Sunday, December 17, 2017
Business

Empty parking lot at center of Channelside deal

TAMPA

Channelside Bay Plaza is a dining and retail complex that for years has offered little of either. A few stalwart businesses persevere while the foreclosed mall is stuck in real estate purgatory. Its future along the downtown waterfront is being decided in a bitter legal struggle.

Yet of all the misery and misfortune that Channelside has suffered over the years, this may be the worst indignity:

The empty parking lot next door might be more valuable.

"I love that piece of dirt," Mayor Bob Buckhorn said. "I see nothing but opportunity there."

In many ways the battle for control of Channelside is a fight for control of the 5 empty acres next to it.

• • •

In a sense, everything that's happened in the Channel District over the past few years — the condo boom; the sale of the Tampa Bay Times Forum; the failed deals to save Channelside Bay Plaza; the big land buys — has swirled around the Channelside parking lot.

Assessed at $11.7 million, it remains one of the most coveted pieces of bay area real estate. There are just two empty parcels along downtown Tampa's waterfront ripe for development, but the Channelside parking lot may be the better of the two.

It is bigger and deeper, located in a burgeoning corner of downtown and more suitable for a high-rise tower than the other site, 1.5 riverfront acres that have significant engineering problems.

The Tampa Port Authority owns the Channelside lot. It has been looking for a developer to build a high-rise on the property since the 1990s. There have been plenty of ideas — towering hotels and condo towers, perhaps even a ground-floor grocery store — but financing never came through.

Now may be the best time to develop it because of Tampa Bay Lightning owner Jeff Vinik, who has invested millions in the surrounding Channel District. Vinik bought the Tampa Bay Times Forum lease in 2010. He and his partners also own about 23 empty acres spread across the Channel District.

About 20 of those acres form a contiguous parcel on the north side of Channelside Drive, across from the Times Forum, Channelside Bay Plaza and its parking lot.

A big chunk of that land is the mayor's dream site for a stadium for the Tampa Bay Rays. But Vinik may see more value in building condos, hotels, shops and restaurants on his land.

In 2012, Vinik tried to add Channelside Bay Plaza and the Channelside parking lot to his portfolio, but the deal fell apart. Other groups have also tried to buy the complex, but they don't want just the complex. They want the parking lot, too.

The port owns the Channelside parking lot free and clear. It is not tied up in the bankruptcy case that has embroiled Channelside Bay Plaza. But the port probably won't allow anyone to develop the parking lot until the plaza's ownership is settled in court.

That's why the plaza's fate is tied to that of the parking lot.

"These are two pieces of a much larger mosaic," Buckhorn said, "and you don't want to do them in isolation. They have to connect with each other. They have to complement each other."

• • •

Punit Shah is one of the real estate investors at the center of the legal battle for control of Channelside Bay Plaza.

But he never wanted the complex in the first place.

He wanted the Channelside parking lot.

"That location is phenomenal," Shah said.

Shah had already walked away from a deal to develop the other empty parcel in downtown Tampa: the 1.5-acre site that was the former home to the infamous Trump Tower Tampa project. The effort to build a 52-story luxury condo tower along the river there collapsed amid financial and engineering concerns in 2007.

Shah decided the Channelside lot was more attractive, anyway. It was bigger, in a better spot and had no structural issues.

After the Vinik deal fell through, Shah and his partner, Santosh Govindaraju, started talking to the Tampa Port Authority about building on the lot in 2013.

"We wanted to develop something really upscale to support the phenomenal site," Shah said.

He and his partner formed Liberty Channelside LLC to seal the deal. But negotiations between Liberty and the port turned testy. The port eventually decided the best way to pick a new developer to revive Channelside Bay Plaza was to buy it itself. So the port and the Irish bank that owned the lease to the building agreed on a sale.

Liberty, however, sued to end the port's purchase agreement and won. It then offered $7 million in cash for just the complex, not the parking lot. Liberty wanted to trump the port's offer of $5.75 million for the building.

Both remain locked in a court battle to decide the complex's future.

• • •

Whatever the judge decides, the Tampa Port Authority will remain in control of who gets to build what on the parking lot.

The port's governing board was enamored with Vinik's 2012 plan that called for tying Channelside Bay Plaza to the Times Forum by building a "big draw" such as a hotel on the Channelside parking lot between them. That would create a steady flow of patrons between the properties.

Vinik remains a favorite of board members. They would no doubt give him another shot to redevelop Channelside Bay Plaza and the parking lot.

The port board favors Vinik because he could do so in conjunction with the rest of his nearby Channel District holdings. An entire quadrant of downtown Tampa could be shaped with one unified vision.

That would become especially important if the next developer decides to knock down some of the old Channelside Bay Plaza. That's exactly what developer Bill Edwards did while turning St. Petersburg's old BayWalk plaza into the new Sundial complex.

If the port cannot buy the plaza, it may still be able to ensure that whoever develops the parking lot does so in a way that will help the entertainment and retail complex.

In fact, the mayor said it was "premature" to speculate on the parking lot's future until Channelside Bay Plaza's ownership has been settled once and for all.

"Once we get Channelside Bay Plaza out of bankruptcy," Buckhorn said, "then we would ask for proposals that would include the parking lot."

• • •

The mayor has his own ideas for what could go on those 5 acres. Downtown Tampa, for example, has no five-star hotel. Why not put the first one in the Channel District?

"I would love to cut the ribbon on a Ritz-Carlton myself," Buckhorn said.

He also doesn't want to repeat what many think is the fatal flaw of Channelside Bay Plaza: The waterfront complex restricts views of the water.

"You want to make the water the focal point of the development," Buckhorn said.

The mayor finds the potential of the Channelside parking lot especially tantalizing. It's not just the dream that a high-rise could one day tower over the property, but also the room on the street for new shopping, dining and drinking options along Channelside Drive.

"That's the kind of stuff that keeps me awake at night," Buckhorn said, "thinking about the possibilities, about the potential that is there."

Times researcher John Martin contributed to this report. Jamal Thalji can be reached at (813) 226-3404, [email protected] or @jthalji on Twitter.

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