On Sept. 6, Flagler County’s economic development department issued a press release boasting of landing a company called Discovery World Furniture that would build a 250,000 warehouse on U.S. 1 “near the southern edge of Flagler County,” bring 50 jobs and $2.5 million in annual wages.
The release did not mention that utilities for the property hadn’t been secured yet, though that issue would play a role in the deal’s collapse just weeks later. Nor did it mention the $680,000 property tax break the county agreed in July to extend to the company over the next 10 years, by far the largest incentive package the county was offering any company in Flagler’s history, though Ormond Beach and Volusia County were to be the largest beneficiaries by far of the company’s economic impact, according to Bruce Page, the Palm Coast banker, co-owner of the property being sold to Discovery World, and a self-styled economist.
At the time, the company was doing its “due diligence,” as Helga van Eckert, the county’s economic development director, put it to the commission. But two months later in the release, there was no mention of “due diligence” anymore: the release was written as a done deal, though van Eckert had spoken of it as nearly so as far back as May, when she told the economic development board: “They’re already looking at specific properties and if we find the right site for them, I think that’s going to be a go.” In an interview in July, van Eckert boasted more openly: “This is the biggest project that we’ve brought into the county,” she said, though noting again the due diligence part. “It takes us to a different tier.”
By the time the release was issued in September, there was no question that Anthony Lupo, the company’s CEO was speaking of it as a done deal. “Once established in Flagler County, our plan is to expand operations to include another niche market product with our own proprietary designs, mainly to service the coastal areas here in Florida and much of the south east coast of the United States,” Lupo was quoted as saying in the release. The release did not mention that Lupo has been a homesteaded resident at a Hammock Dunes condo since 2010. (He incorporated himself and his wife there as Lupo Family Business on Aug. 14.)
“This will obviously increase the number of employees we will need as well as support local vendors in a cooperative effort,” Lupo continued. “We currently operate out of two facilities with a combined square footage of 205,000. Our proposed building in Flagler County will enable us to streamline our operation.”
It was not a done deal. The deal collapsed last week when, as first reported in the Observer, Lupo said he was pulling out.
“As we have completed our due diligence, we find that the project does not make financial sense for us to move forward at this time,” Lupo wrote van Eckert in an undated letter. “That being said, if an opportunity to work with you and your team in the future should present itself, there is no doubt that you will be our first call.” He lavished praise on the county and its government. (The letter was attached to an email Lupo sent on Oct. 15.)
The collapse of the deal is not the first high-profile reversal for the economic development department. In 2013, van Eckert’s department played up a 300-job promise from a manufacturer who was supposed to sign a 40-year least at the county airport. The deal was projected as solid enough that then-Gov. Rick Scott headlined the groundbreaking. But no more than ceremonial dirt turned at the airport. That same year van Eckert’s department spent $15,000 to buy 276 minutes of advertising, in 10-second increments, on a Times Square billboard, that yielded no response.
Two years ago the county extended a $90,000 subsidy to a local developer to build a “spec” building that would be used to attract new companies. The first of two buildings has been sitting vacant on Otis Stone Road since its completion a year ago, when van Eckert circulated a sunny release and promotional video. Two years ago van Eckert also boasted of a stoneworks company in Georgia, the former Soviet Republic, opening a local hub with 30 jobs in Palm Coast, starting in January 2018. According to the state Division of Corporations, the company’s U.S. subsidiary was incorporated in 2017, around the time of van Eckert’s announcement, then went inactive. Last year the economic development department had no muscle, and was a non-entity, in preventing the closure of a Sea Ray plant in the county, and the loss of 440 high-paying, manufacturing jobs.
The economic development department has spent nearly $100,000 in the past five years on its website, though the substance of its successes, such as Designs for Health and Gioia Sails, consist of local expansion rather than new companies from out of town. The department costs taxpayers about $500,000 a year.
Lupo did not specify either to van Eckert in person–according to van Eckert–or in his letter what caused the reversal at such a late date. “I can’t tell you if it was financial, if it was timing, if it was geotechnical, I don’t know,” van Eckert said. “At the end of the day it doesn’t work for them. We were still talking to them when it made it to the paper, trying to turn the deal around, but once it got out there, they’re just holding off at this point.”
But there was a controlling part in the issue: Lack of water and sewer at the site, and the way the availability of both had been misrepresented in the real estate listing.
County Administrator Jerry Cameron said van Eckert told him “the real estate agent sold it saying there’s water and sewer available, so we moved forward with it. She put together the incentive package etc., then it turned out water and sewer wasn’t available.”
Van Eckert confirmed the account. “When the property was listed, it was listed as having water and sewer on the site,” van Eckert said. “The property owners as we believe understand it believed there was water and sewer and water on the site.”
But there wasn’t. The listing agent? Parkside Realty’s Margaret-Sheehan-Jones–the same Sheehan-Jones the county trusted when she brokered the sale of the Sears building to the county earlier this year, only for the county to find out the building had severe water damage. It is also the same Sheehan-Jones brokering the space at the spec building on U.S. 1. (Sheehan-Jones and van Eckert have a close relationship, with Sheehan-Jones regularly appearing before the economic development board. Sheehan-Jones said on Oct. 29 she was no longer the broker on the spec building, but did not say when that relationship ended.)
