Clearwater Mayor hits huge Payday!

A hot property. A proponent. A payday.
As mayor of Clearwater, Brian Aungst championed a condo development. Then he bought in and made $233,000 after owning it for two days. But did he get in too easily?By AARON SHAROCKMANPublished November 27, 2005
CLEARWATER - As Florida real estate values rocketed upward in late 2001, Clearwater Mayor Brian Aungst strenuously supported a controversial Clearwater Beach condominium proposal, withering its opposition.
Then, without making a public disclosure, he reserved a unit for himself.
As soon as his condo was built two years later, Aungst sold it in just two days. His profit: a staggering $233,000, a return of 67 percent on his investment.
Aungst's unit - a fourth-floor, 1,350-square-foot Bonaire model in the Mediterranean-styled project named Belle Harbor - proved a windfall for the two-term mayor, who never had dabbled in real estate and sold the condo three months before leaving office in January.
Both Aungst and Belle Harbor's developers, headed by St. Petersburg condo builder J. Michael Cheezem, say the transaction was an honest, arms-length deal.
Aungst paid the listed price for his unit - $347,000, Cheezem pointed out.
And Aungst sees no problems with what he did. He and his wife reserved the unit thinking they would move there, he said, and sold it later only because they realized it was too small.
But an investigation by the St. Petersburg Times reveals a coziness between Aungst, who as mayor strongly pushed redevelopment, and the Belle Harbor developers, who built the first new luxury condos at Clearwater Beach and then won city approval for hundreds more - a portfolio now totaling more than $450-million.
Public records, private sale documents and interviews with Belle Harbor buyers also raise questions as to whether Aungst was given an advantage not available to the other original investors who scored condos in the $130-million project.
Many investors stood in line for two weeks outside the sales center waiting for the frenzied day in June 2002, when units first hit the market. By that day's end, investors told the Times, all models in Aungst's Bonaire floor plan were gone.
But Aungst, who earlier had told one of the developers in a one-on-one conversation that he was interested in buying in, didn't wait in line. He was invited to come pick out a unit the following day. He did.
City laws in effect then prohibited elected officials from using their position to secure an advantage that could lead to financial gain. The laws also instructed officials not to solicit or accept anything of value from individuals or businesses dealing with the city.
Aungst also may have violated city disclosure laws, the city attorney now says. Aungst had a $34,700 deposit on his unit in August 2002, when he voted with other City Council members to approve the platting of Belle Harbor's 6 acres. But he did not inform his city colleagues of his financial interest in the project, as city laws require. In fact, many city officials say they did not know Aungst had bought and sold the condo until this past summer, when the Times began researching this story.
Tracing the three-year arc of Belle Harbor, from point of proposal to selling of units to eventual occupancy, Mayor Aungst goes from a leading advocate to an investor, who then made a big profit.
Cheezem says he cannot explain how or why Aungst got the opportunity to invest because memories now are three years old and paperwork is gone.
But he did acknowledge: "If we had to do it over again, we would have had him stand in line or not sold him one."
Aungst, a cable TV executive who left politics after losing last year's race for Pinellas County clerk of the circuit court, said he had as much right as anyone to buy into Belle Harbor while mayor.
"I had discussions with some of my political advisors, I talked to friends, and they all said, "You're going to move into a place, there's nothing wrong with it,"' said Aungst, 51. "I carried debt, I paid interest on that. It was a straightforward deal."
* * *
Belle Harbor was the second major condominium complex proposed for Clearwater Beach. Connecticut developer David Mack, who later brought Cheezem into the project, wanted to replace a cluster of barracks-type apartments on the island's bay side with two towers at least 130 feet tall and street-level townhomes.
Investors smelled opportunity.
Clearwater Beach's market potential was established the previous year when Cheezem's JMC Communities launched the $78-million, 156-unit Mandalay Beach Club, the beach's first high-rise residential redevelopment in 25 years.
Eager buyers gobbled up Cheezem's condos when they went on sale in Spring 2000.
As Mack hawked Belle Harbor in 2001, Cheezem's Mandalay Beach Club was rising 200 yards to the south. The two projects promised a new level of luxury.
But there was opposition.
At one public meeting, more than 100 protesters turned up, arguing Belle Harbor's towers would wall off views of the sunset. Plus, the site needed to be rezoned, and Clearwater's extensive beach planning document, just finalized after lengthy negotiations, capped building heights there at 75 feet.
Belle Harbor was far from certain.
The strong-willed Aungst emerged as its champion.
From the city's dais, Aungst not only voted for the project, he was its most forceful advocate among the council of five.
Prior to a critical vote in September 2001, Aungst delivered a 20-minute monologue in which he berated critics, read a supporting letter in a driving cadence and singled out city staffers to confirm his points by saying "You're right."
"Developers are running things at City Hall," said Aungst, reading a critic's letter mockingly. "Boy," he returned, "have we heard that before."
Later, Aungst said: "I think it's a great project. I commend Mr. Mack. It's a win-win for everyone."
Then he called on his colleagues to support the development.
