The new CEO of United Insurance Holdings Inc. wants more time to look at the details of the company’s plans for a new downtown St. Petersburg headquarters.
The St. Petersburg City Council has given the United Insurance Holdings (Nasdaq: UIHC), which does business as UPC Insurance, an extra three months to do due diligence on the city-owned land the company wants to purchase for the headquarters site.
The time extension came with a caveat from the top St. Petersburg development official — the city won’t wait forever for UPC to make a final decision on buying the 4.6 acres at 800 1st Ave. S.
“This is a very important piece of land that is located in a great location for the city. Even today, in the middle of COVID, we have a lot of knocks on the door for activity in St. Pete,” Alan DeLisle, city development administrator, told the council at its online meeting on Thursday. “The mayor let UPC know we want to be accommodating but we don’t want this piece of land sitting there for a very long period of time, especially when we’ve got other people knocking on the door.”
St. Petersburg has been critically short of office space to attract new businesses and allow existing ones to expand, bringing new jobs and economic development to the city, DeLisle said during the State of the Economy in January. Vacancy rates were low and rents were climbing at that time, prior to the COVID-19 pandemic sending many companies into a work-from-home mode for their office employees.
UPC Insurance initially proposed the new headquarters project in 2018, offering $5 million for the city property. It planned to build a four-story, 150,000-square-foot corporate headquarters to replace an older building across the street at 800 2nd Ave. S. the company said it had outgrown. The company planned to add 300 new workers, about doubling its staff size, and also said it would build a 500-car parking structure and set aside space on the property for a hotel.
Since approving a term sheet with the company in 2018, the City Council has given UPC several extensions on the due diligence period, including more time to evaluate the site after environmental contamination was discovered on the property, and after the onset of the COVID-19 pandemic.
The most recent extension, approved by the City Council on Thursday, gives UPC until Oct. 15 to complete due diligence. It was requested after former CEO John Forney left the company and Daniel Peed, who was vice chairman of the UPC board of directors, was named CEO and chairman.
During a recent meeting with Mayor Rick Kriseman and with DeLisle, Peed asked for more time to assess the situation, DeLisle told the council. The company asked for an additional six months, according to a memo to the City Council. The administration recommended three months.
“Dan obviously would like some amount of time to get a bit more into the details, not only of the project, but in terms of our staffing requirements,” Brad Kalter, UPC’s general counsel, told council members. “UPC is now working remotely. We came back to the office in the middle part of June, but in light of the recent spike in cases in the Pinellas area we’ve returned to a remote working situation. We were hoping that the Council would give us some additional time to understand whether building a 150,000-square-foot building, as well as the ability to attract developer to build a hotel in the near term, is appropriate.”
UPC continues to evaluate those issues, Kalter said.
“There is no doubt from Dan and the company that we’re committed to the city of St. Pete and staying in the city of St. Pete, but as we think of all of our stakeholders and the significant investment required, we would appreciate the additional time to evaluate and understand the need for a facility of that size and the economic commitment of a hotel development,” Kalter said.
UPC did not respond to a request from the St. Pete Catalyst asking for clarification on whether UPC still intends to build a new headquarters or is considering a smaller project.
DeLisle said UPC has been very active in the permitting process, getting permits approved to start activity, which he said is “a good sign.” He also said he did not believe the environmental issues would stop the project from happening.