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Bay Plaza pulls out // END OF AN ERA

Nearly a decade and $50-million later, the development company that was to transform downtown into a thriving shopping mecca and entertainment hub has suddenly called it quits.

"They pulled the plug," Mayor David Fischer said of Bay Plaza Cos. in a hastily called news conference Thursday afternoon at City Hall.

The mayor learned of the news only a few hours earlier. In fact, he said he thought his meeting with Bay Plaza president Jack Fox and other officials was to find out about a big breakthrough in the long-stalled redevelopment project.

Fox did not attend the mayor's press conference, but explained the decision in a prepared statement: "It is now clear that the project is not economically feasible for our company."

Although Thursday will be regarded as Bay Plaza's final moment, the fact is that the project had been struggling for years.

Just this summer, a rival announced plans for a 20-screen movie theater _ an idea Bay Plaza had advanced as the salvation for its own $200-million project. This spring, the company begged the City Council for a contract extension. For years, a big upscale retailer was sought as project anchor, but nobody was interested.

Even so, Thursday's announcement caught most everyone off guard, for the timing if nothing else.

"I really was surprised that it didn't happen in June," when Bay Plaza sought the latest contract extension, said Council Member Connie Kone. "Bay Plaza was just never really a good fit, just from day one. They and their plan were never really accepted."

"It's something that's probably three or four years past due," said Council Member Larry Williams, who opposed granting the extension to Bay Plaza.

At its inception, Bay Plaza was to have been nothing less than a $200-million reconstruction of about six blocks of a shabby downtown area. The city was to spend $40-million and the developer another $160-million.

To date, each side paid about $25-million, Fischer said. Although downtown redevelopment is far from complete, Fischer said that the city still has something to show for its money.

St. Petersburg's waterfront, downtown parks, sidewalks, a parking garage, streetscaping from Interstate 275 east to the waterfront and a square block of empty, buildable space are the result of the city's Bay Plaza expenditures, he said.

The strategy to rebuild downtown was hatched more than a decade ago. It called for the city to find a private partner with the experience, vision and financial clout to guide St. Petersburg through two decades of urban overhaul.

In the end, a national search for such a partner yielded just the J.

C. Nichols Co. of Kansas City, Mo. The big developer had done dozens of real estate projects over the years, but the jewel in the company's crown is the Country Club Plaza near downtown Kansas City. The attractive residential, office and retail district was begun in the 1920s and expanded through the years _ and St. Petersburg wanted the 1990s version.

By century's end, the city would have sweeping vistas of downtown waterfront, green spaces, offices, park-like boulevards, hotels, world-class shopping, lots of accessible parking _ in short, an environment powerful enough to draw jobs, shoppers and tourists back downtown.

And if Major League Baseball saw the city's economic revival and wanted to be a part of it, so much the better, the reasoning went. Baseball and redevelopment would create an irresistible double lure that would ensure the city's well-being long into the 21st century.

Thursday, Fischer had at least half of that vision to fall back on.

"I think the trigger's really been pulled by baseball" for downtown's economic revival, he said.

He was referring to March's announcement that Tampa Bay businessman Vincent Naimoli had secured the right to build an expansion Major League Baseball team in St. Petersburg. The Tampa Bay Devils Rays are scheduled to take the field in the ThunderDome in 1998.

"There are plenty of entrepreneurs with plenty of money who can easily figure out the excitement baseball is going to bring," Naimoli said from Washington, D.C., Thursday evening. "I'm sure we'll see a lot of people filling the void."

In addition to baseball, Fischer rattled off a string of economic upturns and successes that have arrived in downtown St. Petersburg in just the past few years: reopening of the Stouffer Renaissance Vinoy Resort; redevelopment of the public downtown waterfront; the relocation of several large corporations downtown; city parking spaces filled to capacity; redeveloped Straub and Williams parks; a number of new restaurants, and the opening of the Florida International Museum as a venue for big exhibitions like Treasures of the Czars.

"It's unfortunate they weren't successful, but that means the community can go forward," said Joseph F. Cronin, president and CEO of the museum. "We've got baseball coming. We've got the museum. Anything that will bring people downtown, especially at night, will be welcome."

But even with all the good news downtown of late, Bay Plaza officials said they were just unable to keep their end of the redevelopment puzzle propped up any longer. The project had come under increased scrutiny following a corporate shakeup at Nichols.

