Amenity Plenty.  Heron Bay had amenities and location but needed some goodwill.

Photos: Courtesy WCI Communities

Amenity Plenty. Heron Bay had amenities and location but needed some goodwill.
 

Heron Bay was one of the first three projects WCI Communities decided to pull out of mothballs a year after it emerged from bankruptcy reorganization. At first glance, in 2010, it seemed like a logical choice to help jump-start the Bonita Springs, Fla.–based company’s home building business.

In the city of Parkland, Fla., perched between Boca Raton and the Everglades, Heron Bay was already well-established with 2,600 homes, deluxe community amenities, the best school district in the area, and its ideal location adjacent to major highways. It was successful before the housing collapse and it should be successful again, executives figured. A bigger question was, “When?”

“We had a lot of legwork to be done. We had [our] history to overcome,” explains Douglas Schwartz, WCI senior vice president. “We were a company that didn’t just shut down; we were a company that went bankrupt.”

When WCI sought bankruptcy court protection in summer 2008, sales and construction abruptly stopped, leaving Heron Bay with eight nearly complete homes that sat vacant for several years. Then there was the pox of homes with Chinese drywall that WCI had built there. During the bankruptcy, repair of those homes was passed to a fund set up as part of the reorganization, leaving homeowners and others in the community to misunderstand why WCI itself wasn’t making the repairs as other builders were doing.

In addition, WCI needed to create new product for the neighborhood. The huge homes equipped with every bell and whistle that it built there before the recession—such as the ones that sat vacant in the community for several years—wouldn’t work in the new home-building environment. The problem was that the city of Parkland’s approval process is extraordinarily lengthy and detailed. Every single new-home design, including its elevation, has to be approved by city officials and the city council in public meetings sure to be attended by residents skeptical about WCI because of its bankruptcy. For Heron Bay that process took about a year.

“We were a lightning rod for a lot of public input,” Schwartz says. “Before the city commission meeting there was a lot of discussion, there were dozens, maybe a hundred people at them … and there were folks who were railing against WCI saying, ‘They built Chinese drywall houses. Never let them build again in the city of Parkland.’”

That opposition put elected officials under a lot of pressure, Schwartz acknowledges. “We told them, ‘We understand the position we are putting you in. We know that there are people who will show up at the public meeting and some of them are going to be really mad.’”

Fortunately, well in advance of the public hearings, WCI deployed a tactic that in the end created a group of local WCI believers to counter the detractors. It started holding focus groups filled with local “thought leaders” with the intention of figuring out what kind of houses Parkland residents would want to buy in the new economy. A side effect was that it gave WCI a chance to educate the participants about the new post-bankruptcy WCI and its intentions.

“The end result [beyond pre-vetted home designs] was we ended up with a large group of folks who were real supporters of us restarting there in Heron Bay,” Schwartz says. Some even became buyers of new homes in the community, he adds.

Heron Bay started taking contracts on new homes in May 2011. Within a year it had sold 105 new homes at average base prices of about $510,000, edging closer to $600,000 including options. Prices have increased 5 percent to 6 percent since then.

“The greatest thing we brought as the new WCI [that has helped overcome opposition] was a whole lot of humility,” Schwartz says.

Learn more about markets featured in this article: Miami, FL, Orlando, FL.