Amid calls for greater transparency from Mayor Rick Kriseman's administration, St. Petersburg City Council voted unanimously to spend $2.2 million to protect taxpayers from losing their investment in Midtown's Tangerine Plaza.
The city will seek to spend the money in a foreclosure auction to satisfy other lienholders in the shopping center that serves many poor residents. The city will become sole owners after the auction later this month.
Urban Development Solutions, led by businessman Larry Newsome, lost the plaza after BB&T started foreclosure proceedings in April 2015. A Pinellas County judge issued a notice of a foreclosure sale in June.
During a 30-minute discussion Thursday, council members Steve Kornell, Jim Kennedy and Karl Nurse questioned why the administration didn't notify the council sooner about a problem that arose last year.
"This last-minute presentation makes our job more challenging," Kennedy told the city's real estate director, Bruce Grimes.
Added Kornell: "I didn't hear about any of this until today."
Grimes countered that the bank foreclosed on a private business, not the city. The judge also appointed a receiver in August 2015 to operate the plaza and collect rent from merchants. The city had no right to the private records, he added.
Three residents, including the Rev. Manuel Sykes, questioned whether the city is trying to force an African-American man out of business. The trio also raised issues about secrecy surrounding the foreclosure.
"This is not a hidden thing," council member Charlie Gerdes said about the foreclosure being available in public records. "It is out in the public."
The plaza made headlines in 2013 when Newsome worked with city officials to lure Walmart to the center after Sweetbay Supermarket closed its store at 1794 22nd St. S. The $2.2 million will also help protect the city's $7 million it invested to open the plaza years ago.
If St. Petersburg does acquire the plaza, the city could manage and operate it for several years or consider hiring an outside firm to manage the property. The city could also sell the plaza.
Newsome told the council that financial troubles started after Sweetbay left and monthly incomes dropped. Getting Walmart in the plaza helped, but it didn't make up for the losses, he added.
The company, he said, tried to refinance the mortgage but needed the city to restructure its portion of the debt in order to meet lower loan-to-value ratios required by the lender. He said he sought help from the city more than a year ago, but leaders declined. He stressed the foreclosure resulted from his mortgage maturing and needing to be paid off at once.
"It was our inability to get the first mortgage refinanced," he said, noting the company didn't miss monthly payments.
Still, Kennedy pressed Newsome on when he made the last mortgage payment before the foreclosure started. He couldn't answer, saying he didn't have records with him.
Newsome also owned the failed Sylvia's soul food restaurant in the city-owned Manhattan Casino in Midtown. The restaurant opened in 2013 to great fanfare. Newsome quit paying rent in July 2015 and said the city didn't do enough to help the business. A Pinellas Circuit judge recently awarded the city of St. Petersburg possession of the restaurant.
Contact Mark Puente at [email protected] or (727) 892-2996. Follow @MarkPuente