City to Buy East Gateway Crime Magnet
By Carl Wagenfohr
CLEARWATER - What does a city do about a property that was the subject of 421 police actions in the last year, and a center of drug and prostitution activity that has caused crime to spill over into adjacent residential neighborhoods?
The Clearwater City Council's answer was if the price is right, buy it.
Sitting as Clearwater's Community Redevelopment Agency on Tuesday, the Council agreed to begin the process of purchasing a handful of parcels owned by MNEK, Inc., in downtown's East Gateway District. Those properties currently contain two duplexes, one single family home, the Viva Mexico restaurant, the Royal Palm Motel, and the Economy Inn, which was described in a city staff memo as "commanding more police service than any other East Gateway property."
"We looked at purchasing this property several years ago," said Mayor Frank Hibbard, "but the price was $2.5 to $3-million."
The asking price has since dropped, reflecting the area's sagging real estate market, and the city was able to negotiate a purchase agreement for $1.675-million, a price Assistant City Manager Rod Irwin called "defendable."
While that figure represents a 37-percent premium over the Pinellas County Property Appraiser's published market value of $1.221-million for the set of six parcels, two independent appraisals valued the land at $1.605 and $1.45-million according to Irwin. Those appraisals evaluated the properties as a vacant redevelopment parcel, adding to their value Irwin said.
In addition to eliminating a center of crime and reducing the spread of criminal activity into adjacent neighborhoods, the purchase is expected to remove a barrier to East Gateway redevelopment and reduce the cost of policing the area.
Tuesday's City Council discussion exposed just one issue with the purchase; the CRA does not have enough money to complete the transaction.
Because of declining property values, the CRA's 2010/11 Tax Increment Financing (TIF) income will shrink by about $600,000. Also absent in the CRA's 2010/11 budget is $588-thousand of interest that was counted as income last year; the CRA's 2010/11 income will be $2.084-million, a drop of nearly $1.3-million from last year.
To finance the purchase of the MNEK parcels, the CRA will be taking a $1.9-million loan from the city's Central insurance fund. The loan will be repaid over 8 years, with the first 2 years being interest-only. Because of financial commitments to the downtown boat slips and the Capitol Theater, the CRA will not have the cash to make principal payments until 2013.
The city plans to demolish the buildings on the properties at a cost of about $200,000, and hold the land and make it available for redevelopment opportunities sometime in the future.
The City Council unanimously approved the MNEK purchase, with Councilmember Paul Gibson casting his vote "most reluctantly." He was concerned with the prospect of buying and holding problem properties for uncertain periods of time; "There's a limit to how many more of these I'll be supporting, and the limit may be zero," Gibson said.
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