Peary Court: One Human Family or Gated Community?

Is Key West destined to become a patchwork of exclusive gated communities?  If you believe what White Street Partners is saying there is no such plan brewing for the military housing property at Peary Court.  The soon-to-be owners of Peary Court spared no effort trying to convince the audience at its June 27th presentation that the new development will be fully integrated and intertwined into the fabric of our “beautiful community”.

The presentation included projections of maps from the 1800’s and insightful remarks about the history of Key West’s urbanization.   But the “integration plan” didn’t convince everyone.   With its all-around fence (enclosing even the Palm Avenue entrance), its road to nowhere that loops back on itself, its all powerful Homeowner’s Association and its “enhanced sense of community,” the future Peary Court looks like a gated community in the making; 100% “Stepford Wives” material.

“The goal of good city planning,” argued Don Craig, the City’s Planning Director, “is to create a harmonious and integrated community, not just for the benefit of people living in one particular area, but for the community as a whole.”

Developers reaffirmed that the goal was not to create a gated community, but when asked specifically whether the Homeowners’ Association would have the power to vote to install gates and close the roads to through traffic, Architect and spokesperson, Bernard Zyscovich had to admit, “Well, I can’t deny that.”  He also added that if the City forced the developers to keep the Palm Avenue entrance open for service and emergency vehicle access, they would put a vehicular traffic gate at that entrance.

Obviously, White Street Partners has no intention of making Peary Court part of the Key West traffic grid.  If you dreamed of being able to take a short cut from Palm Avenue over to Southard or Fleming it looks like you’re still going to have to go all the way around Peary Court.

In the past local governments have been generally favorable to the creation of gated communities.  One of the reasons is the prospect of such “higher-end development” boosting property tax revenue.  But “the pendulum is starting to swing the other way,” said Steve Filmanowics, speaking for the Congress for New Urbanism, “People realize when you have a well-connected community, it creates a more vibrant City.”

There are a considerable number of studies that conclude that gated communities often breed “segregation, urban deterioration, loss of a livable urban center, a fake sense of security and exclusion”.

Gated communities received a proverbial black eye the night George Zimmerman shot Treyvon Martin.  Zimmerman, a “neighborhood watch captain” at Retreat at Twin Lakes gated community, became suspicious of a 17-year-old black kid on his way back home and somehow ended up shooting him dead.

The tragedy not only raised issues of self-defense but also propelled the gated community debate into the realm of national media.   The New York Times published an article by Rich Benjamin who blames “gate-minded America”.  Benjamin spent two years hopping from one gated community to the next while researching for a book.  He claims to have encountered what he calls a “bunker mentality”.  More often than not the resident’s develop an “us versus them mentality.”  “Them” being not just new immigrants, African Americans, young people, renters, non-property owners and people perceived to be poor, but to some extent the rest of the town as a whole.

The reader may remember that the City of Key West was embroiled in a protracted lawsuit with Truman Annex Master Property Owners Association (TAMPOA) while trying to keep the group from closing off the end of Southard Street.  The issue was finally resolved and the property is now required to be kept open during the day.   But it was illustrative of the sort of “disengagement gated-community residents are apt to show in their own City”.   There is a tendency to look inward, limiting attention to the issues of their little world and in the meantime an all powerful Homeowners Association rises as some sort of new political power which often sees the municipal government as a rival rather than the guardian of its safety and welfare.

Many municipalities have come to discourage the creation of new gated communities or have banned them altogether as “inconsistent with the desired character of the City.”  Debate over the issue of rejecting gated communities as part of an acceptable development plan can be found throughout the nation: California, Nevada, Oregon, New York, North Carolina, Florida, including St. Augustine.

Of course, at the bottom of the pot, as always, is the unspoken issue of money.  The prospect of a giant property tax windfall can make those exclusive high-end developments irresistible to City Commissioners.  “It is going happen,” Commissioner Rossi told us a few months back, “the White Street Partners deal is going to go through and honestly the City could use the tax revenue.”

However, a discussion with Lynn Garcia, Real Estate Department Supervisor for the Monroe County Property Appraiser shed light on the fact that a project of this type could be very tricky to assess and this is why:

The developers of Peary Court appear to have adopted a rather innovative financial model.  It’s a system of home ownership on leased land.  “We’re not in the business of selling lots,” said Zyscovich.   The way he explains it, buyers will build their house on a piece of land that they would lease from the developer.  The house will be theirs but because they won’t own the land beneath the house they will be able to buy in with a lot less money.

A house on leased land is typically worth (according to internet sources) about 25% of the value of the same type of house on an owned lot.  One defect is that unlike with a classic purchase of a house where your equity slowly builds up along the years, your equity in a home on leased land steadily decreases as the end of the lease term approaches.   When the lease expires you’ll have to move your house, dispose of it, or leave it to the landowner.

Arguably, the fair market value of a house built on leased land could be considerably less than a house built on owned land with no ‘expiration date’.  Property taxes may have to reflect this lower value.

And then there is the land. Here again, the fair market value of a piece of land encumbered for the next 30 years or so with someone else’s house on it may also be a lot lower than the market value of unencumbered land – or at least we can assume the landowner might make that claim when it comes time to pay property taxes.   The tax on the land itself could be a lot lower than expected as well.

Perhaps the time has come for the Commission to have a debate about the future of gated communities inside City limits.  If Balfour Beatty keeps selling military land to pay off its debt, pretty soon the medical clinic on South Roosevelt could be for sale, or the Truman housing, Trumbo Point, or Sigsbee. Who knows?  Could those properties turn into as many exclusive little gated ‘paradise coves’?

White Street Partners will hold a few more public meetings and then will have to negotiate a development agreement with the City Commission.  That might be the moment to introduce some ‘One Human Family’ requirements for future Key West developments such as open streets, continuation of the traffic grid, and true mixed-income development.