St. Pete to sell ‘complicated’ Trop-adjacent property

St. Petersburg’s mayoral administration plans to sell a problematic property across the street from the upcoming Historic Gas Plant District at a discount.

The 1.53-acre property at 298 Dr. MLK Jr. St. S. sits directly east of Tropicana Field’s Lot 8. Those grass lots will soon house a new Tampa Bay Rays ballpark.

Third Lake Partners (TLP) submitted a $6 million unsolicited offer on the site in March 2023. At least one council member believes unloading the land for $10 million will benefit the city.

“The history of that property is complicated,” Councilmember Copley Gerdes told the Catalyst. “I think the council’s role in this is to ensure we get the best value possible out of this piece of property.

“I’m sure that will be discussed next week, and I’m excited to have that conversation.”

A map showing the property’s (red pin) proximity to Tropicana Field’s grass lots (blue pin, left). Google.

Moffitt Cancer Center and a development partner previously offered the city $5 million for the property. The group planned to build a 75,000-square-foot cancer center, a 30-story residential tower, a 14-story hotel and a 300-space parking garage.

To some residents’ dismay, Mayor Ken Welch rejected those plans in August 2022 due to the low price point and lack of affordable housing. TLP’s subsequent $6 million unsolicited offer required the city to request additional proposals.

Welch ultimately selected TLP over one alternative submission. After extensive negotiations, the Tampa-based firm increased its offer to $10 million.

If approved by the council Sept. 12, administrators would transfer $6 million from the city’s General Fund to the Economic Stability Fund and repay a short-term loan for the Deuces Rising townhome project. They would also move $4 million to the Housing Capital Improvement Fund to support future subsidized developments.

“In general, I’m excited to have a much simpler option than what’s current on the books with ownership of the property and the lease,” Gerdes said. “I look forward to having that conversation with my colleagues and seeing where we land.”

The city-owned site has a convoluted history. Documents explain how officials vacated right-of-way segments in 1985 to accommodate a development agreement.

In 1987, they allowed Morris Developments to sublease an abutting parcel, 800 2^nd Ave. S., to the Peninsula Motor Club for parking. Morris failed to meet the city’s terms; officials terminated its lease at 298 Dr. MLK Jr St. S. in March 1991.

The city now holds a 99-year lease on the parking lot that expires in September 2086. The tenant pays just $1,755 monthly, or roughly $21,068 annually for the property.

However, the city’s 2023 tax bill topped $56,000. A November 2021 appraisal found the property’s annual leased value was $250,000.

TLP, led by Ashley Furniture founder Ronald Wanek, bought the abutting 800-block site for $10.5 million in November 2022. It formerly housed United Property Insurance’s headquarters.

TLP also became the parking lot’s lessee. The firm submitted its unsolicited purchase offer four months later.

A city map highlighting the subject properties. Screengrab, city documents.

As of May 2023, that property’s appraised value ranged from roughly $16 million to $18 million. Administrators then negotiated the $10 million sale.

That price tag reflects the city retaining ownership of a right-of-way along 2^nd Avenue South. The corridor is a key entry point for the $6.5 billion Gas Plant development.

Gerdes said the sliver of land is worth roughly $2 million to $4 million. “If you account for the portion of right-of-way we’re getting back, you’re only looking at a $2 million to $4 million discount.”

“It opens up what’s available to be on that property,” Gerdes added. “Right now, we’re paying more than we’re getting back from the lease in taxes. That property costs us money to own, and we can’t do anything with it because of the lease.”

Documents state that TLP must commence construction on a mixed-use development with residential, office, retail or hotel uses within five years. There is no mention of an affordable housing component, save for the $4 million administrators will transfer to a related fund.

The firm will waive the city’s obligation to provide 90 parking spaces as part of the lease. The council deferred its vote, initially set for Sept. 5, until Sept. 12.

“I’d much rather be able to pay back the economic stability fund and put some money back into housing than to have outgoing cash flow on a piece of property we can’t do anything with,” Gerdes said.