"Cash is no longer king for South Florida homebuyers"
Sun-Sentinel, Aug. 18, 2017

By Paul Owers, Staff Writer

Cash deals are by no means dead, but they aren't dominating the South Florida housing market the way they once did.

Sales without mortgages are happening less frequently as investors flee and traditional buyers gain easier access to financing, industry observers say.

In the second quarter, 46 percent of the home and condominium sales in Broward, Palm Beach and Miami-Dade counties went to cash buyers, down from 49 percent a year ago and from 62 percent in 2014, according to ATTOM Data Solutions, a research firm based in Irvine, Calif.

Cash sales peaked in the first quarter of 2011, when more than seven out of 10 deals didn't involve a mortgage.

"The market has dramatically shifted," said Mike Pappas, president of the Keyes Co. in Miami, “Cash drove the market in the bottom-feeding and opportunistic times, but today we have a real market with real buyers, and they need mortgages.”

Investors descended on South Florida in 2011 and 2012 as the six-year housing bust was ending. With prices hitting bottom, bargain hunters with fistfuls of cash scooped up foreclosures and short sales for pennies on the dollar.

The competition was so fierce that some real estate agents were telling clients who needed mortgages that they had little hope of winning bidding wars for the homes. Sellers much prefer cash to financing because they know the deals are likely to close more quickly and with fewer hassles.

Today, though, with values rising and distressed homes in short supply, investors who remain in the market are all competing for the same few properties, said David Dweck, founder of the Boca Real Estate Investment Club.

“The days of the high-profit flip are over, for sure,” he said. “There will always be foreclosures, but they won’t be at the level we experienced in the past.”

During and after the housing bust, lenders tightened underwriting standards, making it difficult for first-time buyers and others to qualify for mortgages. But those requirements have gradually loosened as the housing market has recovered, allowing more buyers to take advantage of historically low interest rates. 

Housing analysts expected the Federal Reserve to increase rates this year. But instead, the Fed has only “tweaked” them, keeping the market favorable for financing, said Jim Flood, regional manager for Supreme Lending in Fort Lauderdale.

A typical buyer with good credit can still secure a 30-year, fixed-rate mortgage of less than 4 percent, he said. A 15-year mortgage can earn an interest rate in the 3.25 percent range, Flood said.

“The bottom line for South Florida homebuyers is that it’s still very attractive to borrow today. Very attractive,” he said. “When you’re talking about rates at 4 percent or under, that is exciting to people.”

In many cases, buyers are wealthy enough that they don’t require mortgages, but they’re choosing to get financing anyway because they can put their money to better use elsewhere, said Stephen B. McWilliam, president of Florida State Realty Group in Fort Lauderdale.

“You make a lot more when you leverage your money with a mortgage,” he said.

That’s what Ron Kurzman hopes to do.

The 41-year-old developer in Miami is buying a five-bedroom home in the Lake Ida section of Delray Beach. He said the $1.4 million property is perfect because it has an above-the-garage room that his wife can use to teach mommy-and-me Pilates classes. The deal is expected to close at the end of August.
Kurzman said he could pay cash but ultimately decided he’d rather have a mortgage.

“I’m not naïve to the fact that the money is at risk in the [stock] market,” he said. “But I did the analysis and realized that the money would be better utilized elsewhere than being tied up in the home.”

While single-family homebuyers are realizing the benefits of mortgages, condo sales in South Florida are still predominantly all-cash due to financing restrictions, said Ryan Paton, president of Capitol Lending Group in Fort Lauderdale.

Government-backed mortgage companies Fannie Mae and Freddie Mac won’t insure loans in buildings with too many investors or where the condo documents don’t sufficiently detail the amount of available reserves, Paton said.

Those rules, put in place during the housing collapse, have been relaxed in recent years but are still a major factor in why most condo sales are for cash, according to Paton.

Still, he doesn’t think it would be difficult for condo boards to make the necessary changes and fix the problems that are holding back more sales to buyers who want or need financing.

“If the condos would do their homework, they could put themselves in position to open the doors to so many more buyers,” he said.