"This is not a hard swallow for you?" asked council member Whitney Gray.
"This is not a hard swallow," answered Aungst.
Belle Harbor advanced on a 3-2 vote.
Three months later, when the City Council considered rezoning the Belle Harbor site and allowing taller buildings, Aungst admonished council members and the audience not to fret multistory towers.
Using as props a water bottle and the board he banged his gavel on, the mayor said the city had two options: allow low development all along the waterfront, blocking views, or a few tall buildings with required open space between them.
"This is not some haphazard thing we're throwing together," Aungst said. "The character of the beach, it needs help. This plan will help it."
Council members approved the needed changes, 4-1 this time. Belle Harbor was a go.
* * *
The morning Belle Harbor's sales center opened, June 10, 2002, the project was just a rendering on poster board, but JMC's sales agents had 11 stories of condos to sell in seven floorplans. More than 30 hopeful buyers waited in line.
Real estate agents, a textile executive from Georgia, even David Mack's Connecticut barber had camped out as much as two weeks. Some paid homeless people $100 a day to hold their spots.
Andy Botwick, a retired Dunkin Donuts executive, slept in his Pontiac Bonneville for four nights. He, like Aungst, eyed the smallest floorplan, the two-bedroom, two-bath Bonaire. Seventeen were available that Monday morning, according to JMC.
Developers also accepted phone reservations, and when the sales center opened at 9 a.m., overloaded phone lines immediately jammed.
Even those in line called on cell phones - hoping to score that way. In 10 minutes, developers said, they had as many names on the phone list as were standing in line.
Buyers then were processed in clusters of three - two from the line, one by phone.
Mary Farnham, a Clearwater Beach real estate agent, was one of the lucky few who reserved by phone.
"I just happened to call in and someone answered immediately," said Farnham, who later resold two days after she closed, like Aungst, for a $176,000 profit.
By 1:30 p.m., most of the Bonaire floor plans already were taken, buyers said. Aungst, meanwhile, was finishing lunch in Feather Sound with St. Petersburg Mayor Rick Baker, Pinellas County Administrator Steve Spratt and County Commissioner Karen Seel, according to his calendar.
"I didn't have time to sit in line," Aungst told the Times .
By 3:30 p.m., Botwick made it through the line. Two Bonaires were left, Botwick recalled. He picked one on the third floor.
Murray Saltzman, near the end of the line, reserved the last Bonaire at 5 p.m. that first day, he said. He paid $427,000 for Unit 1103. "I didn't have much to choose from," said Saltzman, who bought one for his daughter. "It was either that or nothing."
Aungst had seats at that night's Devils Rays game, a 10-5 loss to the Los Angeles Dodgers.
He neither went to the sales office on June 10, nor called, he said.
Months earlier, he told Belle Harbor principal David Mack during a social function that he was interested in buying one of the condos, both Aungst and Mack recall.
Mack said he remembers cautioning the then-mayor. "I told him he was going to have to go through the same process everybody else went through," said Mack, who was not involved in unit sales. "I had 20 friends interested in buying one. I told them all the same thing - I'm not underwriting this thing, if you're going to do it, you're going to have to get in line."
Aungst recalls it differently. "If we had the conversation, which we probably did, he said to call the sales center, get on the list and that was about it," Aungst said.
At some point June 10, a sales center employee called, Aungst said, and told him he could come out the next day to select his condominium.
Cheezem said he cannot confirm Aungst's account or provide his own.
"I have no idea how to go back and reconstruct exactly what happened with each individual," Cheezem said. "We try to be as fair as possible.
"He was not put in front of the line. I don't believe he received special treatment," Cheezem said. "I just can't say for sure if he was in the group that phoned up. I don't have a grasp of every detail, who said what to whom."
The developers did hold back at least some units for themselves and company executives. Cheezem got one unit, and Mack got two. JMC's president of design got a Bonaire model, the same floor plan as Aungst's.
"It's just like taking something off the market," said Steve McAuliffe, JMC vice president of sales and marketing. "Most builders won't release their whole buildings at one time, they hold stuff back"
* * *
Aungst was a political unknown when he won Clearwater's top job in 1999. A public relations director at Time Warner, now Bright House Networks, Aungst quickly styled a no-nonsense approach as mayor, ousting a controversial city manager and taking steps to restore confidence in City Hall. During his six years in office, Clearwater built two libraries, a rec center, a new $34-million baseball stadium for the Philadelphia Phillies spring training and minor-league affiliate - a slate of public projects unrivaled in recent history. No one ran against Aungst in 2002, the first time that had happened since 1956.
Aungst first eyed a Belle Harbor condo as the beach home his family had long wanted, he said. The Belle Harbor address also put him in a new political district that afforded opportunities for higher office.
"I supported beach redevelopment," said Aungst. "I thought it would be telling for me to put my money where my mouth was."
Developers supported Aungst at election time.
Aungst accepted at least $30,000 from the real estate industry in his countywide court clerk race. Belle Harbor LLC contributed the maximum $500, as did Mandalay Beach Club Ltd.