In an email this morning, Sheehan-Jones said, “please understand that water and sewer is available because it is at the site. Lots of sites don’t have water and sewer at their site. This one did and was advertised as such. Of course anyone would know approval is always required and because this was outside of the city, the city approval was required and was thus received. “
“I can’t speak to one thing or another with respect to Margaret or Ormond Beach,” van Eckert said. “Real estate deals, sometimes they die three times before they happen.”
“With all the issues we’ve had with this lady and her dealings, why wouldn’t you double check that and why are we waiting to the last minute to address this?” County Commissioner Joe Mullins asked, citing other issues involving Sheehan-Jones.
The disarray surrounding the water and sewer issue came to light soon after the county approved the tax subsidy for the Discovery. Cameron scrambled to find a solution, meeting with Ormond Beach city officials to extend water and sewer to the property. The county also considered extending a line from Plantation Bay’s utility, but that would have been prohibitive. The connection from Ormond was doable, requiring the usual “interlocal” agreement, but it would have to go through the normal channels–and did.
County Commissioner Donald O’Brien, who chairs the county’s economic development board, said as far as he understood it, the deal broke apart because of issues within the furniture-assembling company. “It was that the two owners couldn’t get on the same page, that’s my internal read of,” O’Brien said. “When it was announced at that point the owners of the company were excited and wanted to do this, I can’t speak to what happened with them internally, we delivered on our side, Ormond Beach delivered on their side.”
That’s not how Lupo himself described it, rather focusing on the water and sewer issue. “The last time they had a vote, they voted to agree to continue to talk about it, and that’s when I said, ‘I’m out,'” Lupo told the Observer in a story published Friday. “We couldn’t turn it around quick enough, and I didn’t have any sense that Ormond Beach was going to be cooperative.”
In fact, the Ormond Beach City Commission on Oct. 15, the very day Lupo emailed his letter to van Eckert, voted 3-2 to extend the water and sewer line to the property, after hearing from Bruce Page, the banker and property co-owner, and Page’s attorney. The discussion focused on how the economic development project would benefit Ormond Beach especially.
“Fifty to sixty jobs, we believe that a lot of the people that’ll work there will live in Ormond or Volusia County,” Jeff Sweet, Page’s attorney, told the commission.
City Commissioner Dwight Selby was opposed to the agreement, saying it would open up the south end of Flagler to development in direct competition with Ormond Crossing and Ormond Beach’s own developments. “The city of Ormond Beach has spent millions of dollars to create these utility systems,” he said. “The vast benefit of this goes to Flagler County and we get virtually nothing.”
Page, an unqualified cheerleader for Flagler County development when appearing before Flagler County boards, sang an entirely different tune when he spoke to the Ormond Beach Commission.
“I grew up in Ormond Beach, I live in Flagler Beach now, but my parents live here, I have plenty of family and friends that have strong ties to Ormond, my heart is in Ormond,” he said, before flattering the commissioners for considering the project. “I just want to look you in the eyes and just let you know, from Bruce Page, I would never be involved in a project that would be at a detriment of the city of Ormond Beach. It wouldn’t happen. I can tell you, speaking for my partners, I know that we feel like this project is as Jeff mentioned, the majority of economic impact will actually be the city of Ormond Beach. We felt like that from the very beginning when we bought the property over 15 years ago. Looking at the utilities, I believe that it’s built in structure, that the city would make money off of it, which is great.” Page and his partners bought the property in 2004 for $1.4 million.
“As a long-time banker with an economics background,” he continued, “I’m absolutely confident that most of the economic benefit will be the city of Ormond Beach and Volusia County through direct employment like Jeff mentioned, but also the splill-over effect, the multiplier effect that happens when you have projects like this. I’ve been involved in economic development my entire year, and I can tell you the rising tide raises all ships.” He said the company’s employees will live in Ormond Beach, pay taxes there, do their shopping there. “I’m absolutely convinced of it. I know I’m biased but I’ve tried to look at your position and I can fully imagine it’s a really good project for you to approve.”
In other words, the project was being subsidized by Flagler County taxpayers, for the benefit of residents in Ormond Beach and Volusia County.
“I also asked Ms. Van Eckert whether or not this project had looked at Ormond Beach,” Selby said. “I believe her answer was no, it really hadn’t, and I said why not, and it turns out that the owner of Discovery World Furniture actually lives in Flagler County.”
Van Eckert on Tuesday said the project was always portrayed as being in “due diligence,” and that during due diligence, deals can fall apart. That was true, but not by the time her department issued the release revealing the name of the company, Lupo’s identity and his intentions in his own words.
To Mullins, who was involved in the negotiations with Ormond Beach, the collapse of the deal points to more serious issues with the county’s economic development department. “I’m very concerned why we went down to Ormond Beach probably a week or two before this gentleman needed to talk about his water, and there was no preparation done,” Mullins said.
“This could have been prevented,” he continued, had the economic development department done its homework, “and not taken the word of a realtor who has been a continual problem for the county. I don’t know why we’re still using this realtor.” Mullins said he intends to bring up the status of the county’s economic development department at a future county commission meeting.
The economic development department is not expected to issue a press release about the collapse of the Discovery deal it once called “Project Columbus.”