"Rather than continue through this process, we wanted to inform city officials as soon as possible of our decision so that they could pursue and take advantage of other redevelopment opportunities."

Fischer said he and his administration would make every effort to keep the complicated contract "unwinding" process out of the courts.

"Legal battles are the worst things to get into," Fischer said. "If everything is tied up in the courts, the land can't move."

And instead of trying to find somebody to take Bay Plaza's place, Fischer said, he hopes several developers are attracted to the downtown space that will now be available.

"I think we'll have more of a chance of moving it off the dime if we break it up" into several smaller projects, he said.

Ira Mitlin, a broker active in downtown commercial properties and president of Mitlin Properties Inc., was more than surprised by Bay Plaza's announcement.

"Shocked," he said.

Mitlin predicted Bay Plaza would not recoup what it paid for the land and said the land in question may be easier to develop in smaller parcels rather than as one giant project. He said the market still is not conducive to speculative construction of retail properties, offices or other uses _ that is, construction without tenants having been lined up in advance.

"I don't see any kind of speculative building happening," he said.

As for the downtown site's future, he said, "Anything anyone would say now would be a guess."

Together, Bay Plaza and the city have put up about $51.4-million toward the project in roughly equal amounts.

Bay Plaza didn't fare as well with its money, Fischer said, because so much of it was eaten up by "soft costs" such as paying for architects, planners, artists, lawyers and accountants needed to get the project under way.

Even in the most recent years, after the company had greatly scaled back on its initial project scope, Bay Plaza was paying an estimated $1-million a year just to keep its small staff together and its doors open.

Some downtown boosters said it wasn't hard to find the good news in Bay Plaza's announced departure.

"I'm relieved that we're not playing "Let's pretend' anymore," said Pat Fulton, head of the Downtown Core Group, which was formed to help small businesses revitalize downtown.

"Bay Plaza has finally acknowledged what the people knew a long time ago, that the plan was flawed. They had become an irrelevance," said Fulton, one of project's critics.

And in the city's neighborhoods, word of Bay Plaza's announced departure had spread quickly. The project had produced a lingering resentment within many residents, who felt it was taking money for badly needed neighborhood improvements and funneling it downtown to benefit a few wealthy landowners and business people.

That image was not helped by Bay Plaza's first two presidents, Neil Elsey and Bob Jackson. Elsey was the glib glad-hander who favored European-cut suits and who oversaw the project in the late 1980s.

When the project began to sputter and he quietly left town, Elsey was replaced by Jackson, an abrasive lawyer who seemed to thrive on conflict and brinksmanship. Despite the bombast, nothing much happened during Jackson's tenure, either.

Last year, an internal power struggle in the Kansas City home office led to Jackson's ouster from the project. He was followed by Jack Fox, a consensus builder who seemed inclined to reach out to local groups and slowly build support for the project.

Fox and his staff already had met with a group of about 100 residents representing a broad array of interests to hear where they thought the project should be going.

One of those participants was Karen Mullins, president of the Council of Neighborhood Organizations.

"Nobody likes to see a company not survive, but they did everything wrong, from their arrogance to everything else," Mullins said. "Let Bay Plaza do what they need to do to get out from under the land and let them get the hell out of here."

_ Times staff writers Kit Troyer, Betty Jean Miller and Susan Aschoff contributed to this report.

The Bay Plaza project in downtown St. Petersburg, a public-private partnership, was to transform stagnant city blocks into a $200-million shopping and entertainment mecca, as this 1991 developer's sketch illustrates.

The Bay Plaza plan

This was the grand plan for Bay Plaza, proposed as a retail and entertainment mecca with a 24-screen movie theater, shops, restaurants and parking garages. The city of St. Petersburg was to spend $40-million and J.C. Nichols, $160-million. The actual costs to date totalled about $51.5-million.

The city's cost:

Total to date $26.4-million

That includes an existing parking garage at First Avenue S and Second Street and land for a future parking garage at Second Avenue N and First Street. $21,500,000

Plaza Parkway $4,200,000

South Straub Park $87,000

Downtown promotion $126,000

Condemning land for Bay Plaza $440,000

The developer's cost:

Total to date: $25-million

It reports spending more than $25-million.

It does not offer details of its costs, but they include constructing an empty retail building, buying most of the land it needs for the project and staffing its St. Petersburg office.

GRAND TOTAL:

(city and developer)

$51.4-million

+ Figures are approximate

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