Commercial Developer offers opinion on YMCA and CMP

March 24, 2013

From Joseph Buehler, owner of J.G. Buehler & Company, Inc., and an unsuccessful candidate for Pensacola City Council in 2008:

I attended the CMPA meeting yesterday to support the advancement of the City Council’s directive for that board to work out the details of a sublease with the YMCA on parcel 8 at the Community Maritime Park. The result was not only disappointing, but a disaster for this project, and for future development at the Community Maritime Park. As someone who has been in the commercial real estate business for some 38 years, I can affirm that neither I nor any responsible developer I’ve ever known would tolerate such a convoluted process involving individuals who may be well intentioned but whose experience in the commercial real estate development process is nonexistent. Now a perfectly viable project for the Maritime Park is on life support.

There will always be those who don’t agree with any decision made by the City Council…that is the burden of leadership. The fact that appears to be overlooked in this deal is this site 8 was originally approved for a Maritime Museum, which UWF officials affirmed last night would cost $30 million to build and $4 million annually to operate. In the original deal the Museum was to pay $1 per year in rent and no real estate taxes. The YMCA deal anticipates paying rent of some $120,000 per year plus another $12,000+ toward Common Area Expenses, with escalations every 5 years. The YMCA also has something the Museum did not have, and that is operational funds to support this new facility.

Reasoning deductively, the highest and best use of site 8 is a world class YMCA. Highest and best use is an appraisal term defined as the reasonably probable and legal use of property, that is physically possible, appropriately supported, and financially feasible, and that results in the highest value. The YMCA is proposing to pay rent based on an appraised value of $27 per square foot, something unheard of in today’s soft real estate market. Hotel developers have indicated no interest in this site. There are currently two office projects announced for downtown—the Studer building in the Maritime Park and the First Navy Bank building at the corner of Palafox & Main Street. Preliminary pIans for both projects are said to include office space for lease. Given historic absorption rates for downtown office space, this will preclude another office development downtown for the foreseeable future. Retail development is not feasible as it tends to follow, not lead, population growth.

Are we prepared to absorb losses for the foreseeable future as we wait for some mystical better deal for the Maritime Park? Are we not concerned about recent reports of the poor quality of health in our community and lack of job growth, both issues that this project would impact positively? I’ve always been taught that leadership is figuring out how we can, not why we can’t. Please give your thoughtful, timely consideration to rescuing this deal—as someone once said “Failure is not an option”.

Respectfully submitted,

Joseph G Buehler

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  • CJ Lewis March 25, 2013 at 9:05 am

    At the bottom end of Joe Buehler’s decision-making process is his conclusion, “Reasoning deductively, the highest and best use of site 8 is a world class YMCA.” Deductive reasoning is “top-down” logic as contrasted with inductive reasoning using “bottom-up” logic. Buehler’s premises are not clearly articulated but we can guess at them.

    Buehler’s first premise may be that any parcel of land once intended for a public facility can never be used for a non-public facility. At differing points, the Community Maritime Park economic development project was to include also a Maritime Services Building, a Conference/Executive Education Center, a Pensacola Sports Hall of Fame and/or a Multi-Cultural Center. Must even more parcels be set aside for a public facility? Although the Master Development and Master Lease Agreements were never overhauled as the project incrementally fell apart, the City Council never once displaying an ounce of fiscal caution, I can find nothing that requires Parcel 8 be used for a public facility. Further, a YMCA is not a public facility. It is a private facility very much like Pensacourt. Moreover, a YMCA does not appear to fall within the intended meaning of the project’s Hotel Project, Retail Project, Office Project or Residential Project. YMCA claims to be a Retail and/or Office Project are ridiculous.

    Buehler’s second premise may be that a Maritime Y belongs on Parcel 8 because the Maritime Museum was going to be placed on Parcel 8. That apple and orange comparison gives no weight to the Maritime Museum’s expected draw of 300,000 people a year. Further, there was no absolute guarantee that the Maritime Museum would be on Parcel 8. In a May 22, 2009 letter to the Pensacola City Council, UWF President Judy Bense expressed her concerns about a plan afoot to use Parcel 8 for what she describes as “private development and retail.” I wrote the UWF Foundation urging them to insist on Parcel 8. In her letter, Bense describes a plan to “activate” the west side of the museum with a Trader Jon’s restaurant concept, consistent with the intent described in the overall project’s Design Criteria Pattern Book, particularly page D-16. While the intent was to have restaurants and retail activities on Parcel 8 integrated with the Maritime Museum, UWF’s fundraising challenges and the mystery of how UWF was ever going to pay the $4-5 million a year for operations & maintenance made the Maritime Museum a very uncertain deal. Realistically, the CMPA could not hold Parcel 8 forever waiting for UWF.

    Buehler’s third premise may be that the CMPA should execute a ground sublease with the YMCA because no one else will want Parcel 8 described as “out in the back” by YMCA types rather than the higher-rent sounding “on the waterfront.” Buehler writes, “Hotel developers have indicated no interest in this site.” Prove it. In November 2010, the CMPA was close to two hotel deals as reported in the PNJ. Name names – which local hoteliers are willing to put their reputations on the line backing up Buehler’s claim on behalf of his YMCA? The City has now engaged the services of CBRE Group to look at the marketability of some City-owned properties to include the Community Maritime Park. As Councilman Charles Bare has urged, it would be premature and imprudent to rush into any lease until we get an independent – non-local – assessment of the potential of the eight ground parcels at the Community Maritime Park. Moving the Downtown Branch of the YMCA a mile to the south adds little to nothing to downtown and has little to no “net” economic impact. Further, the move would deprive the City, County and School Board of much needed tax revenues because the current YMCA Downtown Branch site is expected to remain off the tax rolls.

