SUBJECT/RECOMMENDATION:
Title
Approve amended purchase and sale agreement with Gotham Property Acquisitions, LLC, and The DeNunzio Group, LLC and authorize the appropriate officials to execute same.
Body
SUMMARY:
In November 2022, Clearwater voters approved the sale and redevelopment of two downtown properties to Gotham and DeNunzio (Buyers). In the first quarter of 2023, the Buyers advised that as a result of changing market conditions, significant funding gaps had emerged in the project. In April 2023, the Buyers delivered a presentation to the City Council, at which the Buyers advised that the funding gap was $80 million. During that presentation, the Buyers proposed a combination of changes to the project that would fill the gap and allow the project to proceed.
In response, the Council requested a comprehensive study to verify the extent of the funding gap, and analyze the reasons behind it. City staff identified HR&A Advisors as the best firm to conduct that analysis because HR&A has prior experience evaluating economic conditions in downtown Clearwater, and HR&A was highly recommended by Assistant City Manager Michael Delk. In October 2023, the City received HR&A’s final report. The final report confirmed a funding gap between $76 million -$80 million. HR&A’s report was then cross-referenced with two independent commercial appraisals obtained by the City in November 2023. With the benefit of extensive and recent data, the City Attorney consulted with each Councilmember via 1 on 1 discussion, along with senior city staff, to gauge the level of support for making the changes necessary to allow the project to move forward. Through a combination of those discussions, the City Attorney recommends approval of the revised purchase and sale agreement (PSA). The key changes are summarized in the term sheet attached to this agenda item.
If approved by Council, an amended development agreement (DA) will be presented to the Community Development Board (CDB) for their consideration. Afterward, an amended DA will be presented to the City Council for final approval, likely in May 2024. The proposed amendments to the DA will be consistent with the PSA.