Choices for Maritime Park coming to City Council
- May 29, 2015
- / Shannon Nickinson
- / government
While one proposal to develop three parcels on the Community Maritime Park moved forward Wednesday, another seemed somewhat in limbo.
This week, the Community Maritime Park Associates board agreed to move forward to Pensacola City Council a proposal from Studer Community Investments to develop parcels 3, 6 and 9. June 18 is the next Council meeting.
There were conditions on the approval, including that the Studer company commit to build within five years; that 95 parking spaces related to those parcels will be non-exclusive parcels shared with the Blue Wahoos or any future stadium tenant; and that proposed rent and common area maintenance fees will increase by 10 percent from the original offer based on new appraisals of the parcels.
Less clear now, it seems, is what plans South Florida-based developer MCM-BAP has for the property.
In January, MCM-BAP presented their vision for developing the downtown waterfront redevelopment project. It includes plans for a hotel and boutique apartments, an investment then said to total $65 million.
[caption id="attachment_13242" align="aligncenter" width="534"]
Community Maritime Park parcels.[/caption]
The CMPA board agreed to send that proposal to City Council. Council would sign off on a memorandum of understanding, the next formal step in the process to give MCM-BAP the green-light to begin work as master developer on the project.
But during Wednesday’s CMPA meeting, the board’s attorney, Lisa Minshew, stepped out of the meeting to call MCM-BAP. She and city staffer Mandy Bills spoke with Erick Valderrama, a principle in the company, to answer some CMPA board members questions about how leasing those three parcels to the Studer would impact the MCM-BAP’s plans.
Minshew said that Valderrama said a memorandum of understanding (MOU) has been prepared and was submitted to CBRE, the real estate firm that had been working on the deal.
City of Pensacola Chief Operating Officer Tamara Fountain says she does not have such a document from CBRE.
“City Council will evaluate the memorandum of understanding once it’s ready,” Fountain said.
What Fountain does have is a memo dated May 1 from Michael McShea and Lee Ann Korst of CBRE titled: “Update to Development Strategies for Community Maritime Park.”
In it, McShea and Korst write that MCM-BAP LLC says “bad press” has made its partners in the joint venture decide to pass on the project.
That has prompted BAP to seek substantial decreases in the proposed minimum rents they will pay on parcels where a hotel and boutique housing would be sought.
MCM-BAP proposal then and now
The May 1 memo says McShae and Korst met with Willy Bermello and Erick Valderrama of MCM-BAP in their offices. Also present was their partner Ron Winokur.
“Our discussions were candid and informative,” the memo says.
The memo says, “bad press endured in the last 30 days has evoked some trepidation on the part of BAP and their development partners.”
That bad press is probably the dispute over whether CBRE is owed a success fee. That was a fee that would have seen the developer of the parcel pay the real estate broker (CBRE) 4 percent of the post-development value of a project. Ultimately Mayor Ashton Hayward said that he negotiated with CBRE to cap the fee at $1.5 million, a $1 million reduction from what they initially proposed.
It may also refer to disputes between the CMPA board and City Council that peaked when council discussed disbanding the CMPA board.
[sidebar]
Why CBRE is in the mix?
CBRE is a national real estate firm hired by the city to market vacant parcels at the Community Maritime Park, the Port of Pensacola and the airport.
The city’s listing agreement with CBRE said the firm would be due a commission of 4 percent of the total value of any new sublease, if the Property is subleased to a tenant procured by CBRE, City, or anyone else; a tenant is procured by CBRE, City, or anyone else who is ready, willing and able to sublease the Property at the price and on the terms above stated, or on any other price and terms agreeable to City; or (c) any contract for sublease of the Property is entered into by City and CMPA.
The listing agreement has expired, but it contains a provision that the commission still will be paid to CBRE if someone with whom CBRE had negotiated or to whom the property was submitted before the agreement expired, leases the property within 180 days of the expiration date.
Vernon Stewart, the City of Pensacola’s public information officer, says that 180-day period expires at midnight on Aug. 19.
