Progress Energy nudges bid for site upward

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By CARRIE JOHNSON, Times Staff Writer

Published October 11, 2004

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ST. PETERSBURG - After two months of negotiations, Progress Energy has agreed to raise its bid for one of the last available pieces of downtown real estate.

The utility company has agreed to pay $5-million for the Florida International Museum site, up from an initial offer of $4-million, and wants to build an office tower, hotel and condominiums.

Mayor Rick Baker said Progress Energy also agreed to give up several demands for subsidies from the city. That makes the deal more attractive to city officials, and Baker is encouraging City Council members to approve it.

"I think it is significant that Progress Energy was willing to increase the offer for the land price," Baker said. "This is a fair, reasonable deal for the city."

The council is scheduled to discuss the deal during a workshop today. Several council members said last week they wished the company was offering more money, but most agreed the deal is satisfactory.

"I'm not jumping up and down about it," said council member Earnest Williams. "But I think I can live with it."

Progress Energy first proposed buying the museum site in June. The company offered $1.5-million for half of the site but later increased its bid to $4-million for the entire property. The site is bounded by First Avenue N and Sunshine Lane and Second and Third streets.

Council members still called the offer too low. They agreed to allow Baker's staff to negotiate with Progress Energy and urged them to get a higher price.

Aaron Perlut, a Progress Energy spokesman, said his company is committed to building in downtown St. Petersburg.

Under the current deal, Progress Energy will pay $3.5-million at closing. The remaining $1.5-million will be paid to the city through a six-year loan with a 5 percent interest rate.

The city will commit $1-million toward demolishing the old Maas Brothers Department store building that now houses the museum. Progress Energy will pay any additional costs and handle the demolition.

"We think these terms are fair," Perlut said. "We have negotiated with city staff, and we think we have reached good middle ground."

The company originally asked the city to pay for parking on the site and to waive all development fees. Progress Energy also asked for a five-year property tax exemption for both projects.

The city rejected all of those requests.

"I feel very confident reporting to council that not only do we have a market-driven deal that can be supported," said Ron Barton, the city's director of economic development, "but we removed all the requests for city subsidizing."

Progress Energy plans to build a tower with 200,000 square feet of office space, which would allow it to consolidate all of its Pinellas County employees in one building. If approved, it would be the first new downtown office tower in more than a decade.

The company also has joined with Orlando developer Richard Kessler to build a luxury hotel and up to 50 condominiums on the remainder of the site.

There is one potential pitfall: The city hasn't acquired a parcel in the middle of the property, and one of the seven landowners is asking more than four times the appraised value for his share.

To avoid any complications, Barton said they are offering Progress Energy a contingency plan. If the city can't negotiate a deal for the remaining parcel, they will give the company the option of building its headquarters on the other half of the site.

That would mean the Progress Energy deal could go forward while giving the city more time to negotiate with the landowners, Barton said.

"We didn't want the deal to fall apart just because we couldn't get that last piece," he said. "This way, no one can hold us up."

Council member James Bennett said he is pleased by the idea of a new downtown office tower and hotel. But he's hoping there's still a little more room for negotiation.

"Overall, I think they're getting close," Bennett said. "It's much better than it used to be."