At least $10 million in cash, up front. That’s what negotiators for the Tampa Port Authority want from the developers who are hoping to take over and renovate the struggling Channelside Bay Plaza.
That request comes amid a flurry of correspondence and negotiations this week between Port Authority officials and executives with a partnership between two local hotel developers, Tampa-based Convergent Capital and Liberty Group.
At stake is the right to renovate and operate the Channelside mall, which the Port originally developed a decade ago as an amenity to millions of passengers traveling through cruise lines docked nearby. The site now sits more than 60 percent vacant.
Meanwhile, some members of the Port’s board say they want financial assurances up front, and far more details than they’ve seen so far, before voting on any bid.
Liberty and Convergent are proposing to spend $13 million to $22 million on improvements, including the construction of a new 150-room hotel and office complex on the second floor of the mall that would take the place of a half-dozen vacant nightclubs and an empty movie theater.
Last week, Liberty and Channelside officials met with neighbors during a largely positive Town Hall meeting to hear concerns and to lay out their generalized plans, because they have yet to present full renderings or details of their plans.
Negotiations are taking place almost hourly this week in anticipation of the monthly Port board members’ meeting on Tuesday, though there’s some indication the whole Channelside item may be taken off the agenda.
Already, the Liberty and Convergent group have rescinded several of their larger requests from the Port, according to a letter they sent the Port on May 10. They no longer are asking for a $1 million contribution to the construction of a second-floor walking bridge from the parking deck into Channelside.
“Port staff has been intrigued by Liberty’s proposed plans for the renovation and operation of the Retail Center,” Port Counsel Charles Klug wrote in a May 12 reply letter to the bidders, which lays out at least seven concessions the Port would like the developers to make. A previous offer of $2 million in up-front cash from the developers was a “fraction” of the cost to improve the center, he said, adding that “The Port has a fiduciary duty to exercise sound business judgment in the public interest.”
A significant issue, Klug wrote, are existing defaults on the lease of the property – which the bidders want waived – that prevent the center from operating in a “first class” manner.
So Klug made this proposal: Liberty and Convergent would put a total of $10 million into escrow accounts at several local banks, and that money would function as the budget for renovations over the next two years.
The money in escrow would go to deferred maintenance, hotel development costs, traffic studies, engineering plans and so forth. If the bidders fail to invest more than half the $10 million by year two of the project, or make enough improvements to satisfy the Port, then the Port could tap into the escrow to make its own investments.
Such a proposal, Klug wrote, would “give substance to the expressed dedication of Liberty to improvements and potential redevelopment that will make the Retail Center achieve the standard it was originally created to achieve.”
Meanwhile, several Port board members remain anxious to hear more details about the proposal by Liberty and Convergent, even though many have met in person with the bidders.
“I still don’t really have all the information I need to form an opinion,” said Port board member Patrick Allman, who attended the Town Hall meeting last week, and wants negotiations to end “at some point” soon so he can see a final package by Friday to consider over the weekend. “That’s only to be fair, so we can hear what they have to say.”
Another Port board member, Stephen Swindal, said he likes the idea of a hotel to bring more people to the area, but he doesn’t want the Port stuck with a mall operator that lets the facility fall into disrepair.
“How legally can we protect ourselves that the proposed development is going to be carried out in a fashion that they’ve verbalized,” he said. “How do we hold their feet to the fire?”
Port board member Sandra Murman, who represents Hillsborough County on the board, said she liked the previous presentation by Lightning owner Jeff Vinik, partly because it took down significant parts of the structure and opened the waterfront.
“The port needs to look at what gives us the best return and has the best design for what we want to accomplish,” she said. “I’d like to see some cash in escrow somewhere that could be used for the project. I need to see drawings, specifics, a lot more than renderings of what the outside of buildings will look like. I can tell you this board will not accept anything at face value. We want details, assurances, a plan for how they are going to reinvent and reenergize Channelside.”
If this bidding process doesn’t work out, the next move would be for the Port to proceed with evicting the current mall operator and take over the complex directly and re-bid the site for future investors. “Like a chess game,” she said. “That’s your next move.”