City Manager Al Coby is recommending that the Pensacola City Council not approve the master developer agreement with Land Capital Group (now called Maritime Park Development Partners) for the construction of the Community Maritime Park.
“The CMPA and Maritime Park Development Partners can negotiate an equitable agreement; however, the Draft Agreement as currently crafted, in the opinion of this Office, is not in the best financial interest of the City or Community Redevelopment Agency.”
Coby gives several reasons in the memo that is being distributed to the City Council today. Here are a few of the objections:
Under the Draft Agreement, should MDP assume responsibilities as Developer,General Contractor, and Manager of the Public Improvements, it brings into question the future role of the CMPA.
The Draft Agreement deviates from the Master Developer RFQ as a result of MDP’s proposal to assume responsibility for construction of the Site Preparation Project and Public Improvements and management of the Public Improvements.
The development fee is not but should be specifically established in the Agreement.
The development fee is front-loaded but as a matter of policy the City traditionally pays in arrears for services rendered. While MDP has made a considerable expenditure in an effort to be chosen as the master developer, the proposal to recoup expenses upfront should be restructured more in line with the City’s usual procedure of paying periodically for services as they are delivered.
Allowing MDP to function as both the Developer and General Contractor will require CMPA to employ an additional layer of contract management to assure fulfillment of their fiduciary responsibility in the expenditure of public funds.
Should MDP function as the General Contractor, the percentage allowance for overhead, profit, general conditions, and contingency should be specified in the Agreement. Further, the ultimate disposition of any contingencies not applied directly to the project should be established.
The original concept contemplated the potential for private investment in the project; however, under the Draft Agreement, the option for the Developer to advance funds to the project in the form of a loan ultimately increases the cost of the project to the City. The decision should be made in advance and incorporated into the Agreement the terms under which the CMPA and City are willing to accept an advance and thereby increase the cost of the project or whether the preference would be to adjust the project scope to correspond to the original funding
commitment ($38 million).