Riding the crest of the boom in mutual funds, the Templeton mutual fund group is buying the Fotomat building at 205 M.L. King (Ninth) St. N to expand its capacity for handling shareholder accounts.
Templeton expects to close on the purchase Monday, said Harold McElraft, executive vice president in charge of Templeton's St. Petersburg operations.
In recent years, the Fotomat building has been a focal point of controversy in St. Petersburg city politics. But McElraft said it now will figure prominently in his company's rapid growth.
A $3-million to $4-million renovation and expansion will begin almost immediately, he said. The work will include construction of a 12,000-square-foot computer center in the parking lot adjacent to the building.
"Our goal is to get it habitable by the first of June and move in this summer," he said. About 140 to 150 people will work in the building initially, but McElraft said it is difficult to project future employment because the company is growing so fast.
"At our current rate of growth, this will probably take care of us for the next two years," he said. The company, which employed 375 people a year ago, has 560 authorized positions in St. Petersburg today, including 41 vacancies, he said.
The company's St. Petersburg headquarters at 700 Central Ave. is the base for all of Templeton's U.S. shareholder services and business operations. The company also leases space in the former Lester Brothers furniture store across the street as a mailing and distribution center. No investment management is based in St. Petersburg.
With the expansion, the Templeton St. Petersburg operation will become a data processing center for more than 3.5-million shareholders in both the Templeton and Franklin groups of mutual funds, McElraft said.
Templeton was acquired by California-based Franklin Resources Inc. in 1992. Together the two groups of funds have more than $110-billion in assets and make up the fifth-largest mutual fund organization.
"The people here (at Templeton) in St. Petersburg are very pleased with the confidence that Franklin has in us to commit to expanding the processing center," McElraft said.
The building Templeton plans to buy has been a Sears, Roebuck & Co. department store, a city of St. Petersburg office complex and the headquarters of Fotomat Corp., a photofinishing company.
Its sale by the city to Fotomat was the subject of 1991 grand jury investigation. The grand jury found that city officials had rejected offers of up to $4-million for the 105,000-square-foot building, choosing instead to sell it to Fotomat for $2.5-million in 1983.
The grand jury criticized city administrators for destroying public records, hiding key information from elected officials and showing an "embarrassing lack of recollection" about the transaction. The grand jury did not indict anyone, but the scandal ultimately led to the resignation of City Manager Robert Obering.
The building has been vacant since Fotomat moved out in 1990. Konica Photo Service U.S.A., which took over Fotomat and now owns the building, offered to sell it back to the city of St. Petersburg last year for $1.375-million. The city declined the offer, deciding to buy the old Florida Federal building instead.
McElraft declined to reveal how much Templeton will pay for the building.
"We got a very good deal," he said.
McElraft said city employees smoothed the way for the transaction by helping Templeton evaluate the building and renovation alternatives.
Renovations will include removal of the escalator _ a holdover from the department store days _ and its replacement with an open stairway. In addition to housing offices, the building will include rooms that can be used for employee training and warehouse space, McElraft said.
Vans will shuttle between the building and Templeton's main office a few blocks away.
McElraft said he expects the Franklin-Templeton operation eventually will have twin data processing centers on opposite sides of the United States.
Under that arrangement, the St. Petersburg center normally would handle shareholders living in the eastern United States, with the rest of the country assigned to a center in California.
In the event of an emergency, either center would be capable of taking over the entire operation.