City terminates Pier contract following insurance concerns

The City of St. Petersburg is terminating its third-party management agreement and taking operational control of the St. Pete Pier from Colliers International, just days after the Urban Land Institute named the waterfront asset a finalist for the 2022 Americas Awards for Excellence.

Chris Ballestra, managing director of development, told council members that the city’s administration has “absolutely no issues with the management of the Pier” during Thursday’s council meeting.

“We’re very happy with Colliers’ performance,” said Ballestra. “It is strictly a financial issue.”

Ballestra explained that the insurance market in Florida, particularly following the tragic Surfside condominium collapse last year, “has gone off the charts.” The city entered into its management agreement with Colliers International in June 2017, and Ballestra said the administration is unable to find a satisfactory path forward for policy renewal.

The costs have risen considerably over the last couple of years, said Ballestra, and the city’s administration essentially hit a “pain threshold” from a management perspective. The will terminate its management agreement with Colliers on May 31 rather than the June 5 expiration date.

“We felt it was in the city’s best interest to self-manage this asset.”

Despite that belief, Ballestra explained that outside companies have successfully managed the St. Petersburg Pier since the late 1990s. He added that third-parties operate many of the city’s assets. While St. Petersburg is bringing management of the Pier back under the city’s purview, many of the same people will remain in their roles.

“We’ve been happy with their (Colliers) performance so much that we’ve made offers to the employees, who are actually managing the Pier today,” said Ballestra. “And they have all accepted.

“So, from a public viewpoint, nothing changes there.”

City employees integrated with Collier’s management team before the Pier opened to the public, said Ballestra.

Councilmember Ed Montanari noted that the city provides a $2 million annual subsidy for the Pier, and Ballestra explained that nearly all vendor costs are increasing. He said the city could realize savings of up to $500,000 on insurance alone by assuming managerial control. The savings, he added, will maintain the $2 million subsidy level in the 2023 budget.

“We have additional projects that have not yet been completed, so we would like to maintain that level,” said Ballestra. “Even though we think the actual NOI (net operating income) will not be as upside-down as that $2 million reflects.”

While the Colliers workers will now become city employees, Ballestra said there is no additional cost for the transition in the upcoming budget. However, he said the city plans to add two employees to the staff.

In addition to saving money on insurance, Ballestra said the city would alleviate management fees, compensating for the new salaries.

“And enables us to get people who we’ve wanted for almost two years now, since the opening,” he added.

The playground at the St. Petersburg Pier. The waterfront asset was recently named a finalist for the Urban Land Institute’s prestigious Americas Awards for Excellence.

Ballestra said the local Colliers team would become city employees under the mayor’s administration and called them cohesive and professional. He also highlighted the Urban Land Institute’s (ULI) recent recognition of the Pier.

The Pier is one of 21 finalists from the U.S. and Canada and the only location representing Florida. The program evaluates projects according to several factors, including marketplace acceptance, design, planning, technology, amenities, economic impact, management, community engagement, innovation and sustainability. ULI will announce the winners this summer, with the winners becoming finalists for the Global Awards for Excellence.

“Their (ULI) jurists will be visiting the Pier soon,” said Ballestra. “And again, that is a big deal.”

Council Chair Gina Driscoll said the award is “quite prestigious,” and the city could not have achieved this level of success without Colliers.

“They have been a great partner to the city from day one,” she said. “We’re taking the baton from a company that has really helped put the Pier on the map for us.”

The city council also passed several other resolutions regarding short-term leases at the Pier. Ballestra explained those agreements typically did not require the city council’s approval due to the contract with Colliers. He said those short-term leases include the 22 marketplace tenants.

As part of the updated process, councilmembers also approved the following resolutions:

• Delegating authority to the mayor or his designee to approve property leases within the Pier District of one year or less.
• A one-year agreement with renewal options for Blue Crew Services to provide janitorial services and a contract not to exceed $878,000.
• A one-year renewal agreement with two renewal options Covenant Security Solutions to provide security services and a contract not to exceed $650,000.
• A one-year agreement with renewal options for SP Plus Corporation to provide parking management services and a contract not to exceed $1.013 million for the initial term.
• A one-year lease with renewal options with Pier Events LLC for event management services, with a term commencing on June 1 and terminating on Sept. 30, 2024.

In addition, the city council approved three companies to provide immediate emergency restoration services without a budget.

“If we’re not satisfied with the service, supervision or the cost of any of the vendors at this larger level, which are big dollars in the expense budget of the Pier, it can be dealt with very quickly,” said Ballestra.