[/sidebar]
The memo says that BAP’s joint venture partners “have taken a pass at becoming involved in an untested tertiary market.”
BAP still is interested in taking on the project, with different partners. Those partners are not named in the memo.
In January, the MCM-BAP LLC proposal was:
For Parcel 4, a $20 million investment in a branded hotel.
— Annual rent was to be a minimum of $100,000 or 7.5 percent of annual revenue.
— Rent was to begin being paid 12 months after the building permit is secured or 24 months after the ground lease agreement is entered into.
For Parcel 7 and 8, a $45 million investment in residential housing.
— As apartments, a maximum of 200 units of one, two and three-bedroom sizes, ranging from 700 square feet to 1,400 square feet.
— Rent would be a minimum of $175,000 for both parcels, or 7.5 percent of the annual revenue.
— If MCM-BAP decided to make them condo units instead of apartments, the 7.5 percent figure would be the rent.
— Rent would begin being paid at the earliest of either: the completion of construction or the receipt of a certificate of occupancy from the city; 18 months from the time a building permit is issued; or 24 months from entering a ground lease.
The CBRE memo says the developer sees three options for a memorandum of understanding moving forward.
— Continuing with the master lease development as proposed with significant reductions in the rent for parcels 4, 7 and 8.
The minimum rent for Parcel 4 — the hotel — and for Parcels 7 and 8 — the apartments — would drop to $75,000 in all instances. The percentage for annual rent would be dropped from 7.5 percent to 5 percent.
— Another option could be eliminating the residential development from MCM-BAP’s proposal and moving forward with the hotel on Parcel 4 at the reduced rent rate.
— The third would be to pursue leasing the parcels individually, pursuing the hotel on Parcel 4 as a stand-alone transaction and “aggressively” pursue a restaurant tenant, represented by Dee Dee Davis, for the site.
Davis says the restaurant prospect, “is a long-shot.” Given that the deal is not farther along, she declined to give more details about who it is.
It also says that parking is a significant challenge for the site and asks that MCM-BAP’s partner, Structured Parking Solutions, be allowed to study the possibility of parking being put on parcel 5 or 6.
The memo also notes that Mr. Bermello “will contact Mr. Studer directly to discuss the merits and benefits to both parties of waiting until a long term solution is agreed upon by Studer, MCM-BAP and the City.”
It also says that Bermello will contact Studer directly to gauge his interest in supporting a sports bar use on Parcel 9.
Valederrama did not return a message left Thursday seeking comment for this story.
The memo is linked here.
Community Maritime Park parcels.[/caption]
The CMPA board agreed to send that proposal to City Council. Council would sign off on a memorandum of understanding, the next formal step in the process to give MCM-BAP the green-light to begin work as master developer on the project.
But during Wednesday’s CMPA meeting, the board’s attorney, Lisa Minshew, stepped out of the meeting to call MCM-BAP. She and city staffer Mandy Bills spoke with Erick Valderrama, a principle in the company, to answer some CMPA board members questions about how leasing those three parcels to the Studer would impact the MCM-BAP’s plans.
Minshew said that Valderrama said a memorandum of understanding (MOU) has been prepared and was submitted to CBRE, the real estate firm that had been working on the deal.
City of Pensacola Chief Operating Officer Tamara Fountain says she does not have such a document from CBRE.
“City Council will evaluate the memorandum of understanding once it’s ready,” Fountain said.
What Fountain does have is a memo dated May 1 from Michael McShea and Lee Ann Korst of CBRE titled: “Update to Development Strategies for Community Maritime Park.”
In it, McShea and Korst write that MCM-BAP LLC says “bad press” has made its partners in the joint venture decide to pass on the project.
That has prompted BAP to seek substantial decreases in the proposed minimum rents they will pay on parcels where a hotel and boutique housing would be sought.
MCM-BAP proposal then and now
The May 1 memo says McShae and Korst met with Willy Bermello and Erick Valderrama of MCM-BAP in their offices. Also present was their partner Ron Winokur.
