St. Petersburg to sell part of former Moffitt Cancer Center land

ST. PETERSBURG — The block and a half of downtown, city-owned land once envisioned as a Moffitt Cancer Center campus has sat dormant for two years since Mayor Ken Welch spiked it for not including what he considered enough affordable housing.

With a 6-2 vote from City Council Thursday, St. Petersburg city officials will sell a third of the property, the southeast corner of Second Avenue South and Dr. Martin Luther King Jr. Street, to its next-door neighbor, developer Third Lake Partners. The land is on the east doorstep of the planned Historic Gas Plant District, the future home of a $1.3 billion stadium for the Tampa Bay Rays, and would keep Second Ave South as a main thoroughfare.

“This would act as game day street into the Gas Plant project,” said Aaron Fisch, the city’s real estate and property management director, at the council meeting.

But the deal reopened old wounds from the scuttled Moffitt deal. As one public speaker, Jason Spitzer, argued, Welch’s decision created a “Moffitt standard” for nixing projects that hasn’t been applied to any other project since.

“There’s been no clear explanation from this administration as to why that deal was so terrible and this deal is so great” despite having no affordable or workforce housing, said Spitzer, who described himself as pro-development.

According to city development administrator James Corbett, Third Lake Partners is planning to build a mixed-use project that could include condos, offices, shops and hotel space on the Second Avenue South block. Some of the proceeds from the sale would help pay for an affordable and workforce townhome project in the Deuces commercial district that has cost the city far more than planned.

The negotiated price of $10 million for part of the former Moffitt land also is below the value determined by two appraisals, one placing its worth at $15 million, the other at $16.4 million. But city officials say offloading this parcel would save taxpayers more money in the long run.

Corbett said this deal would sever the city from a cumbersome lease inked in 1987. Back then, the city wanted to stop a business called Peninsula Motor Club from moving from its headquarters at 800 Second Ave S.

Peninsula owned the east half of that block. In 1981, the city acquired the west half, which is the 1.5 acres of land for sale now. Peninsula said it needed more parking. So the city crafted a 99-year lease that had Peninsula paying nominal rent for 90 surface parking spaces to a developer the city was working with at the time.

When that developer failed to meet the terms of the agreement a few years later, the city became the holder of the lease, collecting rent from Peninsula and subsequent property owners that is far below the property tax bill the city is on the hook for.

The property Peninsula owned was bought by AAA Auto Club South, then United Insurance Holdings Corp., then in November 2022, Third Lake Partners for $10.5 million, according to the Pinellas County Property Appraiser’s website. As the tenant in the lease, Third Lake pays $1,755.70 a month in rent to the city for those parking spaces.

The city paid $56,426.99 in property taxes last year for the parking lot, but only collected $21,068.40 in rent from Third Lake.

“We’re getting rid of a lease we’re upside down on,” Corbett said.

He said that Third Lake Partners is in a unique position to buy the land and release the city from the lease. Any other buyer would be on the hook for collecting fixed rent from Third Lake and paying high taxes on that land.

Under the lease that expires in 2086, the rent can only be adjusted every five years for inflation. Third Lake Partners managing partner Ken Jones didn’t respond to a voicemail and text left Wednesday. When reached on a second phone call, Jones said he would call back but did not.

“Once I understood the full picture of the numbers, it makes more sense to do it,” City Council member Gina Driscoll told the Tampa Bay Times.

The city does get back a portion of the taxes it pays for the property. But combined with the annual rent collected, that revenue is $20,000 short of covering the expected property tax bill in 2024.

City Development Administration Managing Director Beth Herendeen said in an email that the city receives about 30% of the property taxes it pays for the land back, with the rest going to the county, the school district and the Juvenile Welfare Board, like any other property tax bill.

The discount Third Lake Partners would get on the land does not trigger the current ordinance in place that requires developers that receive a public subsidy to provide a broader community benefit. Projects that receive a city subsidy equal to 15% of construction value or $30 million are subject to that the requirement. Corbett said Third Lake Partners’ planned development is valued to be more than $80 million.

Council members learned Thursday that the project would have gone through the community benefits process under its older version, triggered by any project receiving at least $5 million of subsidy.

And if the Moffitt project was approved by the mayor, Second Avenue South would have been private with no public access to the Gas Plant district. That project involved developing both blocks, including the city-owned land and the land formerly owned by United Insurance Holdings Corp.

“That’s just interesting,” said council member Richie Floyd. He voted no on the sale along with council member John Muhammad.

Under this deal, Third Lake will give its portion of the southern half of Second Avenue South back to the city. Though the road today is accessible to the public, it is on private land. This deal would permanently dedicate that stretch of road as a public right of way so it could be used as a main thoroughfare into the planned Historic Gas Plant District. Third Lake would also have to begin construction within the first five years of closing the deal or pay $4,166.67 for each month it is delayed.

“If you drive down that street you’d never know it’s private property,” said City Administrator Rob Gerdes.

The city plans to split the proceeds from the $10 million sale two ways: About $6 million would go to the Economic Stability Fund to repay a short-term loan for a $19 million project to build 24 affordable and workforce townhomes for purchase along 22nd Street South in the Deuces. Corbett said the other $4 million would go toward the city’s affordable and workforce housing projects fund, its largest contribution ever.

The block of land along First Avenue South that was also part of the proposed Moffitt campus will remain city-owned and available as parking for the city and for Rays fans on game days, Corbett said. The team is expected to break ground on a new stadium in lots 6 and 7 next year, likely turning prime parking spots into a construction site over the next few seasons.