Pineapple Square Decision

The value of the city contribution to the proposed Pineapple Square project continues to generate controversy.

In the backup material provided to the Commissioners (available on the City web site), the Staff Report of Jan 31, 2006 indicates that the State St lot appraisal has been revised to $10,950,000 (it was at $8,000,000).

The Staff Report says in part:

Based on these considerations, we cannot certify that the proposed granting of development rights for no consideration other than those specified above would not be a subsidy, as the Applicant [Isaac Group] would not be providing consideration at any significant cost and marginal value, while the city would be incurring potentially significant costs (both tangible and opportunity cost.) While fiscal benefits from the proposed project would lessen the overall negative impact to the City, they would not address the apparent unevenness of the proposed real estate transaction.

Other Staff recommendations include:

Preparation of a three-dimensional, scale model showing the massing of proposed structures within the context of the building massing would increase community understanding of the project. The submission of such a three-dimensional model is recommended.

The following is the latest proposal from the Isaac Group concerning Pineapple Square. It is dated Feb 3, 2006:

Project :
130,000 square feet of retail
276 condominiums in two buildings
717 parking spaces to be provided by Isaac to support the project
350 public parking spaces to be provided by the City
"4 urban parkslgreen spaces on public property (we eliminated the liner building in front of the Northern Trust parking deck along Lemon Avenue, and instead will enlarge the large park
around the Dolphin Fountain.)

Terms:
1. *The City and Isaac swap air rights between the City’s State Street lot and the Isaac Pineapple Lemon block. (The City would have, under their RFP criteria, retained only the air rights on the State Street lot for parking). Isaac will not charge the City with any costs related to the value of the air rights over their 1.5 acre parcel, and the City will not will not charge Isaac for the value of the air rights over their 1 .O acre parcel or over State Street.

2. *Isaac pays the city approximately $1,000,000 for the purchase of the State Street lot and, in addition, conveys to the City 175 parking spaces for public use to be combined operationally with the 350 public parking spaces to be paid for by the City. The Isaac cash payment is based on an analysis that has determined that the cost of the same 350 spaces on the State Street lot would have cost the City $1,000,000 less to construct. The 175 parking spaces will cost Isaac $4,600,000 to construct. This will result in the City being able to control 525 public parking spaces in the core retail area of downtown. Isaac will be flexible in working with the City on the timing of the City’s payments towards the construction of their 350 spaces.

3. *Isaac pays the City approximately $326,000 (rounded) to compensate the City for the loss of 15 curb side parking spaces on State Street between Lemon Avenue and Pineapple Avenue.

4. *Isaac pays the City approximately $315,000 for the purchase of 3000 square feet of the City’s parking lot at lSt and Lemon Avenue.

5. *Isaac pays for the reconstruction of that lot.

6. *Isaac pays the City approximately $175,000 (rounded) to compensate the City for the loss of 8 parking spaces lost by the acquisition of the 3000 square feet of the City’s parking lot at lSt and Lemon Avenue.

7. The City must obtain title to the State Street lot with the entire width of the alley to the south of it to provide sufficient overall width to construct a parking structure on the State Street lot.

8. *Isaac will commit that all of the street level lease-able areas in the project will be occupied by a mix of upscale retailers anchored by a minimum of two anchor major restaurants.

The total cash contribution to the City would be approximately $1,816,000, The construction cost of the conveyed 175 parking spaces is approximately $4,600,000. The incremental public taxes generated by the project over the next 10 years will be in excess of $9,000,000. In total, the City will be the beneficiary of nearly $16,000,000 over the next 10 years.

I believe that this proposal provides both Isaac and the City the ability to each obtain their goals.

The ultimate beneficiaries will be the residents, merchants, and business’ downtown with the construction of a new critical mass of retailers and the City’s first major public parking structure to serve the core retail area of downtown.

I will be attending the February 6th Commission meeting and look forward to personally presenting our plan and this proposal for you review and consideration. I look forward to also being available to answer any and all questions.

Sincerely,
John L. Simon

Basically the Isaac Group is acting to maximize their interests. The City is acting to protect the interests of the citizens. As the negotiations continue we hope that the City does not back down in the process and continues to protect the interests of the citizens - all of the citizens.

We are finding that public/private partnerships continue to be difficult to balance. Partnership usually means equal risk and reward for both parties. We hope that the City is truly an equal partner in this process.