"Hardest-hit markets now enjoy biggest gains in home values"
Sun-Sentinel, June 2, 2017

By Paul Owers, Staff Writer

During a five-year run of real estate prosperity, some South Florida communities that bore the brunt of the excruciating housing collapse are enjoying the biggest spikes in value, homeowners and brokers say.

Margate, Oakland Park and Lake Worth are among seven cities in Broward and Palm Beach counties where median home values have more than doubled compared to 2012, according to Zillow, the real estate website.

In Oakland Park, for example, the median value in April was $189,600, 107 percent higher than it was in April 2012, at the start of the housing recovery.

Near the peak of the pre-recession boom in April 2006, the city’s median had ballooned to $259,000 before plummeting 65 percent, one of the worst slides in Broward.

Richmond, Va., transplants Lynda Somers Donahue and her husband, J.D., bought a home last year two blocks off Federal Highway near the Funky Buddha Brewery in Oakland Park.

The couple paid $397,000, but Donahue, a real estate agent, estimates the two-bedroom home with a den already has gained $50,000 in value with only minor improvements, including new cabinets in the kitchen and spruced-up terrazzo floors in the bedrooms.

“It’s a very safe neighborhood,” she said. “We ride our bicycles all over the place, and people say ‘hi’ to each other. I don’t think you could find a better spot.”

Values in other hard-hit areas — North Lauderdale, Palm Springs, Greenacres and Lantana — also have rebounded sharply following the six-year downturn.

“We feel very fortunate,” said Rich Thorpe, a repair manager for Pratt & Whitney who bought a home last summer with his wife, Raeann, for $312,000 in the River Bridge development in Greenacres, in the central part of Palm Beach County. “You can definitely tell values are going up in the neighborhood. There’s lots of house pride here. People are constantly making updates.”

A handful of cities, including Lake Park, West Park and Tamarac, fell just short of 100 percent increases, the Zillow figures show.

Values have increased substantially all across Broward and Palm Beach counties during the past five years, though some upscale areas haven’t seen as much of a rebound. The smallest gains belong to Parkland (34 percent), Atlantis (47) and Highland Beach (49).

Zillow’s median values represent a mix of single-family homes, townhomes, condominiums and co-ops. The median means half the properties are worth more and half less.

With some exceptions, the communities sporting the biggest price gains over the past five years are made up of modest homes in working-class neighborhoods that struggled mightily once the housing boom ended.

Homes fell into foreclosure after their owners lost jobs or couldn’t keep up with the higher payments on risky, adjustable-rate mortgages.

“These markets got hit hard with the debacle of the Great Recession,” said Mike Pappas, president of the Keyes Co. in South Florida. “In that ’08, ’09, ’10 range, out of 10 sales, seven of them were short sales and foreclosures.”

When prices bottomed in 2012, investors swooped in, some buying homes for less than $100,000 and launching major renovations.

In many cases, they installed glistening granite kitchen counter tops, replaced worn carpeting with shiny wood floors and added lush new landscaping to brighten curb appeal.

Homes that once were eyesores with overgrown front lawns and appliances ripped from the walls soon sparked bidding wars among first-time buyers and young families who were eager to buy new digs in move-in condition.

In late 2015, investor Allie Greenstein paid $129,000 for a three-bedroom, bank-owned home off Commercial Boulevard in Oakland Park.

Greenstein bought the property with money from a private lender. The home was in such terrible shape that no traditional lender would have granted a mortgage, she said.

“It was abandoned, and there were leaks everywhere,” Greenstein said. “When you looked up [to the roof], you could actually see the sky.”

After spending $36,000 for a new roof and completing other major repairs, Greenstein rented the home for a year. She’s under contract to sell her renovated property this month to a first-time buyer for well above the $239,900 asking price.

“I saw right away after I purchased it that value was skyrocketing, and it still is,” Greenstein said. “I’m just getting a little tired of being a landlord, and I’m ready to cash out.”

Mike Smith still lives in the three-bedroom home in Margate he bought in 2012 for $168,000 as part of a short sale. The previous owner had paid $305,000 in 2005, records show.

Margate’s median value dropped 65 percent during the bust, but has increased 111 percent since Smith bought in the city, according to the Zillow figures.

