The Tampa Port Authority made the right move Tuesday by ending negotiations with an investors' group vying to take control of Channelside Bay Plaza. The group, Liberty Channelside, had sketched out a promising vision for the retail and entertainment complex, but the developers did not back up their promises with cash and a serious commitment to be the long-term partners that the port needs. It's time to renew the search for a Channelside savior with deeper pockets and a clearer vision.
Real estate investors Punit Shah and Santosh Govindaraju announced last month that they signed a deal to assume the lease from the Irish Bank Resolution Corp., which foreclosed on the property in 2010. But the port, a public agency, owns the land under Channelside and has veto power over any deal. The two sides agreed on the need to redesign and upgrade the facility and to bring in new retail and restaurants. But Liberty balked at the port's insistence that the developers put $8 million in escrow for the improvements. It also failed to deliver on the port's request for more financial details of its management plans.
The port was right to insist on a significant escrow account, given that the developers said they would spend between $13 million and $22 million on upgrades and maintenance at Channelside over the first two years. And it was right to seek firm performance guarantees, given that Liberty wanted the port to provide a rich range of incentives, from contributing $1 million toward a pedestrian bridge between the plaza and its parking garage to subsidizing on-site security by locating a police substation there.
Tuesday's move ends any hope of quickly finding a permanent new operator at Channelside, which would start the clock on a long-awaited rehab and marketing effort to revitalize a struggling yet signature property. Still, the port had no reason to drag out the talks any longer. The issue with Liberty had become one of trust as much as wherewithal and commitment. By moving on, the port might also have opened a favorable negotiating window as its lawsuit to evict the Irish bank and take over the property moves its way through court.
At the very least, the port board sent two strong messages to the bank. First, it wants to see only the most serious candidates for potential leaseholders. Second, the bank should recognize that this property plays a key role not only in the channel district but in the entirety of downtown. And any leaseholder must be able and willing to accept the obligations of being a long-term partner. The port also indicated it intends to enforce the lease for the broad public benefit. The conditions it attached to Liberty were aimed directly at turning Channelside into a quality destination and a magnet for downtown growth.
The cleanest option may be for the port to take over the lease from the bank, cut out the middleman and clear the way for the agency to make a local decision about what's best for the complex. That would involve some risk, and the price may be too steep, but the port already plays a development role in the region. The board's decision Tuesday puts that option back in the bank's court, too, and it is worth exploring. But the board was right to make clear that it won't embrace just anybody who shows up with flashy plans and the bank's backing.