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Tampa looks to sell city block to New Orleans developer HRI Properties for $7.5 million

This rendering shows the mixed-use hotel, residential and retail project that HRI Properties of New Orleans proposes to build in Tampa on N Florida Avenue next to City Hall. HRI has offered to pay $7.5 million for the block at Florida and E Kennedy Boulevard. It is now being used as a parking lot. HRI proposes a 21-story building with a 223-room Hyatt Centric Hotel, 225 residential units, 7,000 square feet of retail space and a 408-space garage. Construction is expected to start in the third quarter of 2017, with the building opening in May 2019.
Published Sep. 29, 2016

TAMPA — New Orleans-based HRI Properties emerged Thursday as the winning bidder for a city-owned block in the heart of downtown that has sat vacant for nearly 20 years.

HRI offered to pay $7.5 million for 1 acre next to City Hall at the corner of E Kennedy Boulevard and N Florida Avenue.

The company plans a 21-story tower with a 223-room Hyatt Centric Hotel, 225 apartments, 7,000 square feet of retail and a 408-car garage. There will be a restaurant, though developers haven't determined which one, as well as a street-corner Starbucks.

"We've been targeting a project in downtown Tampa for many years," said HRI president and CEO Thomas Leonhard Jr.

The company has done $2 billion worth of mixed-used projects nationwide, but this would be its first development project in Florida.

Five years ago, it submitted a proposal to redevelop the old federal courthouse on N Florida Avenue. It likes Tampa for its good record on job creation and its impressive numbers on hotel revenue per available room.

When the city put out its request for proposals in July, Leonhard said HRI liked the idea of being in the center of downtown across from City Hall and that an entire city block was available.

"We just thought it would be a great opportunity to make a significant investment in downtown Tampa," he said.

HRI expects to start building the $120.8 million tower in the third quarter of 2017. Construction will create 527 jobs. Once the building opens in May 2019, its lobby oriented toward City Hall and nearby office towers, it will have a staff of 174.

HRI, Leonhard said, is one the few companies around that operates hotels and apartments in one operation. In Tampa, both renters and hotel guests will be able to use the rooftop pool over the parking garage, order room service or dry cleaning and charge food and beverages to their rooms or rental accounts. Apartment rents are projected to be $1,900 a month for one bedroom, $2,900 a month for two bedrooms and $3,700 a month for 11 top-floor penthouse apartments.

The city put out a request for proposals in July and received responses about three weeks ago from HRI and two other bidders:

• Mill Creek Residential of Orlando, which offered the city $5 million for its land.

• A partnership of several companies with high-profile projects in Tampa: Development Services Group, based in Memphis, plus the Framework Group and Forge Capital Partners, both of Tampa, and the Beck Group, which has an office in Tampa. The group valued the land at $5.5 million, but deducted $3 million to cover the cost of building public parking and offered the city $2.5 million cash.

"The city received very attractive proposals from three very qualified teams," Buckhorn said in announcing the decision. "After careful analysis, HRI's proposal offered exactly what the city of Tampa was looking for. HRI offered not only a vision that would add to Tampa's burgeoning downtown but also offered an attractive purchase price, density and innovative design.

"We look forward to this new project joining the rapidly growing Tampa skyline," he said. For six years, he said, the focus of the city's work has been "a livable, walkable and pedestrian-oriented downtown."

A fourth proposal, a $5 million offer from the owner of the office building at 501 E Kennedy, came in after the city's deadline and was not considered.

Originally, the city asked for any project to include about 200 spaces in its garage for use by the city.

After all the developers said that would create a hardship, the city agreed to accept fewer spaces, said Bob McDonaugh, Tampa's top development official.

HRI is offering to give the city exclusive use of 127 spaces — more than the 90 spaces now on the site.

City Hall bought the land, previously the site of the Cold Storage Cafe, for $1.3 million in 1997. The Hillsborough County Property Appraiser estimates its market value at about $2.7 million, but "it's not throwing off any property tax revenue right now," Buckhorn said in an interview Wednesday.

Once built, the 258-foot-tall tower is expected to generate about $300,000 a year in property taxes to the city, McDonaugh said.

Tampa officials based their decision on the return to the city, the density of the project and the project design, McDonaugh said. Density was important, he said, because more development on site means a higher-value project and more tax revenue to the city.

Now the city must develop a purchase contract and development agreement that will go to the City Council for approval. That process will include getting an appraisal of the site.

"I am confident that this number will prove out," McDonaugh said of HRI's offer.

Meanwhile, Buckhorn said he has no interest in selling the land to anyone who would sit on it.

"I want to see dirt moving on that site," Buckhorn said. "That's why we put it out to the marketplace. I want to see that site developed while the real estate market is booming."

Nor, Buckhorn said, should the buyer think about a quick resale.

That's something Framework and another company did in Ybor City. In June 2015, they paid the city $660,000, its appraised price, for about 1½ acres of city land, plus another $970,000 to the Catholic Diocese of St. Petersburg for a neighboring parcel.

Less than a week later, they sold both parcels, totalling about 3 acres, plus their plans, part of a street that had been vacated and the development approvals they had received for an apartment project, to a South Florida developer for $4.25 million.

"Not interested," Buckhorn said when asked whether he would be open to a buyer with a similar plan for the block next to City Hall. "Once we start the negotiations with them, which is where the nitty-gritty will be determined, I will make sure that my preferences are known."

Along with Hyatt, HRI's project team includes Baker Barrios Architects, general contractor DPR Construction, Capital One and Tampa real estate broker Jeannette Jason of Cushman & Wakefield.

HRI wants to move quickly on this project, Leonhard said, and hopes it won't be the company's last in Tampa.

"We really don't buy land and turn around and sell it," he said. "We really only buy land to develop it and ... when we go into a market like Tampa, we want to do multiple projects."


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