Smith, an engineer, said he’s mildly concerned that prices have risen so rapidly in recent years. He doesn’t want to see another housing bubble.

He has no plans to sell anytime soon, but he’s comforted in knowing that the market is so vibrant.

“If, God forbid, I had to sell and downsize, I know I could make a profit,” he said.

Because the jumps in home values are occurring from the bottom of the market up, another housing bust is less likely, said Val Chiasson, a South Florida home appraiser based in Boca Raton.

He and other real estate observers said values already are starting to slow. What’s more, they say, stricter lending standards in place since the housing collapse are designed to prevent a repeat of what happened before.

While values in low- and middle-income communities had the most room to grow, another factor in their recovery is the lack of affordably priced new homes being built across South Florida, Chiasson said.

Because so little available land is left, the cost of dirt has soared. That means builders must deliver luxury projects to make the most return on their money, Chiasson said.

The severe shortage of new workforce housing has driven values of existing homes higher, pricing teachers, police officers and other middle-class workers out of the market, officials said.

“We have an ever-increasing demand for low-priced housing, but the supply is not increasing,” Chiasson said. “If they were building more affordable homes, we probably wouldn’t see those prices going up as much.”

Staff writer Ron Hurtibise contributed to this report.



"Star Trek house in Boca hits the market for $35 million"
Sun-Sentinel, May 16, 2014

By Paul Owers, Staff Writer

If Mister Spock had any money or humor, he might buy this place.

Former Penthouse magazine owner Marc Bell is selling his Trekkie-decked mansion in Boca Raton. Price tag: $35 million.

The 27,254-square-foot estate features all things Star Trek, including an 11-seat movie theater designed to look like the command center of the USS Enterprise.

A lobby to the theater serves as the "ready room." Star Trek posters, pinball machines and model spaceships decorate the mansion.

"I'm a geek," said Bell, 46, a father of three teenagers. "There's not a rational, logical reason to it. It was just a fun idea."

A place to be a kid.

Growing up in New York, Bell wasn't allowed to mess up the house. He couldn't even sit on the couch.

"So I said, 'When I have my own house, I'm not going to be that kind of parent,'" he said.

"It's really a house for people who, in their minds, are still kids," said Bell's real estate agent, Senada Adzem Bernard of Douglas Elliman Real Estate.

Bell, a computer engineer and entrepreneur, acquired Penthouse in 2004 and later FriendFinder Networks, a Boca-based social networking company. He has since retired from the company that owns both ventures.

Also a producer of Broadway musicals and plays, Bell won a Tony Award in 2006 for Best Musical with "Jersey Boys" and another for Best Play in 2008 with "August: Osage County."

He said his two-story home on the 3600 block of Northwest 52nd Street, inside Woodfield Country Club, took four years to build before he moved in in 2006.

The house has eight bedrooms, 16 bathrooms, a crazy-big game room, basketball court and $2 million in technology. Doors lock themselves, and toilet seats come down on their own.

The theater and ready room stay with the house, of course, but the other memorabilia is going with Bell, who wants to move with his family to even bigger digs somewhere in South Florida.

Some real estate agents are skeptical about the $35 million price.

West Palm Beach broker Douglas Rill said a wealthy buyer might act on emotion rather than money, but he thinks Bell has a tough sell because the house is appraised at only $6.1 million by Palm Beach County.

Another agent, Michael Citron, politely points out that the home is in western Boca, nowhere near the ocean.

"Does the $35 million include William Shatner and Leonard Nimoy?" he joked.

Bell waves off doubters like Kirk facing Khan. He insists he's listing the home at a fair price, considering all that he's put into it.

He said he recently fielded informal offers close to $35 million even before the home hit the market.

"It only takes one person," Bell said.

One Trekkie-mad person.



"Values of our homes up again"
Sun-Sentinel, Dec. 2, 2012

By Paul Owers, Staff Writer

South Florida's historic housing meltdown forced thousands from their homes and robbed many more of financial security.

Practically no one was spared. For-sale signs went up in front of modest homes and millionaire mansions. The term "short sale" became part of the daily lexicon as homeowners pleaded with lenders to let them sell for less than the mortgage amounts.

