Detert objects to purchase offers in $20-million range, calling them too low
The Sarasota County Commission has authorized County Administrator Jonathan Lewis and his staff to negotiate with all six companies that responded to a solicitation regarding the sale of the County Administration Center in downtown Sarasota and two adjacent parcels used for parking areas.
However, the unanimous vote on Sept. 8 followed Commissioner Nancy Detert’s expression of dismay over the fact that none of the offers reflected what she considered the true value of the property.
“I’m stunned at how low that is. Stunned,” she said of the purchase price in each of the six packages responding to the county’s Invitation to Negotiate (ITN).
The highest was $23.5 million. That was in the materials submitted by The Seng Co. of DeKalb County, Ga., and Weaver Capital Partners.
Tricera Capital LLC, which says it is “active in several office, retail, and mixed-use development projects across Florida” — including examples in Miami, Fort Lauderdale, West Palm Beach and Tampa Bay — listed a price of $22.5 million.
It recently acquired the 546,000-square-foot BB&T building located at 1800 Second St. in Sarasota, it noted in its package.
Renaissance Centro of McLean, Va., proposed spending $22,125,000 for the parcels.
Twenty Lake Holdings, “a multi-strategy real estate investment and advisory firm based in Stamford, CT,” as its application explains, offered $20.1 million.
Benderson Development Co., based on Cooper Creek Blvd. in University Park; and Gateway Mega Investment LLC of Miami Beach both proposed a $20-million purchase price.
Detert told her colleagues, “I wouldn’t accept any of these dollar amounts.” She added, “It might really be worth our while” to get an appraisal of the property “at its highest and best use …”
“If we sold this for [about $20 million],” she continued, “the next guy could rezone it and resell it for quadruple that amount, in today’s market.”
(The Sarasota County Property Appraiser’s Office says the 2021 market value of the property at 1660 Ringling Blvd. is $38,379,400. That is down from $38,576,700 in 2020.)
Detert also pointed out, “This is anything but a distress sale, and I gate when government falls into the pit of buying high and selling low.”
By the time a new county administration center has been completed on land the county owns at 1301 Cattlemen Road in Sarasota, she continued, the total investment would be about $100 million.
Nonetheless, she said she supported authorizing the negotiations to proceed with all six respondents to the ITN.
Detert did ask Matt Osterhoudt, director of the county’s Planning and Development Services Department — who was making the staff presentation — whether the commission could seek other offers while those negotiations were underway.
Osterhoudt explained that the state law and county regulations under which the process was being handled would not allow that. Ultimately, however, he added, the commissioners could terminate the ITN solicitation and start a new one.
Then Detert looked at Chair Alan Maio, who was a principal with the Kimley-Horn consulting firm before retiring to run for the commission in 2014. “You’re the expert in the field,” she told him. What did he think about seeking an appraisal?, she asked.
“I would rather proceed,” he replied, “and if none of these negotiations are satisfactory, we go out for another ITN.”
Maio stressed that he did not want to see the commissioners become involved “in a two- to three-year rezoning process with the City of Sarasota,” to change the classification of the county property before trying to sell it. “I’d like to see us get out sooner rather than later.”
Carolyn Eastwood, director of the county’s Capital Projects Department, and Deputy County Administrator Steve Botelho have presented the board a slide several times over the past 18 months, showing the anticipated expenses of maintenance and renovations over the next 20 years if the county offices remained in the building standing at 1660 Ringling Blvd. The total would be about $49 million, they said, though Botelho noted that the estimates were “broad numbers.”
(The other two parcels the commission declared surplus for purposes of the ITN stand at 1646 Morrill St. and 1703 Morrill St. The market value of the 1646 Morrill property this year is $2,675,800, the Property Appraiser’s Office says; for 1703 Morrill, it is $471,800. The 1703 Morrill St. parcel comprise 10,120 square feet, the Property Appraiser’s Office record notes, whereas the other Morrill Street parcel encompasses 94,674 square feet.)
Maio also reminded Detert on Sept. 8 that staff had estimated the construction of a new administration center on Cattlemen Road at $75 million. The board would use the proceeds from the sale of the downtown Sarasota parcels, he continued, and it could put funds aside for three to five years and then borrow approximately $25 million to cover the total expense. (The Sarasota County Charter has a section that limits how much money the commission can borrow without voter approval, based on a formula. The figure Maio cited is roughly the current Charter cap.)
“I wasn’t suggesting that we rezone,” Detert responded to Maio, “because I’m notinterested in delaying the project.” The downtown Sarasota property could be appraised, she pointed out, while negotiations proceed with the six respondents to the ITN.
Then she explained that she had asked staff members who had met one-on-one with the commissioners prior to the Sept. 8 meeting why they thought the purchase prices were so low. They told her, Detert added, that the offers were based on the fact that the land is zoned for government use.
Even if the six companies were willing to put up another $5 million, Detert said, the $20-million range still “seems very, very low.”
