Veranda Bay Developer Pauses Annexation into Flagler Beach to Draft Workaround Litigation Threat

The Flagler Beach City Commission Thursday evening agreed to pause indefinitely further annexation steps involving Veranda Bay, the large development along John Anderson Highway. The city did so at the developer’s request.

The pause and its indefinite timeline look more dramatic than they are. In fact, the pause appears to be more of a strategic retreat–the latest move in a chess match now in its sixth year–allowing the developer to redraw annexation plans in light of the threat of a lawsuit by opponents of annexation, had the original plan gone forward.




Second reading of the annexation ordinance had been rescheduled from Dec. 12 to Jan. 23 when an attorney representing Preserve Flagler Beach and Bulow Creek, the non-profit opposing annexation, issued a letter to city officials noting that annexation would create “enclaves” of county properties, which is forbidden by law. Such enclaves are common in local maps, the county’s legal office has stated, and are seldom challenged. But they can be.

The City Commission took the letter as a threat that a lawsuit would follow if annexation proceeded, and delayed the vote to Jan. 23, with no public indication in the interim of how the city would respond other than that it was dead set against fighting litigation. That put the onus on the developer to find a workaround.

On Thursday, Ken Belshe, who has represented Palm Coast Intracoastal and Veranda Bay Investments–the corporate subsidiaries of Sunbelt Land Management, which oversees the development–wrote City Manager Dale Martin, asking for the pause. The brief letter was distributed to commissioners at the very end of their three-hour meeting, nearing 8:30 p.m., though none of them were surprised by it.




“During the last 60 days there have been threats made regarding the filing of a lawsuit if the annexation process continues,” Belshe wrote. “We do not believe that any litigation would be successful in stopping what is a well-planned, strategic annexation by the City that would ultimately increase the tax base and provide economic opportunities for many. However, in order to allow the City to evaluate the project and study any legitimate concerns raised by the public and the Commission, we respectfully request that the Commission table consideration of said ordinances until a date uncertain.”

Belshe’s letter makes it appear that the next steps are to be the city’s. In fact, the ball is in Belshe’s court.

“I’ve studied the legal ramifications, and it is that: fix it, and then come back,” Commission Chair Scott Spradley, an attorney, said this morning. “If they want the city to weigh in on their solutions, then I’m all ears. But I feel strongly this is a developer issue to resolve, not a city issue to resolve.” Spradley said the threat of litigation by the opponents of annexation was a “hard stop” for him personally. “I have no interest in signing on to in this case annexation and subject the city to lengthy and costly litigation.”

And in fact Belshe and his attorneys have been working on a workaround with Flagler Beach’s city attorney and staff, according to Commissioner Rick Belhumeur.




One version of the workaround would result in this: Veranda Bay would drop annexation plans for the east side of John Anderson Highway and pursue annexation of the west side of the highway only. Dropping the east side would make the enclave issue moot, since that’s where the eight county properties are clustered. It would also not interfere with Veranda Bay’s ongoing plans there: the 453 homes it is permitted to build through county regulatory steps it secured in 2019 can keep building (close to two dozen have been built or are being built). Annexing the west side would allow the developer to get started on commercial projects, which is where Belshe’s next priority happens to be.

“In the end the commercial was what I was most excited about, so if that means he can get started on his commercial sooner, I think it’s good for everybody,” Belhumeur said.

Belshe, in response to opponents’ concerns about the size of the development, had already lowered the total number of proposed homes from 2,700 to 2,400, then to 2,200. The 453 already-permitted homes being on the east side, the remaining 1,747 would be slated for the west side, and would presumably be part of Annexation 2.0.

“He’ll just come to us when he’s ready with a new package and we’ll go through the process all over again,” Belhumeur said. “What’s been done goes away. There will be some familiarities, obviously, but it doesn’t include the east side.” He added: “The annexation has to be redrawn from scratch, because everything changes, numbers wise, so I guess he’ll be asking for 2200 minus 453.” That may take some time. The east side’s annexation could be phased in at a future time.

Even without Belshe’s letter Thursday, the city would have done the same thing: pause the process. “He just formalized it, and it had already been talked about, between the lawyers and staff,” Belhumeur said.

Spradley did not speak of Veranda Bay’s alternate plans in any such details. “I’ve heard that there are ideas that are being worked on by the developer,” he said.