City leaders may bet more than $8-million on an ambitious proposal to start a mail order drug company and bring hundreds of high-paying job opportunities into a depressed area of the city.
Maryland-based Washington-Harris Group early this summer offered seemingly pie-in-the-sky projections for job creation for predominantly black neighborhoods in the city. Now, after months of quiet meetings and negotiations, the company has trimmed its numbers and brought a specific business plan to the table.
A plan that calls for considerable public investment.
The city would back the company's $6.25-million loan application to the U.S. Department of Housing and Urban Development. It would do this by pledging as collateral more than $3-million per year in block grants from HUD.
The city also would use those same scarce block grant dollars by loaning the company another $2.1-million. But that loan would be protected by a bank guarantee should the company default.
The company, WHJointVenture, has an option to buy the vacant former Belk department store at 3100 First Ave. S. In a proposal faxed Tuesday night to City Council members, the company said the $15.92-million project includes $7.25-million for buying and renovating the property, including adding a 30,000-square-foot addition. It was unclear how much equity the company would bring to the deal.
City Council members are expected to review the proposal Thursday and decide on Nov. 13 whether to forward the $6.25-million loan application to HUD. The city wants to get the HUD review started while it analyzes the proposal's feasibility, Mayor David Fischer said.
Fischer has made inner-city revitalization the top priority of his administration, and this proposal could be a huge coup.
"If this can be pulled together, it would go a long way to providing some really good employment in the inner city," Fischer said.
Initially relying mostly on Defense Department contracts, the company expects to create 372 full-time jobs in three years (roughly half the number the company estimated in June). Many of them would be professional pharmacists or pharmacist technicians earning more than $40,000. Other job opportunities at the highly automated facility would include day care and cafeteria services.
The principals in the venture, who include former hospital administrators and management consultants, could not be reached for comment Tuesday. They have no track record in running such a massive business, but city leaders have been impressed with their contacts and business concept.
The company is black-owned and would be operating under a Defense Department Mentor Protegee program, in which established firms work with fledgling minority-owned companies in winning government contracts. The Defense Department spends more than $15-billion annually on pharmaceuticals, and WHJointVenture hopes to tap into $100-million of that business by year two.
"Where we differ from our competitors is that we are independent and not aligned with a major pharmacy chain," WHJointVenture president Charles Washington wrote in a letter to the city. "Therefore, we can be used by small to medium-sized companies as a means that they may utilize to keep their capabilities consistent with the larger chain operators."
It has aligned itself with some major health care players: Geneva Pharmaceuticals, the world's second-largest generic drug supplier; Cardinal Health, the second-biggest pharmaceutical company in the United States; and Baxter Healthcare Corp., which would provide automated prescription processing equipment for the facility.
They have also enlisted some of St. Petersburg's most seasoned downtown insiders to work on the deal, including Ian Irwin of Irwin Contracting and assorted other businesses and lawyer Joel Giles.
St. Petersburg is eligible for up to $15-million in so-called Section 108 loans from HUD. It took advantage of the money in developing Tropicana Field, but has rarely, if ever, used the program for private development projects.
The project would put at risk the roughly $3-million-a-year the city receives in Community Development Block Grants. But it would hardly be the first time such risks have been taken, particularly in the name of downtown redevelopment.