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Tropicana Field site's price likely top issue in talks with developers

By Aaron Sharockman, Times Staff Writer
In print: Sunday, June 22, 2008

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ST. PETERSBURG — Now that the city has picked a potential developer for Tropicana Field, negotiations will quickly turn to a key provision in the deal.

What is the Trop site worth?

The current offer of developers Archstone and Madison Marquette is $65-million. But that's $2-million to $3-million short of what the city wants in what would be St. Petersburg's biggest land deal ever.

The purchase price likely will be Topic A on Monday when the city and Archstone-Madison begin six weeks of talks on remaking the 86-acre site.

Failure to reach an agreement before August would doom the $1.65-billion downtown redevelopment, including the Tampa Bay Rays' plan for a $450-million waterfront ballpark.

"There's a gap we need to cover," city economic development director Dave Goodwin admits. "More money needs to be paid for the land. Or more money needs to be paid for the land sooner."

Archstone-Madison's current offer would be paid out in three phases over seven years.

According to the developers' timetable, Archstone-Madison would pay $15-million in 2010, $40-million in 2013 and the remaining $10-million in 2016. The payments are tied to each phase of construction.

But they do not keep pace with the debt payments outstanding at Tropicana Field, which is how the city wants to use the money from the sale.

The city and county are paying about $11-million a year to pay off bonds for the construction of Tropicana Field. Those bonds, which cannot be prepaid as part of an agreement with bondholders, are set to expire in 2016.

The city estimates it would need the developers to pay nearly $4-million toward the bonds in 2009, and about $11-million a year thereafter until 2016.

How that could happen is subject to negotiations, city and Archstone-Madison officials say. But both sides at least offered reasons to hope an agreement can be reached.

Archstone-Madison officials said their purchase price and payment schedule was based on a development pattern, not the need to pay off outstanding debt.

The schedule might be adjusted to accommodate the city's financial positioning, they said. That could mean moving their payments up a year or more, or including more money in a first payment, and less in later installments.

Moreover, the city owns a block just east of Tropicana Field, between Second Avenue S and Third Avenue S that Archstone-Madison might be able to purchase. The additional land sale may help close the difference.

Paying off the Tropicana debt would enable the city and county to shift resources to fund a $450-million waterfront ballpark for the Tampa Bay Rays.

"We're close enough that I think we can come up with a way to bridge the gap," said Ken Miller, a senior vice president with Archstone. "We want to be able to help the city make the Rays' stadium happen. Obviously, it's in our interest because we want to develop the Tropicana site."

City officials say they hope to have informal agreements with Archstone-Madison on the purchase price, along with a number of other details, by Aug. 1.

Also on the table will be the potential environmental liability at the Tropicana site, what financial and development guarantees Archstone-Madison may be willing to offer, and how much money the developers will be willing to contribute to demolish the dome.

The discussions, however, will be nonbinding. City officials even laid out a scenario in which formal development contracts would not be signed until 2009, after a potential referendum on the waterfront stadium proposal.

City attorney John Wolfe said, however, that if the terms of the preliminary agreements are not in the final contract, the city likely will walk away from the deal.

"I don't think the project will go forward" in that scenario, Wolfe said.

For more, see the Times' online stadium blog, Ballpark Frankness, at blogs.tampabay.com/ballpark.







What else will be on the negotiating table

Environmental liability: The city says the known environmental problems at Tropicana Field are minor and can be solved with less then $100,000. But the city and Archstone-Madison also must account for any unforeseen environmental problems at the 86-acre site. How will the city and developers split the testing costs, if testing is required? Who will pay for the work, or how will the costs be shared, if environmental cleanup is ultimately required? Archstone officials called the potential environment cleanup a huge issue. But they say it's no worse than at any other prospective development.

Financial Guarantees: The city will shoot for the moon, while the developer will want no guarantees. The most likely outcome is somewhere in the middle. The city will likely not be able to get guarantees on tax revenue projection, but Archstone-Madison has seemed willing to guarantee the construction of up to 1-million square feet of retail space, which in turn will create some tax revenue. The developers also must be willing to guarantee a time line for any development and an agreement for the purchase of the 86-acre site that coincides with the plan to finance a waterfront ballpark.

Aaron Sharockman, Times staff writer