Two David Mack entities, Greenmack Clearwater and DAM Clearwater, also contributed $500 apiece.
Aungst said he did not actively solicit the contributions. Instead, political advisor Ed Armstrong, who also is Cheezem and Mack's land use attorney, "ran that fundraising," Aungst said.
The contributions were "not a personal thing," Cheezem said. "It's important we support the leaders we think will do the best job in our local governments. It certainly has not been just Brian. I have always appreciated the leadership that the city of Clearwater has demonstrated."
Aungst said he called Belle Harbor in April or May 2002 - about a month before units became available - to say he was interested. Then on June 10, agents contacted him, Aungst said.
"We had no idea we had a shot to purchase a unit until we got a phone call," he said.
JMC provided the Times with Aungst's private reservation contract, which confirms he got his unit the day after the first-day sales rush. He picked the third-cheapest unit in the project, unit No.404, and held it with a $10,000 deposit.
In July, Aungst took out a $100,000 mortgage on his Countryside home. He signed a contract that August to purchase the unit and immediately put down an additional $24,700. The following January, he deposited $34,700 more, the remainder of his 20 percent down payment.
Aungst listed "escrow-down payment-Belle Harbor, 501 Mandalay Ave., Clw, Fl, 33767" on his annual financial disclosure form, filed in June 2003 at City Hall and with the Pinellas County Supervisor of Elections office. He previously had not disclosed his financial interest in Belle Harbor in a public record or during a public meeting. Even though he reserved the unit in June 2002, his name did not show up in county property records until he closed on the condo in September 2004.
He said he was not compelled to be more public about his reserved condo because it was to be his new home, he said. He used his name to purchase the unit, not a blind trust or obtusely named Limited Liability Company.
"I bought a place I was intending to move into," Aungst said. "If I was worried about anything, I would have tried to hide it."
* * *
It was not until his condo was nearly built that Aungst and his wife donned hard hats to tour the two-bedroom unit. They realized then, they say, it was too small.
"I have an office alone filled with all the stuff from when I was mayor," said Aungst, whose four-bedroom home is appraised at $350,000, according to property records.
They ruled out keeping both homes and renting out the condo, he said, because mortgage payments would be too high.
They had no choice but to sell, he said.
Aungst contacted real estate agent Martin Donovan, who specializes in Clearwater Beach real estate and also was an Aungst campaign contributor. He told Donovan to find a buyer. Donovan set a sales price at $649,000. Aungst agreed.
A retired couple, Robert and Betty Pfaff, were eager to find a Clearwater Beach condo after selling their home in the Island Estates neighborhood, a nearby waterfront community between the beach and the mainland.
Donovan was the Pfaff's real estate agent, too. He helped them sell their Island Estates house and then, as is common for real estate agents, helped them search for their next home.
Robert Pfaff, a retired Department of Defense employee, told the Times he and his wife saw Aungst's unit advertised. They had considered other condominiums, but they liked the idea of moving into a new project.
They started negotiating.
Aungst and Pfaff said they went back and forth on price before settling at $580,000. Pfaff does not think he overpaid. Aungst agrees; the condo was appraised at $600,000, he notes.
Belle Harbor signed over the deed to Unit 404 to Aungst on Sept.29, 2004, a Wednesday. By that Friday, Aungst had sold to the Pfaffs.
"They didn't hide who the owner was," Robert Pfaff, 69, said. "It was a straight up sale."
Thirty-four of the first 111 units changed hands in the first year of occupancy, but only one buyer, Sarasota real estate agent Lawrence Bauman, sold his condo quicker than Aungst. Bauman resold his the same day he bought it for a $157,000 profit.
David Mack held onto his $810,000, 11th floor condo for six months before selling for a 48 percent return.
Aungst's did better in two days - 67 percent.
Aungst said he cleared less than $130,000, after paying capital gains taxes and $29,721 in closing costs and real estate commissions.
* * *
Like most elected city officials around Tampa Bay, Clearwater's mayor is paid for part-time work - about $19,000 a year.
But government officials are obliged to keep the public's business separate from their need to make a living, said Ben Wilcox, the Florida director of the political watchdog Common Cause.
"Just because someone becomes a public servant, that doesn't mean they cannot make money," Wilcox said. "But they have to be fully open about it, and you don't accept any favor or quid pro quo in return for your vote."
Aungst said he received no favors. And listing his investment on the financial disclosure form was all he needed to do, he said.
But city ethics laws appear to require more, City Attorney Pam Akin says. When Aungst voted with other council members in August 2002 to approve a platting of Belle Harbor's 6 acres, he already had a contract on Unit 404 and made a $34,700 down payment. His colleagues in City Hall didn't know that, though.
City laws require officials disclose such financial interests. The penalty is a fine of up to $5,000.
In his final days as mayor, Aungst and friend and former campaign treasurer Jim Appelt organized Clearwater Land LLC to buy and sell properties. As of now, Aungst has made a down payment in one project, he said, a development being planned for downtown Clearwater by a member of the Church of Scientology.
His wife, Karen, qualified for real estate license in May. She said sh e is looking for a firm to team with.