“Our discussions were candid and informative,” the memo says.
The memo says, “bad press endured in the last 30 days has evoked some trepidation on the part of BAP and their development partners.”
That bad press is probably the dispute over whether CBRE is owed a success fee. That was a fee that would have seen the developer of the parcel pay the real estate broker (CBRE) 4 percent of the post-development value of a project. Ultimately Mayor Ashton Hayward said that he negotiated with CBRE to cap the fee at $1.5 million, a $1 million reduction from what they initially proposed.
It may also refer to disputes between the CMPA board and City Council that peaked when council discussed disbanding the CMPA board.
[sidebar]
Why CBRE is in the mix?
CBRE is a national real estate firm hired by the city to market vacant parcels at the Community Maritime Park, the Port of Pensacola and the airport.
The city’s listing agreement with CBRE said the firm would be due a commission of 4 percent of the total value of any new sublease, if the Property is subleased to a tenant procured by CBRE, City, or anyone else; a tenant is procured by CBRE, City, or anyone else who is ready, willing and able to sublease the Property at the price and on the terms above stated, or on any other price and terms agreeable to City; or (c) any contract for sublease of the Property is entered into by City and CMPA.
The listing agreement has expired, but it contains a provision that the commission still will be paid to CBRE if someone with whom CBRE had negotiated or to whom the property was submitted before the agreement expired, leases the property within 180 days of the expiration date.
Vernon Stewart, the City of Pensacola’s public information officer, says that 180-day period expires at midnight on Aug. 19.
[/sidebar]
The memo says that BAP’s joint venture partners “have taken a pass at becoming involved in an untested tertiary market.”
BAP still is interested in taking on the project, with different partners. Those partners are not named in the memo.
In January, the MCM-BAP LLC proposal was:
For Parcel 4, a $20 million investment in a branded hotel.
— Annual rent was to be a minimum of $100,000 or 7.5 percent of annual revenue.
— Rent was to begin being paid 12 months after the building permit is secured or 24 months after the ground lease agreement is entered into.
For Parcel 7 and 8, a $45 million investment in residential housing.
— As apartments, a maximum of 200 units of one, two and three-bedroom sizes, ranging from 700 square feet to 1,400 square feet.
— Rent would be a minimum of $175,000 for both parcels, or 7.5 percent of the annual revenue.
— If MCM-BAP decided to make them condo units instead of apartments, the 7.5 percent figure would be the rent.
— Rent would begin being paid at the earliest of either: the completion of construction or the receipt of a certificate of occupancy from the city; 18 months from the time a building permit is issued; or 24 months from entering a ground lease.
The CBRE memo says the developer sees three options for a memorandum of understanding moving forward.
— Continuing with the master lease development as proposed with significant reductions in the rent for parcels 4, 7 and 8.
The minimum rent for Parcel 4 — the hotel — and for Parcels 7 and 8 — the apartments — would drop to $75,000 in all instances. The percentage for annual rent would be dropped from 7.5 percent to 5 percent.
— Another option could be eliminating the residential development from MCM-BAP’s proposal and moving forward with the hotel on Parcel 4 at the reduced rent rate.
— The third would be to pursue leasing the parcels individually, pursuing the hotel on Parcel 4 as a stand-alone transaction and “aggressively” pursue a restaurant tenant, represented by Dee Dee Davis, for the site.
Davis says the restaurant prospect, “is a long-shot.” Given that the deal is not farther along, she declined to give more details about who it is.
It also says that parking is a significant challenge for the site and asks that MCM-BAP’s partner, Structured Parking Solutions, be allowed to study the possibility of parking being put on parcel 5 or 6.
The memo also notes that Mr. Bermello “will contact Mr. Studer directly to discuss the merits and benefits to both parties of waiting until a long term solution is agreed upon by Studer, MCM-BAP and the City.”
It also says that Bermello will contact Studer directly to gauge his interest in supporting a sports bar use on Parcel 9.
Valederrama did not return a message left Thursday seeking comment for this story.
The memo is linked here.
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