Even those who did hang on to their homes watched in dismay as plummeting values pushed families into foreclosure, leaving a trail of vacant homes and tattered neighborhoods.

But six years later, values across the region are headed back up -- growing evidence of a widespread recovery and perhaps early signs of a watershed moment. One-third of 33 communities in Broward County posted double-digit price gains in October compared with their previous lows, according to data from real estate website prepared for the Sun-Sentinel.

Prices are rising in all corners of the county, in waterfront enclaves and working class communities alike. Some areas are seeing bigger bounces than others.

Wilton Manors, a small city in eastern Broward known for its immaculately manicured front lawns, bottomed at $184,600 in July 2010, but the median value there has soared to $226,900 -- a 22.9 percent increase that leads all of Broward. The city's median peaked at $419,200 in December 2005.

Real estate agent Chip Rowand has a client under contract to sell a three-bedroom townhome in Wilton Manors for about $420,000, a price tag usually reserved for single-family homes.

"I was shocked," Rowand said. "But people are willing to pay higher-than-appraised value in these desirable communities."

Fort Lauderdale's October median value of $205,900 is 14.3 percent higher than its low point in February 2011. Weston is up 17.1 percent to $301,600 after hitting bottom in October 2009. Weston's median peaked at $481,200 in March 2006.

"If you're a bargain hunter and you were looking for the absolute bottom of the market, you've missed the boat," said Douglas Rill, a longtime South Florida broker.

What's driving the surge in prices? A lack of homes for sale, mortgage rates still hovering near historic lows and strong demand from investors and first-time buyers. Homes priced appropriately are getting multiple offers -- sometimes 10 or more in a matter of a few days.

When a North Lauderdale townhome hit the market last week for $69,900, one couple offered full price and penned a heartfelt letter to the seller explaining why they wanted the home. Still, they lost out to a cash offer.

"Having to write a letter and beg for a house -- that's where we're at today," said Judy Trudel, a real estate agent for Balistreri Realty in Broward and Palm Beach counties.

The market now is reminiscent of the early stages housing boom of 2000 to 2005, when speculators poured untold millions into residential real estate.

As investors bought homes and quickly sold them for fast profits, developers built more homes and condominiums and prices rose to record levels. The median price for a single-family home in Broward peaked at $391,100 in November 2005, according to the Florida Realtors.

Stan Warshaw bought his four-bedroom Lighthouse Point home in 1994 for $375,000. He said the value topped $1 million during the housing boom, but he didn't sell because he didn't want to have to buy another place at the top of the market.

"Now I wished I had sold it and just rented," said Warshaw, 61. "Hindsight is 20-20." The assessed value of his home has remained at a steady $646,570 for the past three years, records show.

Lenders were more than willing to hand out mortgages, often without verifying a borrower's income. To afford the escalating home prices, young families and other first-time buyers had to take out risky loans that eventually would reset to much higher interest rates.

Many borrowers didn't understand the mortgage terms or the consequences but signed on the dotted line anyway. Other borrowers were told not to worry about facing higher interest rates because they could quickly sell or use the equity in the homes to refinance.

Meanwhile, sellers routinely turned down market rate offers because they were convinced that prices would keep climbing.

South Florida real estate agent Cathy Prenner of Campbell & Rosemurgy said she had a client in Lighthouse Point who rejected $1.3 million at the height of the market, only to sell years later for $700,000.

"It was like musical chairs," Prenner said. "The music was playing, and then it stopped."

In 2006, prices started retreating and investors were struggling to flip their homes. Properties flooded the market, but buyers suddenly were hesitant to commit. Prices fell further as demand waned.

Foreclosures started to increase as homeowners who bought during the boom discovered they didn't have the equity they thought they did and couldn't get out of the burdensome mortgages.

By 2007, economic woes and job losses heightened the housing crisis. Prices were in freefall -- leaving tens of thousands of South Florida homeowners "underwater" on their mortgages.

Short-sale negotiations dragged on for months and fickle buyers often moved on to the next house. Unable to sell, some homeowners walked away from their properties, damaging their credit and adding to the mountain of foreclosures.

Eventually, Broward County's median home price fell to about half of its previous high, luring bargain buyers back into the market.

