding these library projects. Maybe the city can accept bids, but please let’s improve our library. Maybe we can even get the local business community to chip in. Home improvement stores, local banks, stores, anyone?

  30. Lin says:

    The point I was trying to make is that you don’t need to BUY real estate to have arts. There is space for exhibitions everywhere.

    I am also in favor of spending a bit of money on our Library. The library where I am from had a wonderful space downstairs for Concerts, Art Shows, etc. There was a SELF SUPPORTING cafe for people to hang out — it was wonderful. I love our library but it can be more.

  31. W.Ryan says:

    You don’t need libraries to read books. Not that libraries aren’t important. There are many places to get literature. One of them the internet or book stores( business spaces to have books displayed or read). So your point is? We’re not just talking about real estate. It seems as though you think that art just materializes. Artists need space to create. They need a support system that enable them a nurturing environment with other artists who share ideas and energy. I’m not just talking about painters. We have actors, poets singers and musicians that need a central location. SOHO NY didn’t become a great cultural and creative location because artists just displayed work. They lived art in a thriving art incubator. This increased the worth of the real estate. This same process happened in every thriving city. Chicago, NYC, LA, Seattle, Boston, Miami and even St. Augustine, every city developer knows this.

  32. palmcoaster says:

    I have an elderly friend of mine that due to a long reading in the local library caught a severe pneumonia that sent him 3 days to the Flagler Hospital and could have died. Why? long exposure to and irresponsible library sick reader that sporadically coughed while was reading nearby. He does not use the library for reading any longer. Now his wife goes and just gets the books there, to read at home and in and out. My friend told me that was the worst illness he ever sustained in his 88 years of age as he could not breath.
    Totally agree with Alan Peterson we are in no economic condition to spend 150,000 plus on the library improvement now. We all have to tighten our belts.

  33. Lin says:

    OK WRyan, my point is that the city is not in a financial position and the taxpayers are not in a financial position to buy space for artists to use to create. Artists can create everywhere — their own homes, artists coops for example. I suggested the library as a performance space and display space alternative not a place to read. My point is that we need to stop looking to the govt spending our money as a solution to every problem.

  34. Lin says:

    By the way, W.Ryan, I spent my life in real estate — this isn’t NY or SOHO — alot of artists communities developed naturally, not by government spending more in such a hurting economy.

  35. Anita says:

    Regarding Library improvements, it would do us good to recall that the current Director, Holly Albanese, was responsible for bringing additional funding to the library through U.S. Passport Services. For a small fee and in addition to their myriad duties, library personnel prepare forms and forward them to the State Department and will also take appropriate Passport photos for an additional charge. Funds generated from this operation were earmarked for the Internet Cafe, which in turn, would earn additional funds for Library operations. Both endeavors, as well as monetary assistance from “Friends of the Library” are meant to alleviate needless burdens on the taxpayer, however, let us be clear; the eponymous Flagler County Public Library is there to serve the PUBLIC and folks,(Mr. Peterson and Palmcoaster, included) there ain’t no free lunch. If you want the service, you’ll have to pony up something. And, PalmCoaster, I hope your friend has recovered from his illness, but I common sense tells me it was HIS responsibility to get up and change his seat if someone was spreading germs in his vicinity.

  36. palmcoaster says:

    Same with city and county/sheriff hefty cameras/traffick violations tickets…where is all that dough going? In which line of the city,county, sheriff budgets are shown? Lots of $$ end uses we are just not informed about!

    Remember that also Florida has the billions income in the lottery to be used for education great idea …but where is that money going really?…with all these education cuts?

    Applaud Albanese for the passport deals to be done in house bringing revenue…Now how much is that revenue and how is accounted for and in what spent? Transparency should be a must. Sorry but a 60,000 paint job plus two halls at 20,000 each need to wait for better economic times on this county where over 16.5 % unemployment reings now.

  37. Anita says:

    @palmcoaster I would strongly suggest you contact Ms. Albanese for those figures. I do know that part of the revenue was recently spent for a new electronic card catalog to replace one that had served for close to fourteen years and was unable to handle the increased patron volume or needs. The current Library budget can be found at : Click on the About Us tab and scroll down to the approved 2010 budget. The figures are there. Another document you might be interested in is the Director’s 2009 proposal for the purchase of the new electronic system. It lays out the need for, the uses of and the financial requirements – all the transparency you could ask for, and it’s free for the “Google-ing.” [Keyword: Flagler County Library, FL]

    You have every right to visit the library and to see what your money will be spent for, and it might be a good thing if you did. Barring that, you can always grab a bucket and a brush and volunteer.

  38. W.Ryan says:

    Lin says: “My point is that we need to stop looking to the govt spending our money as a solution to every problem.”

    There is no request for handout at all! My point is that we need to establish a cultural aesthetics to create the environment to better entice all sorts of opportunities in Palm Coast. This creates developmental opportunities. Acquiring City Walk will not be a handout or a financial dilemma for PC. Rather acquiring City Walk would house city government as well as stimulate the economy in the long run. The one problem PC has had is… What, culturally, does this City have to offer. By the way; your view of artists is very limited. You really need to find out what a professional artist does and what they need in order to be creative at a professional level.

  39. Lin says:

    W.Ryan – you don’t know what I need to do or what I know. I have lived with an artist (husband) for over 40 years and have participated in that kind of life.

  40. W.Ryan says:

    Lin-I didn’t mean to offend…this thread is all about opinions. Clearly the artist in this community is an asset which has not been realized or utilized. There is no waste of money when everyone in our society benefit from a higher aesthetic value for the arts. Every part of our daily life has been affected by some graphical, musical or theatrical expression. Nuff said on my part.

  41. J.J. Graham says:

    Lin nobody here is looking for a handout, in the 3 years that I’ve owned a gallery I haven’t asked the city for a dime. we’ve built what culture we have here on our own. All I am asking is that lower rent prices be set for businesses that serve a cultural purpose in the community, because thee enhance the commerce in the vicinity of their location. Any business here at city marketplace can vouch for that. I’ve proven it. No real estate credentials needed.

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