Vince Whibbs Sr. Community Maritime Park - Email to CMPA Board dated 8/7/2008

CMPA Board Member,

I had time examine more closely a proposal submitted by one of the Master Developer Candidates and I wanted to share my concerns.

The proposal I am referring to states "The Master Developer shall sub-lease from the CMPA those parcels utilized for Private Improvements at a lease rate equal to 6% per year of the appraised value of the unimproved property as of June 30, 2008...payable beginning at building Certificate of Occupancy."

I believe it is important to arrive at an educated guess of the income that would be lost as a result of agreeing to this proposal before an offer from a Master Developer is accepted.

I would highly recommend that the Board obtain the opinion of a Real Estate Appraiser, but since you may be voting tomorrow and I am not aware of any appraisals of the private development parcels, I will make an attempt.

Assuming there are no environmental concerns on these properties such as contamination or wetlands, I believe it is reasonable to assume that the average market value of these private development parcels was approximately $30 per square foot on June 30, 2008, although the appraisal may come in much lower as I do not know of any recent comparable sales that would justify this value. The highest price paid for land downtown that I am aware of is the property at the corner of Palafox and Main Streets, where The Floridian condos were going to be developed, which sold for approximately $50 per square foot near the peak of this market in May of 2005. Land for the most of the other proposed condominium towers sold for $19-$26 per square foot around that same time.

I believe that once the public portions of the park are completed, residential condominium, office or hotel development will be viable on the private development parcels. For a pad site such as this with roads and infrastructure in place, I believe it is reasonable to assume the average value of these private development parcels will be at least $75 per square foot. This estimated value is considerably less than what has been paid for beach condominium development land in the area.

I could not find parcel sizes in the CMP Design Criteria, but I arrived at the following estimates (Parcel descriptions taken from the CMP Design Criteria, Page B4):

Parcel A - 54,000 SF
Parcel B - 126,000 SF
Parcel C - 40,800 SF
Parcel D - 22,100 SF
Parcel E - 28,500 SF
Parcel G - Not included because the parcel size of the private development portion could not be determined.

The total, not including the property on Parcel G is approximately 271,400 square feet of private development area or 6.23 acres.

If we assume the June 30, 2008 appraised value of these properties averaged $30 per square foot, then the total value would be $8,142,000. At a land lease rate of 6% per year, the annual payment would be $488,520.

If you assume the average value of these properties after completion of the public development will be $75 per square foot, then the total value would be $20,355,000. At a land lease rate of 6% per year, the annual payment would be $1,221,300.

If you agree with my assumptions, then allowing a Master Developer to lease the private development parcels for the June 30, 2008 value will result in a reduction of $732,780 ($1,221,300- 488,520) in land lease payments per year to the City. If you multiply that by the sixty year term, you arrive at a $43,966,800 shortfall. If you assume an interest rate of 6%, the present value of this $43,966,800 paid over 60 years is $11,842,771.

So, in my opinion, agreeing to lease the private development parcels to a Master Developer at the June 30, 2008 value is the equivalent of handing them about $12,000,000 today.

I hope you agree that this request is very unreasonable.

Please do not hesitate to contact me if you have any questions or comments. I appreciate your time and consideration.

Sincerely,

Fred Gunther