Foreign investors scooped up properties, viewing the deals as safe investments because the economies in their native countries were faltering. Investors have returned, but many are renting their properties while they wait for prices to rebound.

Strong sales over the past 18 months have reduced the glut of homes on the market. At the end of October, Broward had 4,806 homes for sale, roughly half the number from a year ago.

The market still has issues: Florida had the nation's highest foreclosure rate in September and October, according to RealtyTrac Inc. Roughly four in 10 homeowners are underwater, but the recent price gains are helping to ease that burden for some.

Analysts expect the sharp price increases to level off when interest rates pick up and additional foreclosed homes hit the market.

Homes historically have appreciated 2 percent to 4 percent annually. Zillow projects South Florida values to rise 2.1 percent over the next year.

Mike Larson, a housing analyst with Weiss Research in Jupiter, warns that an influx of investors could create another bubble. Still, he's not worried yet and is encouraged by the recent trend.

"It's been a long time coming," Larson said.



"Going Condo"
The Palm Beach Post, July 24, 2005

By Paul Owers, Staff Writer

William Fazio was a renter, with no regrets.

Less than two years ago, the unattached accountant paid $1,400 a month to lease an apartment at The Residences at CityPlace, content to live in revitalized West Palm Beach and let somebody else fix the fridge when it broke.

Then Fazio found a flier at his front door, encouraging him to buy an apartment-turned-condominium at The Tower, also in CityPlace. Intrigued, Fazio canceled a date to attend a condo conversion meeting. Over a glass of white wine, he learned he could buy a one-bedroom unit for about the same money he was spending each month in rent.

So Fazio plunked down a deposit on the spot to reserve the $146,000 condo.

"This fell into my lap," said Fazio, now 29 and engaged and enjoying a new career as a mortgage consultant. "If I didn't take it, I'd have kicked myself."

Thousands of people are taking advantage of similar deals in South Florida's blistering real estate market as developers rush to convert apartments to condos in record numbers.

More than 5,800 units went condo in Palm Beach County in 2004, according to McCabe Research & Consulting in Deerfield Beach. And that benchmark won't last long: About 5,400 units are being converted in just the first 6 1/2 months of this year.

What's feeding the frenzy? A host of factors, analysts say.

Start with a scarcity of land for new development and throw in low interest rates, liberal financing terms, a rash of ambitious investor-speculators, skyrocketing property appreciations and a growing population bolstered by Baby Boomers seeking second homes.

What's more, the rising costs of land, concrete and steel mean developers can't build condos as cheaply as they can convert them. So, it's no wonder they're willing to pay top dollar for existing rental properties across the region and turn them into condos - for profits of 30 percent to 50 percent or more.

Palm Coast-based Bay Communities paid $36 million last year for St. Andrews at the Polo Club in Wellington. Philadelphia Management and Cos. bought Estates at Stuart in April for $45 million. And just three weeks ago, Miami-based Crescent Heights, one of the nation's largest condo converters, snapped up Legacy Place Apartment Homes in Palm Beach Gardens for $88.1 million.

"Just about any property that goes on the market gets 10 offers from day one," said Tal Frydman, a senior associate with Marcus & Millichap in Fort Lauderdale.

Chappy Adams, president of Illustrated Properties in Palm Beach Gardens, said, "Before two years ago, you rarely heard of conversions, at least in this area. But in the last two years, it's a hot item. I probably get one call a week from developers looking to buy (rental) properties to convert."

A 'flip'-inflated market?

But amid all the hype, potential problems are looming.

Some fear the condo market is artificially inflated with investor-speculators who tie up units at discounted prices and then "flip" them to other buyers for huge profits.

If demand softens, experts warn, speculators, developers and lenders could be stuck with an expensive inventory of units.

"I only hope it slows down a little bit because I don't want to see people get hurt," said Monte Kane, a Boca Raton accountant who studies condo conversions.

"There is too much being converted," said Lewis Goodkin, a Miami-based real estate consultant. "The level of speculation is really out of whack."

Goodkin said people prefer condos to single-family homes partly because they aren't as expensive. But with many condos now topping $250,000 and interest rates rising, Goodkin predicts fewer buyers will qualify for homeownership.

