The city’s long-discussed plans of working with a developer to build a new Municipal Services Center and redevelop the old MSC site have come to a halt.
“After a detailed review of the proposal, we determined it was not in the city’s best interest to continue with the previous process,” Janelle Irwin Taylor, the city’s spokesperson, said in a statement. “This decision will give us the opportunity to explore additional options, including a space needs assessment, and will allow the city to fully maximize the property’s value, which has increased since the original plan.”
The statement follows a Thursday Public Services and Infrastructure Committee, where City Administrator Rob Gerdes informed the committee that St. Petersburg Mayor Ken Welch has pressed the pause button to move forward on an agreement with Third Lake Partners or any other parties.
“The mayor decided not to make a selection in that process,” Gerdes said, explaining that all the developers who initially submitted proposals related to the purchase and development of a new MSC have been notified.
“We are re-looking at the process. I’ve asked the real estate department to look at all potential sites that could be candidates for the MSC,” he said.
The Municipal Services Center at 1 4th St. N. is an 11-story building, constructed in 1925, that houses city offices such as billing and collections administration, code compliance assistance, construction services, economic and development services, finance, and real estate and property management. However, the current building needs costly maintenance.
The city initially started evaluating plans for a new MSC in 2019 when it received an unsolicited offer from New York-based Property Markets Group to build a new MSC and apartment complex on the city-owned parcels on 2nd Avenue North, and the purchase of the existing MSC.
As it was an unsolicited offer, the city then solicited alternative proposals and received multiple qualified alternative proposals. After review and consideration, former St. Petersburg Mayor Rick Kriseman selected the proposal from Third Lake Partners, which offered the highest bid at $12.5 million.
The most recent action on the agreement took place in December when the city council voted to defer the resolution on a term agreement to a committee in the new year (2022).
During the PSI meeting, St. Petersburg City Council member Gina Driscoll recalled that around the same time as the December meeting, the city learned the 2nd District Court of Appeal would be located in Mirror Lake at the Sebring building site.
Driscoll said this opened up a “great opportunity for the second DCA and MSC teams to collaborate” and “the two properties will complement one another.” She noted how the potential relationship between the DCA and MSC should be included in any future discussions related to the MSC.
Gerdes said he has also asked to engage with the engineering department about the best use study for a future MSC.
There isn’t a set timeline for the discussion, and the topic has not yet appeared on any of the city’s agendas, a spokesperson said.
If the city were to have entered a contract with Tampa-based Third Lake Partners agreement as previously discussed, Third Lake Partners would purchase the current MSC for $12.5 million and construct a new MSC at 429 Second Ave. North, across from City Hall. Third Lake Partners would either keep the existing, deteriorating MSC building and renovate it to create Class B office space or demolish it and build an entirely new development.
The city would lease the existing MSC from Third Lake Partners until the completion of the new 120,000-square-foot-plus MSC. Third Lake Partners would also purchase city-owned property at 461 Second Ave. N. to build the apartment complex.
A sale of the current MSC is critical, as the city will use the proceeds from the sale to lower the cost of the new MSC building and allow the city to avoid roughly $37 million in deferred maintenance costs on the existing MSC, according to a 2018 estimate.
A new MSC building would also bring the city administration closer to City Hall.