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Zephyrhills shelves plans for industrial building until economy improves

ZEPHYRHILLS — The building project near the Zephyrhills Municipal Airport that caused a stir among City Council members has been put on hold for now.

Council members decided Monday evening not to extend a loan agreement with Progress Energy to construct an industrial spec building that would house new businesses. They liked the concept, but doubted the economy had improved enough to recruit firms for the space.

"It would probably be a good idea to let this one pass on the renewal," City Manager Steve Spina told the council.

The city still has the designs for the 50,000-square-foot building and could seek a new loan to build it once the economy turns around, Spina said.

Council member Manny Funes said he researched the buildings surrounding the airport and talked to area Realtors who told him moving forward with the project was a bad idea. But other members said the project was a good idea whose time had not yet come.

The plan had been to provide businesses that wanted to move to the area with a ready building instead of open land. Zephyrhills officials had seen their Dade City counterparts welcome new businesses to their Business Center, and they wanted to provide a similar space.

The city partnered with Progress Energy to secure a $400,000 interest-free loan for construction. It allocated money from its reserves and partnered with CLS Zephyrhills to cover the remainder of the costs. It spent $95,000 on building plans, a site plan and engineer. There was even a manufacturing company interested in using part of the proposed building, which was slated to be built in 2008.

Then the economy tanked, the project was put on hold, and a new City Council was voted in.

Today, ground has still not been broken on the project. According to the initial agreement, the city is supposed to start repaying the loan in August.

Last month, however, Progress Energy representatives kicked around the idea of a one-year extension if the city committed to beginning construction by August 2012. They were also thinking of giving the city another three years from the start of construction to reimburse the loan.

But Progress Energy ultimately offered an 18-month extension of the agreement, with the requirement that the city make a $20,000 payment toward the loan principal.

Spina told the council that if Progress Energy had given them three years instead of 18 months, he might have had a different recommendation.

"It doesn't appear that the economy has turned around sufficiently," he told the council.

In February, Funes accused Spina of waiting too long to bring the stalled project to the council's attention. He also accused council member Lance Smith — a partner of CLS Zephyrhills — of representing a company that he said was helping the city lose money.

On Monday, Funes said he talked to one Realtor who was concerned that the city was trying to compete with real estate businesses.

But other council members praised public-private partnerships like this one. By teaming up with private industry, the city is able to provide services while sharing in the rewards — and the risks, said council member Jodi Wilkeson.

Smith, who was elected to the council after the 2008 plan was approved, recused himself from any council decision on the project because of his ties to CLS. He told the council that CLS wants to maintain its partnership with the city because the project will be viable once the economy picks up.

"We are still committed to this project," Smith said, adding that having a building ready to show industrial clients "is just plain good business."

Spina said the city would have the Progress Energy loan paid back this year.

Zephyrhills shelves plans for industrial building until economy improves 03/29/11 [Last modified: Tuesday, March 29, 2011 8:26pm]
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