From the June 29th Friends & Neighbors Newsletter. To receive your free subscription send your email to thomasfcampenni@gmail.com
The City will purchase the “Wells Fargo” building on East Ocean across from Memorial Park for $7 million. The City will give a $200,000 deposit that is refundable if the seller cannot provide 18,000 square feet on the first and second floor by June of 2021. The seller has until July 2020 to fulfill this requirement and closing will happen within 90 days of that fulfillment date. With the vacant 18,000 square feet, the City will then have a place to move City Hall.
Is it a good deal? It depends. The City is certainly paying top price and the price is based on a cap rate that considers the rents being paid currently. If 18,000 square feet are now vacant or occupied by the City, then that amount of income is no longer available to pay for debt service. If the market tanks due to a recession (overdue at this point), then the price is too high. The City has a handshake agreement with someone to sell the strip center for townhomes. If there is a recession that will probably go away.
Commissioners Meier and Matheson stated that they were committed to moving City Hall to that building. There was no ambiguity or hesitation. Commissioner Leighton must agree since it was her motion to go ahead with the purchase that was seconded by Meier. Mayor Bruner was silent on the question though she voted yes. Commissioner Clarke hemmed and hawed and said she wasn’t there for the earlier discussions. Consistency is not her forte. She was recorded as the only no vote.
The idea of a New City Hall is the Moby Dick of Stuart and Commissioners, City Managers, and Main Street become the obsessive Captain Ahab in going through this exercise every few years. I don’t quite understand why. Some believe that a new hotel will be built on the current site. Others that the land will be part of the park. There is a possibility that if this moving miracle were to happen, a few parcels could be carved out with a new street between the expanded park and the tracks. Development would occur there.
It will be a momentous battle because there are many residents who will be in opposition. Will any benefit be worth the political fallout? This is the same Commission that backed out of the ballfields being redeveloped and, in that case, most of the people were non-residents. I believe there still needs to be a referendum that is passed by the voters.
If I were still on the Commission, I would go ahead with buying the building. While the price may be higher than what could have been negotiated, Stuart can pay more since the investment horizon is longer than the typical buyer. I would then want to see it financed in the most cost-effective way be it bonds, mortgage, or another investment vehicle. The building should continue to be fully leased to tenants until the financing is paid off. At that point a decision can be made whether to continue it as a source of revenue or whether City Hall should be relocated.
The Wells Fargo building was built in 1972, which makes it only a few years younger than the current City Hall. Does it make sense to move from one obsolete building to a rapidly approaching other? Both will require renovation in the near future. What is painfully obvious to anyone with commercial real estate experience is the lack of critical thinking in this area. There needs to be a more thoughtful and businesslike approach to the City and its real estate investments and properties. I believe the City is leaping forward without having analyzed the investment sufficiently.