The Real Story: More Woe at St. Joe

St. Joe, like many developers, has a building timetable for many of its buyers. When a buyer purchases a piece of land, he agrees to build a home within a guaranteed period, typically three to five years, depending on the community and when the sale took place. In certain communities, if the owner reneges on the obligation, St. Joe has the right to buy back the land at the original price. That original price is valid even if the property is flipped several times.

St. Joe is extending the length of time buyers have to build by two years in its Watersound Beach and Watercolor communities, averting a potential public relations disaster.

Another potential PR situation could be developing at Watersound Beach. St. Joe owns and operates the Watersound Beach Club. Membership to the club was supposed to be included in the purchase price of a lot, according to a former Watersound Beach salesperson.

However, owners recently received a letter stating they will need to pay a $20,000 fee and $675 quarterly dues to be able to use the club. Owners have 90 days to exercise their membership decision. Again, Ray was not available for clarification.

In past columns, I have questioned whether demand will match supply for St. Joe's communities and homes. Building costs range between $300 to $400 per square foot for the high-end homes in St. Joe's exclusive communities.

At Rivercamps, a 1,500-acre community in Bay County, Fla., with permits for up to 450 homes, sites have ranged from $84,000 to $849,000 and have averaged roughly $200,000. Assuming a 3,000-square-foot house, the cost to own is well over $1 million.

"Rivercamps is a total joke," according to one hedge fund manager who is short St. Joe. The source, who requested anonymity, questions who is in the market to spend that kind of money and to be stuck in "a buggy pine forest on a bay," or at other St. Joe developments that are off the beach, when beach property is available in other parts of the country for roughly the same price or less. He believes the company parlayed its success in the Gulf of Mexico to entice previously successful speculators to buy up lots in much less desirable locations.

Demand was certainly high at Rivercamps when the company had its initial release in October 2003.