Would you sell a property far below its value to one of only two bidders when you know there are many other prospective buyers who will pay much more?
That’s what Mayor Ken Welch wants to do with the Gas Plant, while now acknowleging there was and is international interest in the property and while having two new appraisals that value the property at much more than the offer he wants the city to accept.
This is at a time when St. Petersburg needs to borrow $600 million to speed up sewer and stormwater repairs. And this borrowing will increase real estate taxes by almost $100 per $100,000 value - for 30 years!
Why doesn’t the Mayor provide the hard facts and evidence that what he wants to do is a good deal for the city? I suggest he doesn’t because he can’t—because there are no factual answers that justify this deal.
The 86-acre Gas Plant property will be ready for development in about three years.
The property is probably the most valuable large-scale redevelopment opportunity anywhere in the U.S.
The Mayor has now acknowledged the property value in his comments to the Tampa Bay Business Journal: “obviously these 86 acres generate a lot of interest around the world.”
But the Mayor never got bids from those national and international developers. He only got offers from two local developers.
The property was just recently appraised as high as $390 million if sold as is - with any buyer paying all the costs of development including the streets and parks.
The property could be worth as much as $1 billion if the city leads the development and sells the land after the streets and parks are constructed.
Mayor Ken Welch wants to sell the Gas Plant’s developable land to Blake Investment Partners, for $275 million. Far less than the appraised value. And he wants to agree that the city will pay for the streets and parks.
We don’t know the costs of the streets, parks and infrastructure. However, in their proposal ARK Ellison Horus mentioned $239 million in infrastructure investment and later suggested $400 million in infrastructure cost. For purposes of discussion, I will use $300 million.
If the city sold the property at the appraised value, the city collects $390 million.
If the city sells to Blake Investment Partners it collects $275 million, but it has to spend $300 million for the streets and parks. The city would be out $25 million.
Collect $390 million or spend $25 million? A difference of $415 million.
$415 million is 2/3 of the $600 million the City wants to borrow to pay for sewer and stormwater repairs—which will cost homeowners almost $100 for every $100,000 of property value in increased property taxes - for 30 years!
The City received only two offers for this extraordinary 86-acre property, and not one single national or international developer submitted a bid. The Mayor himself says the property generates interest around the world, and he still wants to move forward after receiving only two local offers.
Why would the Mayor do this deal? Why would anyone do this deal?
I suggest if any of us was the trustee for the city, we would never do this. We would have to admit we didn’t do a good job of asking for bids. Those major developers should have been salivating to get a chance. Again, per Mayor Welch himself: “these 86 acres generate a lot of interest around the world”—but none of them bid.
The Mayor says it’s not an issue of selling the land for the highest price. But selling for a loss of $415 million? When you haven’t even gotten bids from the major developers supposedly interested from “around the world?” And you haven’t considered what smart cities around the U.S. do - lead the development and capture the full property value - as much as $1 billion.
As I have written extensively, all of my research says the City should not sell the land even at $390 million. Instead, the city should decide on the parks and streets first, and put them in.
Why?
Because we should decide what kinds of parks we want.
Because once the streets and parks are in, the land could easily be worth more than $1 billion. And that value should belong to the city.
Because the City keeps control—we don’t have to worry about any one developer having problems over the next 20 to 40 years, potentially putting the whole property at risk.
And we can set aside as much land as we want for affordable housing. (P.S. No developer is going to guarantee how much they can build—it’s impossible for them to do that.)
The Mayor is now acknowledging the Gas Plant’s extraordinary value and interest from around the world.
Then, why doesn’t the Mayor provide the facts and evidence that what he wants to do is a good deal for the city? I suggest he doesn’t because he can’t—because there are no factual answers that justify this deal.
All of the other candidates for mayor and most of the candidates for City Council District 6 say they wouldn’t.
Value: We Should Not Give Away the Gas Plant
$600M Borrowing - and a $1 B Giveaway in St. Pete?
A Billion Dollars Will Go Out the Window
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