"Things are going to hit a wall at some point in time," he said. "If I had to make a guess, I would say that this year likely will finish strong. But by next year, I think you'll start to see some real significant damage."

In fact, demand for condos might be waning already, judging from the responses at two recent conversion sales events.

A few people showed up early to get in line to buy into the 160-unit Pineapple Grove Village in downtown Delray Beach. But some observers were surprised that the crowd wasn't larger when sales began July 14.

"I thought it was going to be a mad rush, but it didn't happen," said Homar De La Cruz, 39, of Greenacres, who camped out two days ahead of time with his brother-in-law, Jay Lutz.

Other would-be buyers who toured the models hinted that the units, priced from $300,000 to $800,000, weren't worth the money, considering their proximity to railroad tracks.

About half of the units are under contract so far, said Kim Kirschner, whose real estate firm is handling the Pineapple Grove sale for The Bainbridge Cos. of Wellington.

Kirschner estimates it will take two or three months to sell out, saying higher-priced condos sell slower than more moderately priced units. "It's purely a price-point issue," she said.

Two days later, on July 16, Montecito Property Co. opened sales at Portofino at Jensen Beach on U.S. 1.

The Jacksonville-based company plugged its "Super Saturday" on radio and television and even broadcast the event live on the Internet.

By the end of the weekend, Montecito had sold 221 of the 384 units. But an official previously had said the company expected to sell all the units in a day.

"I think we're starting to see a slowdown in this overheated activity," said Jack McCabe, chief executive of McCabe Research.

Rental inventory shrinks

Even so, the conversion craze is having a dramatic effect on renters and rental properties.

In 2004, for the first time in South Florida, the apartment rental inventory shrunk, by more than 8 percent, to about 161,600 units, according to McCabe Research. Only four luxury apartment complexes remain in the West Palm Beach area.

Condo converters are required by Florida law to give tenants 45 days to decide whether they want to buy their units. Converters usually cut them deals on pricing, but many tenants can't or won't buy and have to scramble to find other housing.

Tyler Self and his wife, Lauren, moved into an apartment at Legacy Place 14 months ago. Crescent Heights will convert the 384-unit complex on Alternate A1A to condos during the next few months, but the Selfs are moving because they don't plan to buy.

The couple thought they could go back to Alta Pines, a nearby apartment complex they almost chose over Legacy Place. But Alta has since been converted to condos, too.

The Selfs are finding a shortage of suitable rentals. They say they will wait out the housing market, hoping prices fall soon, but they're also considering a move out of Florida so they can start a family.

"We can't afford to do that in Palm Beach County," said Tyler Self, 25. "If it still looks like this next year, we'll probably move on."

On the Treasure Coast, Teri Pawlik thought something was up at her St. Andrews at Jensen Beach rental community when she saw workers inspecting the apartments. Not long thereafter, she learned Montecito had bought the complex and planned to rename it Portofino.

Having moved there 18 months after selling her house in Port St. Lucie, Pawlik wasn't sure she wanted to buy again. But she said Montecito made it easy: The company brought in mortgage brokers to help residents decide whether they could swing the payments.

Pawlik agreed to buy her two-bedroom unit for $234,555 and also is paying $15,000 for a garage. She closes on the deal this week.

"The prices were good, I like it here and the property is in a perfect location," said Pawlik, 32. "Why pay rent and pay somebody's else equity when I can pay my own equity? You're really investing in yourself."

That, at least in part, is why despite evidence that condo sales could be slowing down, the market remains hot.

Back at Delray Beach's Pineapple Grove, Kim Lunsford, a real estate broker for Century 21 in Margate, was one of the first to arrive for the "Midnight Madness" sales event. She pulled up in her camper 48 hours ahead of time on behalf of a client, who had given Lunsford power-of-attorney privileges.

Lunsford, 25, said she has waited six other times for condo-seeking clients and is unfazed by the process.

"You can either wait in the beginning or wait at the end," she said.

Lunsford had plenty of time to get to know De La Cruz and Lutz. They look at Pineapple Grove as an investment opportunity, although they aren't ruling out living there. While they were hanging out in Delray Beach, their wives drove to Jensen Beach to check out a VIP showing of Portofino.

