New St. Petersburg office tower

[Benhamin]

Deal clears way for rise of office tower

By CARRIE JOHNSON, Times Staff Writer

Published December 29, 2004

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ST. PETERSBURG - It was costly, but city officials have removed the final obstacle impeding construction of a Progress Energy office tower and luxury hotel in the center of downtown.

The City Council plans to hold a special session Thursday to authorize the administration to spend $480,000 for the final parcel of land under Florida International Museum, the site of the proposed development.

Attorney Sam Mann Jr. had asked for $120 a square foot for his one-third interest in the 16,000-square-foot chunk of land in the middle of the museum parcel. City officials rejected that as too high. The property was appraised at $30 a square foot.

After negotiations, Mann agreed to accept $90 per square foot.

Council Chairman Bill Foster said price inflation was almost inevitable, given the high-profile nature of the project.

"I won't say it was our fault, but when you have a development of this magnitude that's hanging on a single interest, (Mann) knew it would be hard for us to go on without that parcel," Foster said.

"We all got on TV and were going ga-ga over this project. I did, too. But that kind of excitement has value," he said.

Mann said he thought the agreement was reasonable.

"It's a fair price," he said. "Otherwise I wouldn't have done it."

Taxpayers won't pay the entire bill. City officials went back to Progress Energy and its development partner, the Kessler Group, and asked for more money to offset the cost. The companies agreed to pay an extra $150,000 in addition to the $5-million offer for the entire property.

Once the city has acquired the parcel, the companies will be free to close on the property. Progress Energy plans to break ground next year and finish construction on the 200,000-square-foot office building by Dec. 31, 2006.

It would be the city's first new office tower in more than a decade. The hotel, a 250-room Westin Grand Bohemian, will follow in August of 2007.

Economic Development Director Ron Barton said the project has the potential to be even more important to the future of downtown than BayWalk, the shopping and entertainment center that draws thousands of people downtown.

"To me, that's a significant milestone to get that kind of investment in a block that really wouldn't be considered waterfront property," Barton said.

Progress Energy and Kessler have agreed to pay the city $3.5-million at closing for the Florida International Museum property located between First Avenue N and Sunshine Lane and Second and Third streets. The remaining $1.5-million will be paid through a six-year loan with a 5 percent interest rate.

The move will allow the utility company to consolidate its approximately 600 employees and five locations in Pinellas County into one building.

The mixed-use project also will include space for retail and condominiums.

The 16,000-square-foot parcel in the center of the property was the only potential stumbling block for the deal. The city owned one-third of the strip, Mann owned another third and the rest was owned by six different people.

The other owners agreed to sell their interest for $75 per square foot.

When the City Council signed off on the deal in October, a contingency plan was added in case the parcel couldn't be acquired for a reasonable price. Progress Energy was given the option of building its headquarters on the other half of the site. However, that option was less desirable because it could have blocked plans for the new hotel.

"I'm glad everyone came to their senses and did what was in the best interest of the city," Foster said.

Representatives from Florida International Museum also were relieved to see the deal move forward. For years, they have clamored to be released from their current headquarters in the former Maas Brothers department store.

The 215,000-square-foot building is extremely expensive to maintain, said Kathy Oathout, the museum's executive director. The museum will close in June, in preparation for a move to the annex adjacent to its current home, Oathout said.

The museum will share the annex with St. Petersburg College, which is looking to expand its classroom space downtown. A ground-breaking ceremony is scheduled for Jan. 12, Oathout said.

"This is what we've been working for the entire time," she said. "We need to be in a space that we can manage."

[bobliocatt]

Its nice to see this project get underway so quickly. It will definately fit nicely into its surrounding environment. The old museum building was a large block of mostly dead sidewalk space.