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Sunday November 23rd 2014

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Commercial Developer offers opinion on YMCA and CMP

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