What’s the real value of St. Petersburg’s 86-acre Tropicana Field site?

Opponents of the deal to build the Tampa Bay Rays a new stadium and redevelop the rest of the 86-acre property argue that the negotiated price doesn’t reflect the true value of the land.

The city and county will contribute the 21 acres for the new baseball stadium to the deal at no cost (as they did for Tropicana Field 30 years ago). The Hines-Rays team and city officials have agreed on a price of $105 million in staggered payments for the remaining 65 acres. In addition, the Hines-Rays team has committed to an additional $50 million in community benefits such as specific job training and funding commitments for new public amenities like an African American history museum.

Opponents argue the land is worth a lot more — anywhere from $279 million (per a 2023 appraisal) to as high as a staggering $700 million put forth by a pair of former Wall Street analysts in a column published in the Tampa Bay Times last December. The two analysts are founding members of the NoHomeRun group that opposes the deal.

In reality, a valuation as high as $700 million isn’t based on real land-development economics.

The Hines-Rays deal with the city comes with a very specific mix of public and private uses and commitments, including a new baseball stadium, market rate and affordable housing, offices, hotel rooms, conference space, 10 to 14 acres of green areas and a new Woodson African American Museum of Florida. The negotiated price reflects that mix, as different uses support different land values and some uses support no land value at all, including parkland and affordable housing. The current proposal also reflects the risk associated with a 30-year development plan that will encounter unpredictable economic ups and downs before it can be completed.

NoHomeRun recommends the city pursue a “Do it ourselves” approach to maximize value. To get to the $700 million estimate, the city government would have to get into the land-development business, come up with its own plan for developing the 86 acres, construct the required infrastructure and then oversee marketing and sale of smaller development sites at retail value. “Retail value” for land is the amount developers will pay for finished development parcels with the intent of maximizing the density permitted by applicable zoning. In this part of downtown, think a 20-story apartment or condominium building on every single development parcel or block. A sea of residential buildings would not be the boldest or most imaginative use of this incredible public asset. And St. Petersburg residents probably wouldn’t be pleased with either the aesthetics or economic impact of that alternative.

Let’s do the math for the Hines-Rays plan. To reach $700 million, the land would have a retail value of $8.14 million per acre for each of the 86 acres. I found two sales of much smaller development sites in the immediate vicinity of Tropicana Field during the past two years. One was an assemblage of three sites on the east side closer to the downtown core for an average of $10.5 million per acre. The other is a 2.9-acre site currently under development for a high-rise apartment building on the west side of the Tropicana site abutting Interstate 275 for $3.6 million per acre. Based on those two examples, I can agree that an average retail value of $8.14 million per acre for smaller finished development sites is at least in the ballpark.

But the 86-acre site is not a collection of finished development sites today. To be comparable, the city or master developer must first construct internal roads mirroring the downtown street grid with utilities underneath those streets to service new development. To create a typical downtown St. Petersburg street grid with 200-by-400-foot blocks (surrounded by standard 50-foot-wide street right of way), the streets will consume 30% to 40% of the total land area. Using an even more conservative 27.5%, and factoring in the 21 acres for the new stadium, about 18 acres will be needed to construct new streets.

In addition, the Hines-Rays team has committed to include 10 acres of parkland and public green space in its plan surrounding Booker Creek, which flows through the property. Obviously, parkland cannot be sold, so in calculations like these it has zero dollar value.

The plan also includes a commitment to construct 1,250 units of affordable housing, with about half on site and the other half elsewhere in the city. The only way to make the numbers work is to obtain public subsidies to reduce the development cost to the point that apartments can feasibly be rented at affordable levels. Free land is the most likely form of public subsidy, and that factors as well into the negotiated price. Assuming a typical mid-rise design for affordable apartments at 80 units per acre, the affordable housing commitment will consume another 15 acres of the site. While half the units will be built off site, the Hines-Rays team will have to buy the offsite land for those units and the same land cost subsidy is required to support the economics of these offsite units; that commitment must be factored into the negotiated price of the Gas Plant site.

After subtracting all of these commitments that support $0 land value (internal streets, parkland, affordable housing sites and the Rays stadium) from the overall site, only a little more than 22 acres are available to the Hines-Rays team for development (or sale to other developers). Here’s the breakdown:

Historic Gas Plant District site: 86 acres

Less the stadium site: 21 acres

That leaves 65 acres for other development.

Less internal streets: 18 acres

Less parkland (minimum required): 10 acres

Less affordable housing: 15.6 acres

Net acreage remaining: 21.4 acres

Value of 21.4 acres at $8.14 million per acre: $174.2 million

This analysis, based on the actual proposed plan and agreed mix of land uses, is obviously much closer to the negotiated price and helps to explain how the city and development team may have derived their valuation of $155 million ($105 million plus the $50 million in community benefits).

Another factor: If the city took the “do it ourselves approach,” it would have to get into the land-development business. Given the regulations imposed on public entities regarding construction bidding and disposition of assets that are not applicable to private companies, that will materially increase costs and the development timeline. To start, the city would contract directly and manage civil engineering for the new street grid instead of relying on the master developer. For every land sale, the city would likely be required to issue an individual request for proposals and evaluate the responses, potentially adding 12 months to the process of selling each individual development parcel at retail value.

There are examples of cities across the country using this approach. In many instances, they create independent not-for-profit development authorities to manage the development process. I found one example in Cambridge, Massachusetts, where The Cambridge Redevelopment Authority has managed development of the dynamic Kendall Square district for four decades. That organization has overseen the successful mixed-use project next to the Massachusetts Institute of Technology and has a staff of eight to 10 full-time development professionals. The operating cost of a comparable entity in St. Petersburg would likely be in the range of $2 million or more annually. I doubt the creation of a new department or bureaucracy is what our residents and city administration would support. Our city administration is already overtaxed providing the services required to respond to growth pressures and infrastructure needs in a way that reflects the special character of St. Petersburg.

The City Council and county commission will have the last word on this proposed deal. I encourage our municipal leaders to protect the public interest, but not to get bogged down in wide-eyed claims that this property will someday be worth several times more than the negotiated price.

Ultimately, our elected leaders have to decide if the benefits of keeping the Rays in St Petersburg and the Tampa Bay area — and leveraging a new Major League ballpark to jump-start and accelerate the development timeline for the entire Historic Gas Plant District — outweigh the risk of forgoing potential development alternatives that don’t involve the Rays. As we say in our business, at the end of a good negotiation neither side leaves the table entirely happy.

Jay Miller has been a real estate developer for 25 years. He has a master’s degree in urban planning and public policy from Harvard University’s John F. Kennedy School of Government. He lives in St. Petersburg.