The brothers-in-law ended up buying a one-bedroom unit at Pineapple Grove for $359,000, while their wives settled on a two-bedroom condo at Portofino for $264,000.

"It's the trend now," De La Cruz said of the condo conversions. "We're just trying to catch the wave and ride it as far as we can."



"Jazzed for Jacksonville"
The Palm Beach Post, Jan. 23, 2005

By Paul Owers, Staff Writer

JACKSONVILLE -- This is a Hardee's and Whataburger kind of town, a military post along the scenic St. Johns River, where people power walk and smoke cigars after lunch. It's a place where you'll find custom license plates saying things like GOD WILN and store marquees telling you that "a man who rolls up his sleeves seldom loses his shirt."

To some, Jacksonville always will be the city that smells, even though its paper mills went away in 1989.

The National Football League thought enough of the area to award an expansion franchise, the Jaguars, in 1993, but the region remains an enigma: A large Florida coastal city with no discernible tourist industry.

So there were more than a few falling chins when the NFL selected Northeast Florida to host Super Bowl XXXIX two weeks from today.

"I think everybody was shocked," says Connie Jones, who mixes drinks at the Tailgate Bar & Grill across from Alltel Stadium. "It's not so much that it's a small town. It's just that it's got a small-town attitude."

But that didn't matter to members of the city's business elite, who convinced NFL owners that a Super Bowl on the river with cruise ships serving as floating hotels would be novel and appealing. Now this city of softly Southern accents is hoping to use the spectacle to finally forge a national identity.

"It's an enormous opportunity for us to introduce our community to the world," Jacksonville Mayor John Peyton told 100 residents at a town hall-style meeting recently.

The following day, in his plush, downtown office, the boyish-looking mayor, just the second Republican in 100 years to hold the post, recalled the night he had dinner with John Covey, brother of author Stephen Covey, who wrote Seven Habits of Highly Effective People.

John Covey, a Mormon, has 10 children, all college-educated. And not one knew where Jacksonville was, even though it's the largest city land-wise in the contiguous United States, at 840 square miles. Many people, in fact, can look at a map and point to Miami and Tampa - homes of the state's two other NFL franchises and 11 Super Bowls - but wouldn't know where to find Jacksonville.

So an advertising agency used part of a $20 million marketing budget to create a campaign to educate the uninformed. "Jacksonville: Where Florida Begins" accomplishes that goal, the mayor says.

Officials concede that Jacksonville has problems, like any other town. It has large industrial and blighted areas. And on New Year's Day, 200 marchers protested the deaths of two black men who died in December in police custody.

But none of those blemishes makes the city any less Super Bowl-worthy, officials say.

"Is this the best place to throw a party, and does it have the best nightlife?" Peyton asked. "Probably not. But we have a great quality of life here. Our goal is to be successful so that the Super Bowl will return one day."

Many had their doubts

Jacksonville bid for a Super Bowl in 1987, but it wasn't taken seriously because there was no home team at the time. The Jaguars and their underdog owner, Wayne Weaver, gave the city a better chance at a title game, but it was far from certain.

To the astonishment of many, Weaver won a franchise for the city even though his ownership group, which included then-gubernatorial hopeful Jeb Bush, had briefly pulled out of the running. And Jacksonville hardly is a media mecca; its television market is the league's second-smallest, ahead of only Green Bay's.

When it came to the Super Bowl, the city offered a warm-weather climate preferred by the NFL, but there were potential deal-breakers everywhere. Was the region's airport big enough? Were there enough private practice fields?

Officials scrambled to assuage the NFL's concerns, adding flights and increasing capacity at Jacksonville International Airport. But the biggest problem was a lack of hotel rooms.

With 100,000 visitors expected for the Super Bowl, the league required Jacksonville to have about 32,000 rooms within an hour's drive of the stadium; Northeast Florida was about 4,000 short.

So somebody - Weaver doesn't remember who - came up with the idea of bringing in cruise ships to Jacksonville's deep-water port after having seen the plan work at the 1992 Barcelona Olympics.

