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Luxury apartments, corporate HQ compete for same site in downtown St. Pete
A second proposal to buy city-owned land downtown raises a key question about corporate expansion and jobs versus luxury housing for the city of St. Petersburg.
Related Development LLC, a Miami-based developer, wants to buy city-owned land in the 800 block of 1st Avenue South and build a luxury apartment building on the site, according to a letter sent to the city on Aug. 29. Related said it would pay $6.5 million for the site, and for a parking lot now leased by United Insurance Holdings Corp.
Related’s offer is higher than the earlier offer from $5 million United Insurance (NASDAQ: UIHC), a publicly traded property and casualty insurer that is known as UPC Insurance. UPC said in July that it wanted to build a new corporate headquarters on the site, adding about 300 jobs in the next few years. UPC currently employs about 250 people at its current headquarters at 800 2nd Ave. S.
UPC also is asking for economic incentives, which are not mentioned in the Related proposal.
UPC has to balance its long-term commitment to St. Petersburg against its fiduciary commitment to shareholders, John Forney, president and CEO, wrote in his offer letter. Allowing UPC to purchase the land would help the city retain a successful and growing company, he said.
After the city received UPC’s unsolicited proposal, it opened up the potential land sale for other plans. That’s when Related sent its proposal, said Alan DeLisle, city development administrator.
“The staff does an assessment of the strengths and weaknesses of each proposal and the mayor decides what to move forward to the city council,” DeLisle said.
He expects Mayor Rick Kriseman to make a decision soon.
In its one-page proposal, Related said it would immediately begin design, pre-development and due diligence on the property for the purpose of constructing a new luxury apartment building. Related asked for a four-month due diligence period before closing on the deal.
Related also said it would set aside enough land to accommodate ancillary retail and a hotel that would be developed if and when the city found a viable development partner.
The highest and best use for the site would be condominium or market rate multi-family projects, according to the Related letter, which cites recent city appraisals. Related said its $6.5 million purchase offer is reflective of the uses proposed.
UPC said the appraisals’ determination of the best use for the land “are not in the best interest of the city for this site and office and commercial uses are not financially feasible under a highest and best use valuation.”
UPC Insurance wants to build a 150,000-square-foot Class A office with a 500-space parking garage. UPC also agreed to set aside land for retail and a hotel, if a developer comes forward. The company said its offer does not preclude the addition of workforce housing.
UPC’s proposal asks for city funding of up to $250,000 for infrastructure construction, such as utility relocations, that is tied to hiring from within the community redevelopment area.
UPC also intends to pursue incentive programs tied to hiring, such as the Qualified Target Tax Refund and New Market Tax Credits, Forney’s letter said.
“UPC has proven itself as a strong corporate citizen for the city and its own employees,” Forney wrote in the July 19 letter. “To date, UPC has not asked for or received any economic incentives or benefits form the city of St. Petersburg in spite of adding over 200 high-paying jobs in the past few years.”
UPC Insurance writes and services property and casualty insurance policies in Florida and 11 other states through a network of independent agents. The company had net income of $10.1 million, or 27 cents a share, on total revenue of $654.4 million for the full year of 2017, and net income of $23.1 million, or 54 cents a share, on revenue of $355.2 million in the first half of 2018.
Related Development is part of The Related Group, whose projects include Icon Central Apartments, a 15-story mixed use tower at 801 Central Ave. expected to be completed by the middle of next year. Other projects are Icon Harbor Island, Town Westshore at Marina District and Manor Riverwalk in Tampa.
