Vision. Control. Value.
This is the fourth article in a series explaining why Vision, Control, and Value are the three principles that should guide the redevelopment of the Historic Gas Plant District—and why those principles can only be achieved if the City leads the planning process rather than turning the entire site over to a single developer.
Earlier articles on Vision – Should I-175 be part of the conversation and Who should decide the parks – point out that the City should first decide what it wants: the future of I-175, the amount and location of parks and public space, and how streets reconnect the district to the surrounding city. These decisions should come before parcels are released.
The article on Control argued that because redevelopment will unfold over decades amid unknown future conditions, the City should retain overall direction instead of placing the future of all 86 acres in one development team’s hands. Too much risk otherwise.
Now let’s talk about Value.
Value
St. Petersburg owns the 86-acre Historic Gas Plant property in the heart of the city—the most valuable public property it will ever own. The City should ensure the property is developed in a way that the value is retained by the City. Why would it be any other way?
The City recently received two independent appraisals placing the property’s value at approximately $390 million. Under a traditional land sale, the buyer—not the City—would pay for the streets, parks, and other infrastructure.
But Mayor Ken Welch has selected a proposal for negotiations that would pay the City just $275 million, and the City would have to pay for those same streets and parks—estimated at close to $300 million.
The numbers are astonishing.
If the City sold the property today at its appraised value:
• City receives approximately $390 million
• Buyer pays for infrastructure.
Under the proposal the Mayor is negotiating:
• City receives $275 million
• City pays approximately $300 million for infrastructure.
Result:
Appraised sale: +$390 million
Negotiated proposal: –$25 million
Difference: approximately $415 million
And that is only the starting point.
It does not include the additional value that could be created over the next twenty or thirty years as the Historic Gas Plant District is developed.
And that future value could exceed $1 billion.
That is where the real opportunity—and the even greater risk of giving value away—lies.
What Could the Historic Gas Plant Be Worth?
Imagine the Historic Gas Plant District after a strong master plan lays out the streets and parks. Restaurants and businesses open, and thousands of people live and work there.
Developers from across the country will be trying to buy parcels.
Why? Because by then the difficult work will already have been done. The City will have created the streets, parks, infrastructure, and public spaces that make the property valuable.
That is exactly why experienced developers want this opportunity. Any major development company would.
That is the core of the third principle:
Value.
The City should not sell tomorrow’s value at less than today’s price.
What’s at Stake
Not all 86 acres will be developable. Streets, parks, public spaces, and infrastructure will take a share.
Suppose roughly 60 acres ultimately become available for private development.
What could those parcels eventually be worth?
We already have some indication of what valuable downtown St. Petersburg land can command today.
As I wrote recently, two downtown St. Petersburg properties totaling just 1.8 acres sold for $32.5 million—approximately $18 million per acre.
[Read: Why Would St. Petersburg Sell Before Creating the Value?]
That is today’s market—not a projection twenty years into the future.
It demonstrates what land can be worth when it is part of a successful urban neighborhood—after streets, utilities, parks, public spaces, businesses, housing, and years of public and private investment have created a place where people want to live, work, and invest.
At $18 million per acre, 60 acres would be worth approximately $1.08 billion. Assuming $300 million for infrastructure, the City could net more than $700 million.
Now compare that to the proposal Mayor Welch is negotiating: the buyer pays $275 million, the City pays approximately $300 million for infrastructure, and the City’s net is roughly negative $25 million.
The Mayor’s approach does exactly what this article warns against—it sells tomorrow’s value before the City has created it.
Where is Mayor Welch Coming From?
Should the City lead the planning process, decide the layout, keep control, avoid unnecessary risk, and potentially earn more than $700 million—or accept a proposal that leaves taxpayers about $25 million in the hole?
My answer: “Are you kidding me?”
Time works for the public when the public still owns the land.
If nearby downtown land is already selling for approximately $18 million per acre today, what might well-planned development sites in the Historic Gas Plant District be worth ten, twenty, or thirty years from now?
Why Is the Mayor Doing This?
Mayor Welch’s approach now under negotiation is hard to understand.
The City is considering allowing one development team to create the plan for one of the most important public properties in its history.
It is considering giving that team control over how 86 acres are developed over decades.
And it could be giving up hundreds of millions of dollars in current value—along with much of the future appreciation that could be created over the next twenty or thirty years.
What is St. Petersburg getting in return for giving up the Vision, the Control, and potentially so much of the Value?
No public explanation has been offered that justifies giving up the Vision, the Control, and potentially hundreds of millions of dollars in Value.
The reason is simple: no explanation is possible.
Cities all over the U.S. lead the planning process and retain the value they create.
Vision Creates Value. Control Protects It.
These principles are connected.
- A clear public vision creates value.
- Retained control protects that vision and allows the City to adapt it over time.
- Keeping ownership until individual parcels are ready for development allows the public to capture more of the value that vision creates.
The City does not become a developer. It becomes the planner, the steward of the public’s land, and the guardian of the public’s long-term interests. As smart cities do nationwide, the City’s planning department, working with national planning professionals, a well-vetted advisory council, and community input, lays out the parks and the streets.
Private developers then compete to buy individual parcels within a plan the City creates and controls.
The Real Questions – And the Clear Answers
The Historic Gas Plant District is not merely 86 acres to dispose of.
It is a generational asset—and perhaps the greatest financial opportunity St. Petersburg will see in our lifetimes.
The City already owns the land.
The citizens already own the opportunity.
Who should benefit from the value created over the next thirty years?
The people who own it today.
The City should set the vision.
The City should retain control.
And the citizens of St. Petersburg—not a single developer—should benefit from the value those decisions create.
Related Reading
- Who Should Lead the Redevelopment?
- Vision: Should I-175 Be Part of the Vision?
- Vision: Who Should Decide What Kind of Park St. Petersburg Builds?
- Control: What Happens When the Plan Meets Reality?
- The $32.5 Million Land Sale: What It Tells Us About the Value of Downtown Land
- The Best Cities Lead
If you believe St. Petersburg should create the vision, retain control, and preserve the value of this once-in-a-generation public asset, please share this article.
