TEMPLE TERRACE — After months of due diligence and mounting concerns about financial risk, the Temple Terrace City Council stopped short last week of advancing a purchase-and-sale agreement for a proposed $8 million pickleball and restaurant complex in the heart of its evolving downtown area.
Council members said they like the Blazin’ Paddles concept — a 35,000-square-foot venue with 12 pickleball courts, a restaurant, bar and potential music space — but said the developers, Courtside Group LLC, lack the working capital to give the city confidence the project won’t collapse shortly after opening.
The council, though, reiterated its approval of the project, but voted to give the developers more time to come back with at least $1 million in working capital.
Courtside currently has $270,000 in its proposal, though it says other mechanisms in its financial plan put that total much higher.
Not enough, however, to convince the council to sell the long-dormant property which is viewed as a key piece to the envisioned downtown area.
“I do not want to be in a situation where we approve this and six months later we have an empty building, but you all own the property and it’s an eyesore,” said Council member Alison Fernandez. “It’s been an eyesore for a number of years.”
Courtside Group was selected by the city back in August to negotiate the $1.4 million purchase of the 1.75-acre site at 8901 N. 56th Street. As part of its review, it hired Gray Robinson Law for a title analysis and Fishkind Consulting to evaluate the financials and business plan.
Hank Fishkind, the firm’s president, reviewed the financial documents and recommended the city require Courtside Group to:
• Provide a firm financial commitment for the proposed SBA loan, which would cover just over $6 million of the total $7.5 million cost of the project.
• Demonstrate that they have raised the equity capital of $1.8 million from investors included in their financing plan.
• Increase their working capital to $1 million to offset the group’s lack of operational experience in running restaurants.
Courtside Group countered that lower borrowing costs and a conservative construction budget gave it more financial flexibility when it came to the working capital.
“They felt that at least those two factors alone would help them with some flexibility to withstand, again, the opening and the management over the first several months to years,” City Manager Carlos Baia said. “We took that response and we provided it to Mr. Fishkind, and he did not feel that it satisfied his primary concerns.”
The working capital was the biggest sticking point with each member of the council, as well.
“The number one reason that small businesses go out of business is they are undercapitalized,” said Fernandez, a former KPMG financial auditor. “Their working capital is not sufficient to see them through until the business actually starts making a profit.”
Fernandez said restaurants, in particular, require deep operational knowledge and are most prone to early volatility. Courtside’s lack of experience running one, she said, was a red flag.
Fishkind’s report echoed those concerns, calling the inexperience “a significant risk to the success of the project.”
However, Courtside co-founders Jed Woodarek and Stephen Danyluk pushed back.
They told the council that Blazin’ Paddles was prepared to hire experienced managers and a chef to address that gap, and could even pivot to using food trucks instead, although that would inhibit their efforts to acquire a liquor license.
Woodarek argued that their financial model, when fully evaluated, shows they are closer to the $1 million working-capital threshold than the consultant suggested. He also noted the SBA loan terms would defer any debt repayments for 18 months, giving them breathing room after the opening.
Danyluk said additional equity rounds were possible, and that the group still had “levers that could be pulled” if more funding were required.
Woodarek added that the Fishkind report projected the project could deliver $3.2 million in economic value to Temple Terrace.
“That’s something that we hope that we can bring to life,” he said.
The city council, however, tempered its enthusiasm for the project with hesitation.
Council member Gil Schisler said he would like to continue to move forward on the project “but it’s very important that we do this, and we do this right.”
Ross, who has been down the road of failed downtown ventures as a council member and mayor, said the city has to protect itself and cannot ignore the financial analysis it paid for.
“You went and hired this guy who tried to tell you that they didn’t have enough working capital, and yet you did it anyway,” Ross said, describing the criticism the city would face. “How do you say to the constituents, yeah, we did that, and we had plenty of warning. I really love the concept, but I’m hesitant to roll the dice when we have such concerns…. we don’t want to have egg on our face.”
While the council could have chosen to go in a different direction altogether, it made it clear it hopes the Courtside Group returns and can provide more assurances.
“If you want to come back, that might change the scenario for some of us,” Ross said.
In the meantime, the city will continue marketing the 1.75-acre parcel. A new appraisal completed Nov. 12 lowered the listing price from $2 million to $1.445 million, a drop attributed to comparable sales, development limitations, CRA requirements and the fact it has stayed unsold for two years, according to Bluemark Valuation.