“I’d like to hear from all the commissioners,” Maio replied. “We’re not negotiating to decide today which of the six [offers to accept].”
Commissioner Ron Cutsinger said he felt staff should proceed to negotiations with all six companies. “I think these are … all qualified.”
Moreover, Cutsinger continued, “The best appraisal is what the market is willing to pay.”
Commissioner Michael Moran added, “I think that was well said.” In authorizing the negotiations, Moran noted, “We’re not committed to anything.”
“I agree,” Commissioner Christian Ziegler said.
Following those comments, Maio added, “I’ll just make a flat statement: I have neverput my best offer in at the first shot.”
Moran made the motion to authorize the negotiations, and Detert seconded it.
The unanimous vote in support of that action came just shy of 13 minutes after the discussion began.
The proposals
The responses to the ITN were opened on Aug. 20, Osterhoudt of Planning and Development reported during his presentation. The county staff memo provided to the board in advance of the Sept. 8 meeting pointed out, “The purpose of the ITN was to solicit offers from one purchaser for the entire Property, as well as enter into a leasing agreement with the County so the County may occupy and self-manage for a period of +/- four (4) years upon closing to allow for the development of a new County Administration Building anticipated in 2025.”
According to Chapter 2, Article IX of the County Code, the memo added, “[I]f two or more responses are received [regarding real property acquisition, disposition, exchange and leasing], the staff will present a report detailing each response to the [commission] for its consideration.”
The following are other facets of the six offers staff received:
Benderson Development
Benderson Development would allow the County Commission to remain in the building without paying rent until a new facility was ready. It offered an initial one-year term, with the option of three, one-year renewals.
However, Benderson proposed that the administrative offices be relocated to a “Class A professional office within view of the County’s most iconic built assets, Nathan Benderson Park and Mote Aquarium.”
Benderson owns hundreds of acres of property in the area of University Parkway. Benderson Park, which includes the site of the planned $130-million Mote Science Education Aquarium, is close to the Mall at University Town Center, which is a focal point of the University Parkway corridor.
Benderson Development’s director of development, Todd Mathes, wrote in his Aug. 20 letter regarding the ITN, “[W]e are positioned to begin delivery” of that office space in the first quarter of 2023.
Further, Mathes offered a $200,000 deposit on the county parcels in downtown Sarasota.
Gateway Mega Investment LLC
Gateway Mega Investment LLC also proposed a $200,000 deposit, along with a 60-day period for due diligence on the county property. It further offered a four-year lease with a base rate of $15 per square foot, noting that the downtown Sarasota Administration Center encompasses 158,149 square feet. The Sarasota News Leadercalculated the first year’s rent at $2,372,235.
Another four-year lease would be an option, the company added.
The base rate would rise by 3% a year, the document said. The county would be responsible for all operating expenses, as well as “all required maintenance and capital improvements during the lease term.”
Moreover, the offer calls for the county to “be responsible for all environmental issues concerning the Property,” and it would have to “deliver the property” to Gateway “free of all adverse environmental conditions including asbestos, mold any underground contamination.”
Renaissance Centro
Renaissance Centro would put down a $750,000 deposit at the outset and then pay another $750,000 deposit “within 5 business days after the end of the Due Diligence Period …” Further, it offered a four-year lease term, but its cost per square foot was $13.50, with 2% annual escalations. Additionally, like the Gateway proposal, the offer calls for the county to cover all operating expenses and maintenance costs, but Renaissance Centro also says the county would pay all the real estate taxes while leasing the property.
Unlike the other proposals, the Renaissance Centro letter says that if the county began negotiations with the firm, the county could not negotiate with any other party.
It also points out that it would form a limited liability company that formally would purchase the property.
The Seng Co. and Weaver Capital Partners
Seng offered a $250,000 deposit and said it would require 60 days “to inspect the property.”
It provided no details about how it would handle the lease to the county. That would be determined “[a]s part of its closing,” the letter says.
The company did note that it would provide a $250,000 deposit as “Earnest Money.”
Tricera
Tricera proposed a $500,000 deposit and a 45-day due diligence period.
It also called for a four-year lease at a cost of $1.8 million per year, “plus the Property’s full operating expenses, real estate taxes, and insurance.” The base rate would rise by 3% each year, the offer adds.
The county would be responsible for “delivering all building systems (including roof, structure and [heating, ventilation and air conditioning equipment]) in good working order upon the expiration of their lease.”
Twenty Lake Holdings
Twenty Lake Holdings would pay a deposit equal to 2.5% of the total purchase price “following the expiration of the [45-day] Due Diligence Period,” its offer says.
It would lease the property back to the county for four years at a base rate of $1,608,000 per year, with a 3% annual escalation. “Tenant is responsible for everything,” the proposal says, “including, but not limited to, real estate taxes, [insurance], utilities, repair, maintenance and replacement of mechanicals, electricals, roof, parking lot and other structurals.”
Its initial deposit would equal 2.5% of the total purchase price; then, it would pay an additional 2.5% of the price within one day following the due diligence period.