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St. Petersburg City Council - Slow Down!

As the St. Pete Catalyst* reports, the city has spent nearly $1 million (and counting) on outside attorneys to help with the agreements for the Rays/Hines proposal. A proposal that does not turn into a deal until the St. Petersburg City Council Members and the Pinellas County Board of Commissioners vote - to approve, to reject, or to recommend a re-negotiation.


Before there can be any vote by City Council, each member has an obligation to read these agreements and understand their long-term implications to the city. And as Councilmember Brandi Gabbard pointed out, the council members just received a stack of draft documents that she called "voluminous".


Here is my letter sent to the St. Petersburg City Council Members:


3/29/23

Dear St. Petersburg City Council Members:

  1. You have enormous fiduciary and fiscal responsibilities to the people of St. Petersburg to get this right. This is the biggest deal the city may ever do, with huge consequences.

  2. Slow down. You need time to read and understand all of the legal agreements you'll be reviewing.

  3. You also need time to collect, and with the help of independent experts, review all of the other important due diligence, including but not limited to the items pointed out in our two recent Blogs on nohomerun.com: Rethinking the Rays Hines proposal. Let's take a 7th inning stretch. We can do better. Let's pause the Rays Hines deal so everyone has time to review the facts. You need to determine what is in the best interest of the city and the citizens - what matters most to your constituents - whether that's 1) paying for a stadium or 2) setting aside funds for flooding control, affordable housing, education for our youth, new municipal buildings, keeping taxes under control, and so much more.

  4. When it comes to the legal agreements, you have a responsibility to do your own due diligence - not to ensure the documents accurately represent the deal terms (the city's lawyers and the outside lawyers the city is hiring can do that) - but to understand the deal terms. You need guidance from an independent disinterested expert to help understand the impact of the terms. Also, time to ask and have answered if there any deal terms that aren't there but should be. For example, can the team be sold, and under what conditions? What are the penalties if the team wants to move? Do the documents adequately protect the public interest? As William (Bill) Ballard, past President of the St. Petersburg Bar Association, wrote in our nohomerun.com Blog, The Stadium Deal – Too Much for Too Little, there are provisions in the October 2023 term sheet that create risks. Some examples:

    1. Rays/Hines can sell all or some of the property to other developers and those developers can do the same. The city has no control.

    2. Rays/Hines can spread out their land payments for many years into the future.

    3. Major parts of the development agreement could be legally difficult, and in practice, very difficult to enforce.

 

Here is a more complete legal analysis from Ballard:


City Council Members' fiduciary responsibilities.


There shall be a City Council which shall be the governing body of the City with all legislative powers of the City vested therein . . .” City Charter Sec. 3.01. The Florida Municipal Officials’ Manual (Florida League of Cities) states that the “Council also adopts and appropriates the city’s funds through its budgetary responsibilities and has fiduciary responsibilities as trustees of public funds.” That fiduciary duty is owed to the people who elected you, not to the mayor of our city or any other person or organization. That duty includes the duty to become fully informed, to the best of your ability, as to whether the proposed New Stadium Project Agreements (NSPA) and the Historic Gas Plant District Development Agreement are in the best interests of the citizens of our city.


City Council Members' Obligation to take the necessary time to complete their due diligence.


It is not your duty to attempt to negotiate on behalf of the city. Under the City Charter, that power belongs to the mayor. It is your duty to vote 'No' on a motion to approve the product of the negotiations to date if you are forced to vote on these proposed agreements before you and your colleagues have had adequate time and resources to determine (a) the impact upon the citizen’s whose earnings and savings will ultimately pay most of the city’s share of the cost of these projects, (b) the risk these projects will not yield the city a sufficient payback to cover the debt these agreements would require it to immediately incur, (c) whether your constituents will be able to afford to live in our city while subsidizing the Rays and, in addition, having to pay $100 million annually to fund capital improvements to the city’s water, sewer and stormwater systems, (d) whether the Historic Gas Plant District Development Agreement price and terms are reasonable, and, (e) the feasibility of alternative solutions that might better meet the needs of all parties while keeping the Rays in the Tampa Bay area.


At this point City Council is being subjected to what looks like a manufactured crisis. You have been told that unless Council approves these proposed agreements in time for the New Stadium to be ready for the 2028 baseball season our city will lose the Rays. Tropicana Field can well accommodate the Rays and its fans for one more year. This extension of the Use Agreement for another year would, hopefully, allow Council the many working days that are required to perform their due diligence regarding the Rays/Hines proposed agreements.


City Council Members' authority and recommendation to seek outside assistance.


We have previously pointed out the provision in section 3.06 of the City Charter which grants Council the power to appoint, without the consent of the Mayor, a Special Assistant City Attorney to City Council to serve in an advisory capacity. The mayor has a reciprocal right and may have exercised it for the preparation of the proposed New Stadium and Historic Gas Plant District agreements. We respectfully suggest you would be neglecting your duty to your constituents if you fail to seek this assistance.


City Council Members obligation to act responsibly.


As we all now know, on December 20, 2023, a 0.77 acre parcel of land at 155 17th Street South, one block west of Tropicana Field, sold for $9.05 million ($11.75 million per acre). A plan to construct a $115 million mixed use tower was announced. Also, recently sold was the 1100 block of Central Avenue, for $14.75 million ($24million per acre). At the October 2023 COW the city disclosed that (a) it had an appraisal of the 61 acres which valued it as is, without infrastructure, of $279.4 million ($4.6 million per acre), and (b) that it had agreed to borrow $90 million and use that money to provide infrastructure for the 61 acres. This commitment to add $90 million of infrastructure would increase the appraised value of the 61 acres to $369.4 million ($6.04 million per acre). However, for reasons described as “pulling levers” the Rays/Hines deal price for the city’s 61 acres now stands at $105 million ($1.7 million per acre). Based on these facts, one could reasonably conclude that any city official who causes or permits a sale of that 61acres for $105 million has likely neglected the fiduciary duty owed the citizens who elected him or her.


City Council Members obligation to understand the city's greatest priorities.


On November 15, 2021, Bay News 9 reported that “Rick Kriseman says St. Pete will need to spend $3 billion over the next 20 years on water infrastructure.” The city’s FY 2024 Adopted budget shows that in Fiscal Years 2024-2028 the city will transfer from its Water Resources Operating Fund, into which customer utility charges are collected, a total of $266 million to its Water Resources Capital Projects Fund. During those same years, the city will borrow $282 million for that same fund. Similarly, in the FY 2024-2028 period, the Stormwater Drainage Capital Projects Fund will receive $54 million from the city’s general capital improvement fund and borrow an additional $61 million. How much of this $3 billion rebuild of our city’s utility infrastructure has been completed? What will the the level of annual capital expenditures for these essential projects be required over the next three decades? Can Council make an informed judgment regarding the Rays/Hines deals without this information?


 

As Council Member Gina Driscoll pointed out this is a complex project and "...the more eyes that are on this... who are highly qualified - the better off we're going to be when it gets to us."


Council Member Driscoll - you are right - more eyes need to be on it. But as Council Members, you need your own independent review too, so that you have all of the facts. As the taxpayers' fiduciaries, you need your own eyes on it and the eyes of independent subject matter experts that report to you, so you know the deal, and the risks.


Slow down!


*Article Referenced: Gas Plant Attorney Funding Allotment Nears $1 Million, St. Pete Catalyst, March 25, 2024



Rays Hines Legal Document Review for Stadium Deal
Rays Hines Legal Document Review for Stadium Deal


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