    Buehler’s views are typical of the naysayers who lack vision and may believe the original project vision was doomed to failure. I am more optimistic. I do believe the City made a mistake not requiring the Studers to build and operate the baseball stadium as a Private Improvement. In consideration, mindful that the City could not afford to build the Conference/Executive Education Center that the Studer Group reasonably expected to be able to use, I believe the City should have released Studer Group from its requirement to build what is now going to be known as Maritime Place on Parcel 2. With the money saved from the Studers building what is now Blue Wahoos Stadium, the City should have built a parking garage at the Community Maritime Park consistent with the original vision of it surrounded by retail shops and restaurants on the ground floor, offices on the second floor and residences on the upper floors. Admittedly, hindsight is 20/20 but my views now are the same as I expressed then to the City Council.

    I believe the Community Maritime Park can be a great success. It should be given the respect it deserves as a multi-generational project. What is built may be there in current or replacement form for hundreds of years. We have time to get it right. This is not the time to get cold feet abandoning the original vision approved by city voters. A great plan that takes ten years to fully implement will be a lot better than a mediocre plan put in place in fewer years in a hurried, helter-skelter manner. In my opinion, a hotel seems the best use of Parcel 8. I will reconsider my opinion if CBRE Group agrees with Buehler. Once one or more hotels, retail shops, restaurants and office and residential spaces are in place, I believe the area will be bustling with activity. People like Buehler who seem so eager to downgrade expectations may mostly be motivated to lower the perceived value of the property. While that might benefit his beloved YMCA, it is not in the best interest of the people of Pensacola. Further, taxpayers deserve to see a good return on their projected $83,000,000 investment.

  • Dale Parker March 24, 2013 at 4:29 pm

    First of all, I cannot think of anyone I have talked to in the General Public that wants the YMCA there. Second, in the ads that I have seen, the YMCA has a huge issue with the truth such as providing healthcare, etc. Third, no one has solved the parking issue in fact, Daniels comment was give us the lease and we will solve the parking. REALLY! Try that anywhere else and see what they say.

    Let’s be honest, the YMCA is a paid membership Gym. If a poor child from the Tanyard was to wander in there to swim he would be told to LEAVE! This is NOT a public playground and it is a HUGE waste of the most valuable piece of property in the City.

    There is NO problem with the process, the problem is with the players, Daniels, Collier Merrill, Messer and Mayor Hayward (I am being nice). When the original idea was proffered to the CMPA they had questions. This offended the Y supporters who with Collier decided on an End Around. Then in secret they crafted their OWN lease to give directly to the City Council. That is when all heck broke loose!

    BE HONEST NOW … that is what happened. They have NO ONE to blame but themselves for this HUGE mess. The YMCA has an additional burden in this mess because they REFUSE to answer questions and solve problems like parking and ability to pay. Charles Bare has asked several questions of them in which they refused him and he is on the Council!

    As for marketing, the CMPA has failed and they have failed under Collier Merrill’s leadership. They have done NOTHING to further market the park. In fact, they do not even have the plots surveyed!!!! Now, if you were serious about marketing the park they would AT LEAST have that done!

    Therefore, to claim we need the “Y” because no one else is interested is short of lying and most certainly bogus and ridiculous. How can you claim no one is interested and on the other hand not advertise or at minimum prepare for development.

    This brings me to the plan? What IS the plan for the park since the huge bait and switch took place. We had all these beautiful drawings of a 1910 fishing village. Where is that? What happened to that? Aside from Judy Bense throwing the citizens of Pensacola under the buss in her famous we have no money except for that which we bought a golf course, building a hotel, building a plaza, etc etc etc money… where is that development? Where is that plan.

    We paid MILLIONS of a design document, where is that? In the development documents we had documentation of what should go there, hotels, retail, offices, residential… where does a private gym fit in that?

    I would be willing to guess, that those controlling the park do not want competing elements in the park. They do not want a hotel (just watch the Y commercials and ads), they do not want a Grande Marlin type hotel establishment in that corner and their “Y” scheme will ensure that forever.

    Pensacola, wake up! As John Peacock puts it The “Important Area businessmen” are not giving a darn about YOU! They have managed to rack you up in 92 Million in debt service, 100’s of thousands in CRA expenses, 500,000 in outstanding debt, 270,000 in red ink and depending on who you listen to we will start next budget with 2 – 3.5 MILLION of a deficit!!!! It is the wild west with budgets downtown and no one is caring.

    The YMCA is a bad idea for the park. The CMPA knows this, at least most of them. So, if the players in this mess would follow the existing processes like real men and stop shopping for a receptive vote. This is like the Gun Control people adding another 2000 laws because someone broke one or many of the existing 20,000 gun laws!

    It is STUPID!!!

  • George Hawthorne March 24, 2013 at 11:09 am

    There it is. It seems as if that is another professional developer opinion that is consistent with my post in the Studer article. Get the Y back to the table!

  • L.Laird March 24, 2013 at 10:38 am

    “Reasoning deductively”. Sorry Mr. Buehler, but your excellent deduction does not play well in upsize down area of Florida. Deductive reasoning is way beyond the limited intellect of this area. Thank you for your insight that most of not all of the CMTP Board lacks totally….