HOLMES BEACH – The restaurant that started it all may have to seek a variance or a zoning change to get more outdoor dining seats.

In February, the Freeman family, owners of Skinny’s Place, appealed to the city commission to increase their outdoor dining seats and introduced petitions with 2,000 signatures of people wanting more outdoor seating. That request led to an ordinance that created a procedure for restaurants to do so.

However, at its first reading last week, the Freemans learned that as owners of one of two nonconforming restaurants in the city, they would have to seek a variance from the Board of Adjustment. Skinny’s is in a residential zoning district making it a nonconforming use, which can’t be expanded without a variance. The Beach Bistro is the other nonconforming restaurant.

"The two most popular restaurants in the city requesting this could be left out of the loop," Commissioner David Zaccagnino remarked.

Estella Freeman told commissioners that she is concerned about going to the Board of Adjustment.

"The Board of Adjustment is the proper procedure for anything that’s grandfathered in," Chair Sandy Haas-Martens explained. "We have to make sure that all the grandfathered properties that are nonconforming don’t become more nonconforming."

Freeman asked what information the board would need for the variance request and City Attorney Patricia Petruff said there is a list in the code, which Freeman could get in the building department.

"Is there a way to do it differently?" Freeman asked.

"You could seek a zoning change," Mayor Rich Bohnenberger offered.

Commissioner John Monetti said he thought they would have a better change of getting a zoning change, and Bohnenberger said he did not see any reason why a zoning change would be denied.

"As a legal nonconforming use, you operate under certain constraints," Petruff explained. "You have some choices to make about how to get yourself out from under those constraints."

Zaccagnino said the city put the constraints on the property owner after the fact, and Petruff pointed out that she did not know when the restaurant was started, when the zoning became residential or how many outdoor seats they had in the past.

"You’re forcing them to change their zoning to have a couple of tables," Zaccagnino continued to protest. "Isn’t there another vehicle we can do?"

"What you suggest would wreak havoc on our nonconforming use policy," Petruff responded. "If we say this nonconforming business gets a pass, what do I say to the next nonconforming business that wants a pass on something else?"

Bohnenberger said without the ordinance, Skinny’s could not seek a variance.

"If the majority of the commission would like to explore another avenue for this particular property, I don’t think it’s proper hold up passage of this ordinance because of the other restaurants (that may want to increase their outdoor seating)," Bohnenberger advised.

Commissioners approved the first reading.

Requirements for expanding a nonconforming use

• The expansion or change of the nonconforming use requested will not materially change the character or quality of the neighborhood in which it is located, or hinder the proper future development of the surrounding properties;

• No nuisance feature is enlarged;

• The proposed expansion or change shall not create hazardous vehicular or pedestrian traffic conditions, nor result in traffic exceeding the capacity of streets and intersections serving the property;

• The proposed expansion or change will not result in noncompliance with off-street parking requirements determined with respect to the nonconforming use so expanded or changed;

• The proposal shall include appropriate drives and walks and the installation of such screening and buffering as may be reasonably necessary to minimize adverse impacts on surrounding land uses;

• The proposal shall not create any new incident of nonconformity, nor increase the degree or extent of any existing nonconformity.

Back at the end of 2005 and early 2006 ,I sounded the alarm over the speculative behavior being exhibited in residential real estate, warning that it would not go on much longer. I was right, as it turned out, but I did not foresee the peripheral issues related to real estate speculation that are now causing much bigger problems.

It would take three or four of my biweekly columns to cover the full story. To briefly summarize:

Speculative behavior + easy money loaned from banks = residential real estate bubble. Add in loans packaged, securitized and sold to large institutional investors by major brokerage firms + use of leverage to buy more loan packages than they could really afford = contagion when it all falls apart.

Real estate bubble + pin prick from forced sales and foreclosures by those who couldn’t flip properties in a few months for a huge profit = a long slide down the worst real estate price declines since the Great Depression. Contagion effects include selling pressure in the stock market and banks now afraid to lend due to worries about how bad the economic slowdown might be, resulting in low consumer confidence.

So now the bubble has move over to commodities, which I believe will also receive the inevitable bursting pretty soon, but that leads me back to the title of this article. I don’t believe the price declines are over for real estate, but we are closer to the end of the process than the beginning and that is good news. Good news that is for investors who buy the securitized form of real estate through ownership of real estate investment trusts, known as REITs. Most of these investment vehicles have undergone price declines of about 30 percent or more from peaks set at the beginning of 2007, but are recently starting to recover.

REITs are effectively a real estate holding company which owns physical properties. Most specialize in a particular type of real estate, ranging from office buildings and industrial parks, to apartment complexes and shopping malls. Also available are REITs which own hospitals or assisted living facilities.

The neat thing about REITs is that the average investor can get a lot of diversification of property type and geographic location very quickly. While single family homes are likely to languish in price for perhaps several more years, the demographics for apartment REITs are looking very good, and we are optimistic about many forms of commercial property as well

Many of you reading this (like me) are members of the baby boom generation (born between 1946 and 1964). Our generation is about 85 million strong and has changed consumption patterns as we moved through the various economic phases of our life. Well, spending money isn’t the only thing we’re good at because we created the echo boom generation, now over 100 million strong. The bulk of the echo-boomers are in their 20s, finishing college and getting ready to move out on their own, which usually means renting an apartment for a few years.

I don’t recommend that you run out and put your entire nest egg into REITs, which own apartments, but they would be a good piece of a diversified real estate portfolio. What about the current economic slowdown? I believe that outside of the aforementioned greedy financial firms, corporate America is pretty healthy, flush with cash and not likely to begin abandoning its office buildings.

Sure, there will be some more pain before this is over, but remember that as a tradable, equity type security; REITs tend to discount the news of the day well in advance. I think REITs are not a bad place to start establishing positions again over the remainder of 2008. I suggest a mutual fund or an exchange-traded fund, which can give you ownership across a broad spectrum of properties in just one purchase. Current dividend yields are over 4 percent and there is the potential for long-term appreciation in addition to the income.

The best part? Few are talking about buying these vehicles. When everyone wanted to own them (back in 2006), it was, of course a mistake. Now that they are ignored, they are a much better buy for the patient investor.

Tom Breiter is president of Breiter Capital Management, Inc., an Anna Maria based investment advisor. He can be reached at 778-1900. Some of the investment concepts highlighted in this column may carry the risk of loss of principal, and investors should determine appropriateness for their personal situation before investing.

Tom Breiter is president of Breiter Capital Management, Inc., an Anna Maria based investment advisor. He can be reached at 778-1900. Some of the investment concepts highlighted in this column may carry the risk of loss of principal, and investors should determine appropriateness for their personal situation before investing.