CRA Advisory Board Meeting Notes - Orange Dolphin Project

These are notes taken at the recent CRA Advisory Board Meeting. In this part of the meeting, City Manager , Mike McNees gave a report on Orange Dolphin Project:

McNees: Am going to speak about 1) the process that led to getting us out of the blue. 2) How acquisition took place. 3) Questions

All are straightforward and simple issues. Downtown Master Plan 2020 called for civic reservations…what land does the city need to set aside for a successful CRA? What are “could be” places for civic parking/buildings/space/public art? One identified parking area was across the street from the Orange Dolphin. It seems contrary to the Duany Plan to institutionalize parking, but municipal parking can save downtowns. This was identified as a place for parking to serve downtown.

When he arrived here he studied the plans and realized that many things the city was doing were dependent upon adequate parking. He asked how parking needs were being addressed and was told nothing was being done. So they did a City Downtown Parking Plan which included: 1) inventory and utilization study and charrette with downtown stakeholders, 2) future needs assessment 8/2004), 3) strategic study on how to operate (4/2005), and 4) plan to tie all together with who pays what and where (goes to Commission next month).

Consultants recommended best places (showed map) for top priority parking. 1) Palm Avenue, 2) State and Lemon for which RFP will go out or not go out on August 15, and 3) S Orange and Pineapple. The Saunders property shows up, but that is not available. However the site across the street is. It has a new façade on an old building.

McNees heard it was for sale and initially thought, “That’s great, but it’s too expensive.” 2-3 months ago he asked the Engineering Department to look at the property and see if it was viable. They found if city used this property and either vacated the alley or narrowed Dolphin Street (which is very wide), they could get 335 spaces at a cost of $23-24,000 each. Although this is high end price, it is not out of range of costs in other areas.

The owner had a falling out with someone she was in negotiations with and eventually McNees got to the attorney for the property owner. At this time the mayor asked why they were waiting for the parking planning study with all the development going on. Why not ratchet up the effort to find spaces rather than waiting for study to be finished? Commission was in unanimous agreement McNees should go out and beat the bushes. One week later he had a call from the owner and had two days to decide. The price was $4.4 million and there were offers for that much and maybe a few hundred thousand more from others. However, the owner was interested in selling for the public benefit. She also did not want to deal with tenant issues from abroad.

Mayor, auditor and clerk agreed this needed to get before the CRA quickly. They were not being played… there were two other parties bidding and he knows of a third. Option was to get to CRA immediately or lose out. CRA needed to decide, not the city manager…it was his job to bring this forward. The Commission voted 4-1 in favor of proceeding.

There is now a contract with two contingencies: A Phase II environmental study will be done (Phase I study was done two years ago). DEP is aware of a plume of chlorinated solvents from dry cleaning company in the vicinity and have drilled a well, will let it set a week, and then pull samples.

Secondly, they will have to take out 5 leases. One expires 6/2005, but between the time McNees got the authority to negotiate and agreement was reached the property owner had extended the lease to 2013. This will be a real issue. [Editor comment: if you are trying to sell property and have three bidders plus the city interested, would you really jeopardize a sale by extending a lease?]

Owners are in a state of shock, have only been there a short time and like the great parking at their strip mall. [Editor comment: how can our city apparently run rough shod over these small business owners?]

City will talk with them about their business needs and about relocating them immediately or in a year.

At the CRA Monday (Aug 1) McNees will present the worse and best cases of costs to take out the leases. [Editor comment:Remember McNees talked with some of the property owners the Saturday of the negotiation weekend. He announced on Monday at the CRA that the owner would have hard copies of the leases in hand the next day. Why is he still unsure of what the leases say, or is he just unsure of what it will cost to “take them out”?]

An owner of property to the west has approached city and wants to aggregate both properties and do parking and liner retail with housing atop. That developer will be at CRA on Monday, probably even with renderings.

Would recover significant land cost this way and put property back on the tax rolls and have a good public/private building project.

[Editors note: Commissioners have been hinting that this deal is much more complex than the public knows and everyone will be very happy when they know the whole story. We may know Monday.]

Why didn’t he bring an appraisal to the CRA? Because he didn’t have time. It would have been his preference.

Robbins: What about the county administrative building parking property where city has air rights?

McNees: The lot to the south intrudes on Laurel Park and we don’t want to slap in 4-5 stories by single family residential. It is also a block further away. We’re in the best position if we have total control of land. Have learned this by hard experience. [Editor comment: How big is the west county lot that doesn’t abut Laurel Park single family residential?]

Meyer: Did you consider an emergency meeting so the CRA Advisory Board would have the opportunity to advise the CRA on this decision?

McNees: No. If he had to do over again would do that. Was a hurricane in the Gulf at the time that were concerned with as well. Hope never to be in that position again.

Meyer: If you go down the same road again, pull us together so we can be of assistance. Could have a joint meeting with CRA.

Ron McCullough: Is $23-24,000 the total cost per space?

McNees: That figure doesn’t factor in taking out tenants and this deal will very much hinge on attractiveness of partnership project and ability to share that cost. Tenant issues could hurt this. Monday will tell the story.

McCullough: It this comparable to other numbers for parking spaces?

McNees: Pineapple Square puts cost at $20-21,000 per space. Ursa Grae costs have risen, which is one of the reasons we are not going to reappraise the land.

This cost is right at the top of the acceptable range. As to why we didn’t do this two years ago…it took too long and the private sector took it from us. [Editor comment: No, McNees decided to back off bringing request to make offer to Verizon of $1,600,000 and go for lease at $40,000 a year with Michael Saunders, who bought the property for $1,500,000. Documents show it was to go on the Commission agenda 3/3/03, but never got there. 3/17/2004 letter from Paula Rees, VP of Operations for Michael Saunders offers a "guaranteed two-year term with two one-year options to renew." ...."However, in the event the Michael Saunders enters into an agreement to develop the property, the renewals will be denied". So now Saunders is going to develop the property and McNees has to scramble for parking.]

I feel comfortable with this investment and feel confident it will not crash in next couple of years. [Editor comment: apparently now our City has become a speculator.]

Marcia Wood: I’m a big supporter of yours, but not on this one. Is no rational reason to pay two times the highest price ever paid for Sarasota property and taking the property off the tax rolls. Why not give Michael Saunders a height bonus and get 300 spaces. You did have an option…the option to say no.

McNees: We are still in conversations with her, but parking is not in her plan. She had the contract before we did and got there first. The neighborhood needs more parking than it has. Retailers and cinema will all benefit. Were no other viable options to provide this parking. Met with Saunders just two days ago. Are 4,000 realtors here. Let someone can bring me a viable property for less money. It is not twice the cost…he challenges that figure.

Wood: Am not talking about the cost of the building, because that will be torn down, just about the land. That is an outrageous price and can’t understand how she got it. Only salvation will be if you get a joint venture and get some return. TIF funds should only be spent if there is some redeeming value.

McNees: Dimensions do not allow much to be done or liner buildings. One of the provisions of the new code, however, is that the City can make exceptions. I keep telling that to developers. [Editor comment: the new code not yet in place and the city is already talking exceptions.] Is important that we be in control of the land. Do not think it is below market value.

Kathy Baylis: Is good to have parking for Burns Court. Carl’s suggestion about joint meeting is good, although do understand the need for expediency. If this is the market cost, the problem is, how do we know that when there was no appraisal. Could that have been in the contract?

McNees: That was not acceptable to the seller. Merchants need parking and it is part of the philosophy of the Master Plan to provide parking to leverage other development. In Naples a downtown parking garage was the catalyst to development.