THE INVASION OF PALM BA
General Development Corporation
By Diane Barile
A small plane glided over the post-Civil War town of Tillman, renamed Palm Bay, fitting the excitement of the Florida land boom and bankruptcy of the Great Depression of the 1930s. Post World War II times of the late 1950s brought streams of new residents to the local real estate market for land and new houses.
The plane circled the palm tree ringed harbor and then turned to the west of Turkey Creek and over a grid of drainage canals left from a 1916 project to drain prairies and marshes for agricultural development. The airplane passengers grinned and nodded in agreement. The 185 miles of canals meant that the initial cost of land drainage was already done creating a community pattern – perfect for land sales.
Passengers on the plane included one of the Mackle brothers who sold homes all over Florida. His protégée and companion aboard was the new president of the subsidiary, General Development Corporation. The place they saw was a potential bonanza with drained land, no taxes and a weak local government.
In their minds, they saw the new City of Port Malabar, adjacent to the village of Palm Bay. General Development had purchased 2,450 acres for its Welcome Center and first 130 homes. There were options for purchase of ranch lands and pastures west toward the St. Johns River.
Even as the flyers were optimistic, in 1959 the people below had their own pressures. The City of Melbourne, sharing boundaries with Palm Bay and West Melbourne, proposed to annex them both to expand its tax base. The smaller towns carried no city taxes and saw no advantage in becoming part of Melbourne. In 1960 Palm Bay incorporated blocking Melbourne’s efforts.
The Palm Bay City Council met at a stucco City Hall where Palm Bay Road crossed the Florida East Coast Railroad tracks. Meetings were often interrupted by the loud rumbling of trains passing a few feet from the City Council proceedings. Sometimes it seemed the engine would run through the shaking building. Issues facing the new city became so heated that police paced the aisle between the warring factions.
Managers of General Development (GDC) were politically active, hosting council members to extravagant airplane excursions to the Miami Company headquarters. The idea of a separate Town of Port Malabar evaporated as GDC lands were eagerly annexed to Palm Bay.
With the purchase of more than 40,000 acres from rancher Marion Platt and venture capitalists, the ultimate size foresaw the largest city in Florida. The land purchased from the ranchers was leased back to the sellers as agricultural use until needed in development. The continued zoning as agriculture gave GDC a lower tax rate than urban land.
But there were problems. While company lots were sold at a density of three or four homes per acre, both the State of Florida and the Brevard County Health Department regulated the placement of water wells and septic tanks to ensure the health of the homeowners. Because of the wet soils, only lots of one acre or more were permitted for the septic tank form of sewage treatment. Therefore, the lots being sold were too small for development as advertised by General Development Corporation.
After much political dialogue, a unique agreement was made. (1) All GDC property in Palm Bay would be divided into individual Planning Units. (2) When 1/3 of the lots had houses in a Planning Unit, GDC would extend a water line to the unit. (3) When 2/3 of the lots were occupied, GDC would extend a sewer line.
This agreement set the scattered dispersed land use for the city. To avoid providing expensive community water supply and sewerage treatment, GDC would close housing densities just less than the one third limit set by the Health Department. Then home sales would shift to an alternate Planning Unit.
A percolation test was required before each home could install a septic tank. To ensure the tank would discharge sewage contaminants, the test determined that at least six feet of porous sand existed between the land surface and the top of the saturated water table. But the level of saturated soil varied through the year from near the surface to below six feet in the driest months. Port Malabar tests were always done in May, just before the rainy season. During most of the year, the septic tanks failed spewing bacteria contamination into street swales, canals, Turkey Creek and the Indian River Lagoon.
The two hundred miles of canals was the responsibility of the Melbourne-Tillman Drainage District (now the Water Management District) Board of Directors. The original design of the 1920s was to drain the St. Johns River marsh lands for farm lands and pastures. By the 1970s, the District met in the General Development offices with a company employee as Chairman. During this time channels were being dug deeper and wider to accommodate water running off roofs and driveways and new streets. The term “cheap as dirt” did not apply in the swampy lands of Florida. Finding soil to fill in wetlands was usually an expensive commodity, but not in Palm Bay. Stacks of dredged soil three stories high were carried by a barrage of trucks to elevate the flood prone Planning Units giving the impression of high and dry home sites. Streets were paved below ground level so buyers looked up to lands that could flood.
General Development sold land nationally and internationally. During the Viet Nam War, engaging kiosks in Saigon described retirement life in subtropical Florida for $10 down and $10 per month. In France, handsome young Englishmen, trained by GDC, canvassed military base housing in late afternoons and early evening. Their sales pitch highlighted pay now for a happy retirement in a company house on your own property. At one point, sixty percent of Palm Bay residents were retired military.
On the American home front, markets rose to a deceptive scale. In cold northern states, potential buyers were hosted by General Development to lavish steak dinners and glowing pictures of the good life in Palm Bay with an invitation to visit the place during especially frigid months. Groups of guests were given three to four days full of tours, meals, heavy on how and where to invest in Florida land. Port Malabar, of course, was the answer. The buyers were never given access to realtors other than the GDC sales force. Phone calls from the guest rooms were monitored and diverted. Why? The company land was sold at three times the local market.
These marketing scams were in the 1980s extended to Taiwan, Hong Kong and South Korea with prices as much as ten times local values. One family bought a house for use while their son attended the Florida Institute of Technology. Four years later, the home and land seemed valueless.
After thirty years of selling Florida sunshine and the American Dream, the General Development Corporation with its 3,000 sales force globally came to the attention of the American Federal Trade Commission (FTC) and was indicted by a Federal Grand Jury. The company was charged as a massive scam for out-of-state and international buyers. Seduced by low monthly payments, immigrants from Canada and the Far East were unfamiliar with the local economy. Additionally GDC, through handshake agreement, won environmental and land use concessions which established less than adequate patterns of urban development.
General Development Corporation and top executives pleaded guilty in 1990 and accepted restitution of one hundred million dollars for the victims. The criminal charges of fraud and conspiring to commit fraud tainted the future of the employees and reputation of Florida land sales as a whole. Within months GDC declared bankruptcy.
Those two men flying over cattle ranches, chicken farms and flooded land in 1959 had a plan. They fore saw an urban development covering 72 square miles, subdivided into seventy thousand family lots sold primarily to military retirees. They saw the year 2000 when all the land would be sold out to house about 200,000 people. Rather than dedicated to building a thriving community, their organization theme centered on schemes and peddling practices to outwit politicians, regulators and most of all those building a new home.