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Vinik-Cascade partnership floats idea of more tax money for bigger project

TAMPA — The development plan has grown from $1 billion to $3 billion, so the Jeff Vinik-Cascade Investment partnership is talking to local officials about expanding the public's financial commitment to the project, too.

Discussions are in the early stages, say officials and executives with Strategic Property Partners, the Tampa real estate company set up by Vinik and Cascade, a private capital fund launched by Microsoft billionaire Bill Gates. No hard numbers have been mentioned, and no financial request has been made.

The city of Tampa and Hillsborough County have already committed a total of up to $100 million in downtown property tax revenues to reimburse SPP for realigning streets, putting in new water, sewer and drainage pipes, and making other public improvements on its 40 acres near Amalie Arena.

So far, there's about $34 million worth of work under way on a first phase of infrastructure. No reimbursements have been made since the work is not yet done.

Meanwhile, the size and scope of the project has grown significantly since the $100 million agreement was struck in late 2014.

Strategic Property Partners originally envisioned a project with an ambitious 3 million square feet of development. Now it's looking at building 9 million square feet over the next decade, including:

• 3,500 planned apartments or condos. (By comparison, downtown now has about 5,800 residences total.) Residential development alone would account for 3 million square feet of space.

• 2.4 million square feet of offices, up from 1 million in the original plan. (2.4 million would be more than a third of the 6.1 million square feet of office space in downtown today.)

• 1 million-plus square feet of retail — almost as much as in International Plaza — versus 125,000 in the original plan.

SPP also plans to demolish and rebuild the 230,000-square-foot Channelside Bay Plaza. And it plans to build two new hotels with a total of 650 rooms, plus renovate the 700-room Marriott Waterside Hotel & Marina.

The company has 15 teams of architects and designers working on plans for 16 different blocks. The University of South Florida is scheduled to start construction on its medical school building late this summer. SPP plans to start construction on the first of its buildings next year, with its first big buildings opening in mid- to late 2020.

So while $100 million might sound like a lot for infrastructure, SPP chief executive officer James Nozar expects the costs of those public elements will be "far in excess" of that.

The company says that if it builds a lot more than originally planned, its new construction will generate more in property taxes and it would help to receive a larger share of that new tax revenue to pay for public improvements inside the project's footprint.

"To be clear," SPP spokeswoman Ali Glisson said, "we would not expect our partners to extend their commitment until after we spend $1 billion."

The idea, SPP executives say, is in line with similar huge projects that are receiving large amounts of community redevelopment funds, including $660 million for the $5.5 billion Port Covington project in Baltimore, as well as Midtown Miami, Stapleton redevelopment in Denver and Hudson Yards in New York City.

The redevelopment money in question comes from Tampa's 870-acre downtown community redevelopment area, or CRA.

When local officials created the CRA in 1983, they added up all the property values in the area. In the years since, taxes generated by that original value have been split up among the city, county, school district and other local taxing authorities.

But since 1983, the value of all downtown real estate has more than quadrupled, generating millions of new tax dollars to support further development downtown. For most of its life, downtown CRA taxes repaid the bonds for the Tampa Convention Center, but that debt is now paid off, so the revenues are available for SPP's project.

"This is the best example of growth paying for itself and paying for more than itself and bringing jobs and bringing high value to its community," County Administrator Mike Merrill said Monday. Last week, Merrill met with SPP executives who suggested receiving 75 percent of the additional tax money generated by any development they build in excess of their original $1 billion plan. But the executives said that was nothing more than a starting point for discussion. Merrill said there was little discussion of the number and no decisions made.

Conversations between City Hall and SPP likewise have been very general.

"It's been brought up a couple of times," said top city development official Bob McDonaugh. "They keep expanding the scope of their investment and with that comes the question . . . 'If we do a lot more, we might come to you and ask for more help.' "

Before answering, McDonaugh said, city officials would need more details about what SPP plans and wants.

"Obviously, we're willing to listen," he said.

A list that SPP gave Merrill suggests the "public realm" projects could include roads, sidewalks, landscaping along streets, a bigger Riverwalk, other new public plazas or parks, public art, community meeting space, public parking or enhancements to the TECO Line Streetcar, the arena's Thunder Plaza or Cotanchobee Park.

The list, first disclosed by the Tampa Bay Guardian blog, also mentions "educational, arts (and) cultural uses." Nozar said that could include moving the county-supported Museum of Science and Industry to SPP's project, but it would include many other cultural amenities, too. MOSI did not come up during Merrill's meeting with SPP, he said.

Strategic Property Partners also is thinking about asking the Legislature to consider next year authorizing the creation of a special district for the project. Inside the district, tenants and property owners would pay an assessment to help maintain and manage public spaces, similar to the way businesses contribute to the Westshore business district.

Merrill said further discussions of SPP's idea will take place "only in the context of leveraging private dollars to pay for public infrastructure," so that taxpayers don't end up paying the whole cost.

Vinik-Cascade partnership floats idea of more tax money for bigger project 05/02/17 [Last modified: Tuesday, May 2, 2017 12:35am]
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