"We started thinking, 'Why not Jacksonville?' " said Weaver, 70, a shoe store executive from Columbus, Ga., who made his millions without ever attending college. "Only 11 other cities have ever hosted a Super Bowl. But we have the weather, wonderful beaches, a magnificent river and infrastructure that a lot of cities don't have. We convinced ourselves that we could be competitive."

So officials arranged for five luxury liners to provide 3,617 rooms for NFL corporate guests. It may be cramped quarters, but the ships will offer first-rate restaurants and entertainment options.

Tom Petway, a part-owner in the Jaguars, and Peter Rummell, head of the Jacksonville-based St. Joe Co., conducted the city's 15-minute PowerPoint presentation in front of NFL owners in November 2000. When Commissioner Paul Tagliabue announced that the 39th Super Bowl would indeed be played in Jacksonville, it became the smallest region ever chosen to host the game.

"We were very skeptical," concedes Jim Steeg, the league's outgoing senior vice president of special events, who is handling his 26th Super Bowl. "We gave them a lot of challenges, but they met every one. Now we feel pretty good about it. I think the city will grow into the game just like Tampa did."

Debating economic boost

Mayor Peyton says he wants to use the Super Bowl to generate "meaningful job growth and wage increases," though he doesn't offer specifics. In time, he hopes to attract companies from the biomedical, aerospace and international trade industries. The region's economic development coordinator, Jerry Mallot, has targeted thousands of companies nationwide, including 300 that might be close to relocating. He declined to disclose their names.

His office has sent out postcards, sunglasses and golf shirts to top executives, hoping to sell them on Jacksonville, which has that rare mix of year-round sunshine and a change of seasons.

Mallot cites CSX Corp. and title insurance giant Fidelity National Financial, two Fortune 500 companies, that already have moved to the city in the past few years.

A 2003 study revealed that the estimated economic impact on San Diego from hosting Super Bowl XXXVII was $366.86 million.

But Philip Porter, a professor at the University of South Florida who has scrutinized the economic benefits of past Super Bowls, says the mega-event doesn't come close to helping host communities the way these studies suggest. He says the national television exposure is short-lived and is hardly why companies will choose to move to a particular area.

"What can Joe Average in Jacksonville expect to get from the Super Bowl? Nothing," Porter says.

But officials are undeterred.

"We know the Super Bowl changes the images of communities," Mallot says. "The Super Bowl will provide more exposure to us than anything we've ever done in the history of the city."

Gearing up for the show

Many in this metropolitan area of 1.2 million people annually enjoy the Florida-Georgia college football game and the Gator Bowl, both played at 76,000-seat Alltel Stadium. But as the NFL's Steeg points out, "you can't compare the two to the Super Bowl."

Last year's contest between New England and Carolina was the most-watched show in sports television history, with nearly a billion viewers in more than 200 countries. Tickets are sold out well in advance, before most fans have a shot at them.

Pat Noble, who works at the Super Bowl Super Store at a Jacksonville mall, said the city's naivete is showing.

"People ask me all the time, 'Do you sell tickets to the Super Bowl?' " Noble says with a chuckle. "When I tell them 'No,' they say, 'Well, we'll just go down to the stadium and get them there.' "

At The Jacksonville Landing, a downtown hot spot similar to West Palm Beach's CityPlace, some merchants don't know whether to be elated or terrified about the arrival of the Super Bowl.

Vera Bryant, manager of Edgewater Treasures, worries about traffic and parking, major concerns even under normal circumstances. During Super Bowl week, she's preparing to extend her collectible store's hours and spend nights on the floor in a sleeping bag. She expects the game to at least double her sales.

"It's a good thing - at the moment," Bryant, 57, a lifelong Jacksonville resident says of the Super Bowl. "I've been told to stock up on big-ticket items because people will spend money like we've never seen."

One South Florida sports columnist says holding the Super Bowl in Northeast Florida is "a little like dropping Mardi Gras in Davenport, Iowa." Others doubt the area will get the chance to host more Super Bowls.

Rummell, the St. Joe CEO, and other officials say they're not offended by such slights, just determined to prove them wrong.

"Jacksonville has not historically been the archetypical Florida city, like Miami and Orlando," says Rummell, 59, a former executive for the Walt Disney Co. "But I still think we're going to put on a hell of a show and be a city that enjoys its day on stage."