At the August 22 commission meeting the City Commission voted 3-2 to sell the blighted and long-vacant social security building located at 245 and 255 W Central Avenue. The agreement outlines an aggressive redevelopment plan to ensure the parcel is swiftly redeveloped for the betterment of the downtown streetscape. See the preliminary rendering above. Specifics on the agreement and a bit of context is below. This agreement came into place after two rounds of RFPs in which six/ten LLC was the only respondent and two-years of negotiations between the City and six/ten LLC.
The fact sheet below was presented by the City staff and helps to explain the context of the sale. It has been inaccurately reported that the Social Security building was purchased by the city for $1.1 million. As you read below, that is not the case. The $1.1 million includes the entire block on Ave A NW where the parking garage is currently located in addition to the social security building.
The City purchased three parcels of property September 29, 2006 for $1.1 million as part of a larger assemblage of parcels by the City for the construction of the downtown parking garage. The largest of the three parcels, totaling approximately 0.34 acres and located on Avenue A, NW, was used in the development of the parking garage. The two smaller parcels, totaling approximately 0.25 acres and located at 245 and 255 West Central Avenue, were not required in the final design and construction of the parking garage. A one story masonry building of approximately 9,422 square feet, originally constructed in 1940 and 1947, currently occupies the two parcels on West Central Avenue. The building has been vacant since May 31, 2013. The property is located within the downtown business district, the Core Improvement Area, the City’s Primary Activity Center and the City of Winter Haven Downtown Community Redevelopment Area (Downtown CRA). Because of the City’s ownership, the property currently generates no ad valorem taxes or other public revenue. The City currently spends approximately $9,450.00 per year for insurance, operation and maintenance on the building. The building has fallen into disrepair and fails to contribute to the economic development of the Downtown CRA which has undergone major redevelopment over the past decade.
In 2013, the City determined the sale and redevelopment of the property for mixed-uses would help achieve the vision for the Downtown CRA and Primary Activity Center by enhancing the existing character of downtown and facilitating continued economic vitality and growth within the Downtown CRA and other areas of the City. Accordingly, the City issued a Request for Proposal (RFP-13-27) May 1, 2013 for the sale of the “former Social Security Building” property. There was one response to RFP-13-27 received by the City from Tree Swallow Partners, LLC (owned by Six/Ten Corporation) dated May 29, 2013. There was no purchase price identified in the proposal and the City and Tree Swallow Partners (Six/Ten) failed to negotiate a sale and redevelopment of the property.
The City issued a second Request for Proposal (RFP-14-60) July 8, 2014. This proposal was more robust than RFP-13-27 in that it included more descriptive information about the Winter Haven location, economy, demographics and market factors. RFP-14-60 was distributed to a larger market than the previous RFP, including being published on “LoopNet.com,” a leading commercial real estate internet service. There was one response to RFP-14-60 received by the City from Six/Ten, LLC dated September 10, 2014.
The Proposal dated September 10, 2014 was presented to the Downtown CRA Advisory Committee November 10, 2014 and the Committee voted to recommend to the CRA Board to direct the City Manager to proceed with negotiations with Six/Ten, LLC for the sale of the property pursuant to RFP 14-60 and to bring back an Agreement for further consideration and approval by the City Commission. The CRA Board met January 12, 2015 and voted to direct the City Manager to proceed with negotiations of an Agreement with Six/Ten, LLC for the sale and redevelopment of the property pursuant to RFP 14-60 and to bring back an Agreement for further consideration by the City Commission. Since this CRA Board meeting, the City Manager and staff have met numerous times in person and corresponded with representatives of Six/Ten, LLC regarding the sale and redevelopment of the property pursuant to RFP 14-60. A proposed Acquisition and Redevelopment Agreement as more particularly described below is now presented to the City Commission for further consideration.
An appraisal of the property was performed July 17, 2013 by Mr. Joseph String, MAI. The estimated appraised value as determined by Mr. String was $430,000. The appraisal did not assign separate values for the land and the building. The 2016 Polk County Property Appraiser’s records estimate a land value of $133,516.00 and a building value of $376,899.00 for a total value of $510,415.00 for the property.
The annual expense to maintain and insure the building is $9,450.00. Additionally, the City has not collected ad valorem taxes for the property since the 2006 purchase by the City. Based on a current total taxable value for the land and building of $510,415.00, the estimated lost annual tax revenue is approximately $2,955.30 each fiscal year.
If the City continues to own the property and offer it for leasable retail and/or office space, the building will require interior renovations, exterior façade improvements and potential roof repairs. Based on estimates obtained from two contractors, the estimate for making basic renovations to the building would be a minimum of approximately $130,000.00.
The current amount of the purchase offer for the property which followed Six/Ten LLC’s response to RFP 14-60, is stated in a letter from Carl J. Strang, III, CEO, Six/Ten, LLC dated May 10, 2016 and is reflected in the proposed Acquisition and Redevelopment Agreement, is for an amount equal to the Polk County Property Appraiser’s 2016 value of the land only. The Polk County Property Appraiser’s 2015 and 2016 land value for the property is $133,516.00. Mr. Strang has stated the building has no market value to Six/Ten since they intend to demolish the building and redevelop the property for a multi-story building with leasable retail, office space and possible residential units. The proposed offer includes an estimated financial benefit analysis for the City over a 10-year period as follows:
Direct, One-time revenue:
Purchase Price for the land: $133,516.00
Estimated Utility Connection/Impact fees: $8,597.54
Estimated Revenue Over A 10-year Period
Ad Valorem Tax: $80,000.00
Sewer & Water Fees (0.55 psf/year): $82,500.00
City Tax on Electric Utilities (7.1%/2.0 PSF/Year): $21,300.00
Telecommunication Tax (1.1%): $5,000.00
Avoided maintenance/insurance cost: $ 94,500.00
TOTAL ESTIMATED ECONOMIC BENEFIT: $425,413.54
In order to achieve an estimated annual ad valorem tax revenue of $80,000 each fiscal year over a ten-year period, the total taxable value of the property after redevelopment was estimated to be approximately $1.26 million.
The Acquisition and Redevelopment Agreement provides for the redevelopment of the property in accordance with a “redevelopment program” to enhance quality of life, aesthetics and useful enjoyment of downtown Winter Haven; fulfill the goals of RFP-14-60; promote economic development and investment in downtown; and further the objectives of the Downtown CRA Plan. This includes but is not limited to, adding value to the City and County ad valorem tax base through private ownership and redevelopment of the property; adding private sector jobs to the City and its downtown area; adding sales tax revenue through business and commerce in the City’s downtown; and enhancement of the general physical character and vitality of downtown.
The Redevelopment Plan (Project) as set forth in Section 3 of the Agreement includes the following:
Staff recommends the City Commission approve the Acquisition and Redevelopment Agreement for the property located at 245 and 255 West Central Avenue between the City of Winter Haven and Six/Ten, LLC pursuant to RFP-14-60 and authorize the Mayor and other appropriate City officials to execute same and direct the City Manager to take all actions necessary and incidental to implement the terms of the Acquisition and Redevelopment Agreement.