by Bradley Parsons
Staff Writer
The City Council is reserving judgment on the Shipyards development agreement with Landmar that the mayor’s office says it will deliver within weeks.
Adam Hollingsworth, the mayor’s chief of special initiatives, said the deal would be a good one for the City and taxpayers, but several Council members and their auditor said some basic questions haven’t been answered.
Several members of the Council’s Finance Committee asked for an independent appraisal of the land. They questioned how they could evaluate the deal without knowing the value of the large stretch of riverfront land near the Sports Complex.
“The most simple part of any real estate deal, whether it’s buying a house or an apartment complex, is to get an appraisal on the property,” said Committee chairman Reggie Fullwood. “That’s like Real Estate 101 type stuff.”
The mayor’s office and Landmar contend that the property’s value has already been established. The City’s settlement agreement with previous developer TriLegacy estimates the land’s value at $29 million.
But that number gives TriLegacy credit for $14 million worth of work on the land in preparation for building luxury condominiums and a public park and Riverwalk. Of that $14 million, only about $8 million paid for actual improvements to the land. The rest paid for planning and design costs that may not increase the land’s value in the hands of a different developer, said Council Auditor Richard Wallace.
The mayor’s office wants to work with the Council and would order a new appraisal if necessary, said Hollingsworth. However, a new appraisal could take months, which could threaten the deadline for negotiations. The Finance Committee unanimously approved a deadline extension to April 30. The new date still needs approval from the full Council.
Hollingsworth said the agreement with Landmar would be in Council hands within three weeks, providing plenty of time for review. A draft of the agreement calls for Landmar to spend $34 million to complete public improvements on the land. The City would return $10.5 million to the developer through tax breaks. Landmar would also pick up payments on $40 million in City-issued bonds, beginning with the first $3.1 million installment due this year.
Landmar consultant Michael Munz said he was confident the Council would like what it sees when it reviews the agreement.
“The City says it wants $22.5 million and says it wants an additional $10.5 million to pay for improvements, and Landmar says ‘I’ll write that check.’ They want somebody to pay for the debt service and Landmar covers it. And the developer gets
paid back only if the project is
successful,” said Munz. “They’re
not going to get a better deal than that.”
But Wallace said he’s seen other good deals go sour. He remembers checking over the City’s original deal with TriLegacy, which called for the developer to spend $40 million on a 16-acre park. When Wallace reviewed the deal later, the acreage had shrunk to about six acres, but the price tag remained at $40 million.
“That’s why we need to nail this deal down real good,” he said.