By Tom Mullins
The Valuation Debate is Over: Rays/Hines Want Taxpayer-Owned Land for Hundreds of Millions Below its True Value.
Imagine our surprise when the Tampa Bay Times published yet another guest editorial by local developer Jay Miller criticizing No Home Run's well-supported $700 million estimate of the value of the 86-acre Gas Plant site.
First of all, let's add a little context about Mr. Miller. Twice now, he has failed to disclose to Times readers a very material conflict of interest. His development group is currently under agreement to purchase the old police station / Orange Station site on Central Avenue from the city of St Petersburg. That 2.1-acre site was valued last year by the city's own appraiser for $29.4 million. However, the city is selling it to Mr. Miller for just $6.4 million. This is a guy who has a strong interest in making city officials feel comfortable handing over massively valuable properties to politically connected investors for pennies on the dollar.
Mr. Miller says the value of the Gas Plant site is heavily impaired because the city is dictating what gets built on it, instead of developing it according to what the free market wants. But that constraint doesn't make the land worth less; it just makes the city's current Gas Plant development guidelines look silly.
Shortage of Office Space?
For example, gullible city officials have somehow been persuaded that St. Pete suffers from a shortage of office space, and so the Rays/Hines plan calls for construction of massive new office space. Yet a brief web search reveals over 200 current listings in the city for vacant office space. In plain sight of any strolling pedestrian are the "For Lease" banners and big chunks of vacant space, even in the prestige downtown office towers. And that doesn't include all the office space now rented - but largely empty - that will flood the market as long term leases expire.
Inevitably in the future, when Hines reports back to city officials that construction financing is impossible to obtain for (you pick - office, convention center, retail, "entertainment", senior housing, etc.) development, the Gas Plant site requirements will quietly get adjusted by the city to reflect free market preferences - the exact same way that the city is presently adjusting development requirements on Mr. Miller's own Orange Station project to insure stout profitability for him and his partners.
Impairment of Value for Low Density Areas?
According to Mr. Miller, the valuation of the 86-acre Gas Plant site is also impaired by city development guidelines which require many lower-density areas within the site. We disagree on this point.
While the pretty artist renderings do show a clear mix of building heights, the plan agreed by the city and Rays/Hines still calls for unprecedented development density, a factor which drives land valuations sharply higher, and which has received surprisingly little scrutiny to date. For example, Rays/Hines are allowed to build as many as 6,000 condos and apartments on the site. By comparison, all the Beach Drive high-rise buildings combined only equal 635 units.
Land Discount Required for Rays Franchise Viability
Last but not least, Mr. Miller makes the assertion in his closing paragraph that "the profits generated by the real estate development opportunity are needed to make the team viable for the long term". This accidental admission by Mr. Miller that the taxpayer-owned Gas Plant site is being sold deliberately on the cheap in the service of... what, higher player salaries? Tells us all we need to know about how little the current city administration cares about taxpayers' interests.
To Our Readers
If you are as concerned as we are that Mayor Welch is pushing the City Council Members to vote on July 18, without a current appraisal of the property, and without taking into account what voters feel are the city's top priorities, you can help.
You can easily contact St. Petersburg City Council to Slow Down the Process.
Related Reading
How many billions would St. Pete be throwing down a hole for a Rays stadium? An investimagation, Field of Schemes, Neil deMause, July 1, 2024
"This Rays stadium plan comes w/ a public price tag of over a BILLION dollars threatening the record for the biggest MLB stadium subsidy of all time...and a $545M land discount over 30 years turns into a $620M gift."
Tropicana Field site is worth so much more than city is selling it for, Tampa Times, Tom Mullins / Peter Kent, June 6, 2024
University of Chicago economist Allen Sanderson, famously suggested that it would be more beneficial to take the money intended for stadium subsidies, convert it into $20 bills, and drop it from a helicopter over the city.
