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For seven years, the city of Lakeland has for been looking for a builder to purchase the 1.5-acre, city-owned Oak Street parking lot downtown and replace it with a multi-use development. And now it has a deal with a company that wants to build a seven-story apartment complex with a 424-space parking garage.
The Lakeland City Commission Monday approved a 21-page development agreement with Tampa-based ONICX Group to build at least 200 apartments, 2,000 square feet of street-level retail, and a multi-story parking garage. The vote was 6-1, with Commissioner Bill Read voting against it.
But after months of negotiations, now time is of the essence. The whole deal could fall apart if, or when, the U.S. Federal Reserve raises interest rates and puts financing for the $53.6 million project out of reach for Onicx.
Under the pact, Onicx will purchase the property for $1.836 million and the city’s Community Redevelopment Agency (CRA) will contribute up to $1.1 million for the construction of the multi-story parking garage.
The agreement includes several stipulations that allow the developer and the city to opt out at different junctures of the project.
Onicx has a 90-day “inspection period” to determine the “suitability of the property for their project.”
If the company determines the project is not feasible as now planned, it can “terminate the agreement for any reason prior to the expiration of the inspection period and receive a refund of their $25,000 deposit,” the agreement states. Onicx can seek two 30-day extensions of the inspection period.
Under the pact, Onicx must close on the property’s purchase within one year of signing the agreement. It can seek 30-day extensions, but they will cost the company $10,000 each.
Other stipulations include a $736,000 cap on how much the city will waive in fees related to site plan reviews, building permits, inspections, impact fees and off-site utility improvements.
“If these costs are anticipated to exceed this amount, Onicx will provide the city notice of the additional costs and the city will notify Onicx of whether or not it agrees to pay, waive or otherwise satisfy the additional costs,” the agreement reads. “If the city elects not to assume the additional costs, Onicx may elect to either pay the additional costs and move forward with the project or terminate the agreement.”
There is also a 36-month time clock on completing the project once it breaks ground.
The conditions relate to extensive negotiations with Onicx since it won the bid in September with a $40 million,153-unit apartment complex proposal that has been dramatically altered since October at the commission’s prodding, adding expense and complications.
“We and everybody involved in the process need to get it off the ground,” Onicx Group Vice President Arjun Choudhary told commissioners. “Interest rates are going up” and the company is scrambling to secure financing before that happens.
The project has “already been shopped around,” he said. Onicx expects to have “answers” regarding financing within 30 to 45 days.
Choudhary said the Oak Street project is a lynchpin project for Onicx, “the first of three I am trying to do” to be introduced in the next six months that “will catalyze” the downtown real estate market “for success in the future; they will be the first projects of their kind” in Lakeland.
But first, the Oak Street project needs to get underway, Choudhary, commissioners and city planners agreed.
The Lakeland CRA advisory board on April 8 unanimously approved Onicx Group’s proposed 40-page Oak Street development plan for the city block-sized lot on the north side of Oak Street between North Kentucky and North Tennessee avenues.
City Attorney Parker Davis told the commission that the plan calls for Onicx to build the seven-story apartment building and embedded parking garage, which the CRA will contribute $1.1 million to construct.
Onyx originally submitted a proposal for a six-story, 153-unit apartment building on the site. The initial pact called for 10% of the housing units to be set aside for affordable housing for households that earn 80% or less of Polk County’s $47,000 average median income (AMI).
At 153 apartments, that affordable housing “unit count” was 15. Under the proposed new agreement, the affordable housing unit count will remain at 15 with Onicx committed to building “at least” 200 units.
“We understand affordable housing is a tremendous community need,” Lakeland CRA Manager and Assistant Community Development Director Alis Drumgo said, noting that ideally the city shoots for 20% affordable housing in new projects, but, in this case, the commission’s request to add more units and build a parking garage changed the scenario for Onicx.
Because of that, he said, the project’s costs increased from an initial estimate of $36 million to now more than $50 million.
“What we didn’t want to do is penalize the developer for meeting the request of the commission,” Drumgo said, so that the affordable housing requirement will stay 15 units.
Even then, “roughly calculating, (Onicx) is “leaving about $2 million on the table” over the 15 years the 15 units must be qualified as affordable housing.
The proposed deal includes 10 years of tax increment financing (TIF) that abates 80 percent of property taxes over the first five years, 60 percent property tax abatement for years six through 10, and waives up to $736,000 in impact fee permit credits.
The CRA has pondered developing the Oak Street parcel since 2015. In 2018, a private developer expressed interest in developing the site as a “dense, urban multi-family residential project with the potential of incorporating some mixed-use elements.”
The CRA began soliciting bids in March 2019 for the project. A selection committee chose Tampa-based Catalyst Asset Management Inc.’s plan over one presented by Lakeland’s Broadway Real Estate Services.
Catalyst’s 2019 proposal called for a six-story structure with 173 apartments, 38 of which would be set aside for affordable housing. Their proposal also included 10,000 square feet for retail and a four-story parking garage. But after a year of negotiations, Catalyst withdrew from the project in September 2020, citing COVID impacts and “investor trepidation.”
The CRA solicited a new round of bids in July 2021. The selection committee unanimously chose Onicx Group’s submitted plan. At its Oct. 18 meeting, the city commission accepted and agreed to begin negotiations with a deadline to seal the deal within six months — no later than April.
An October development document submitted by Onicx listed prospective monthly rentals for market-rate apartments as $1,196 for a studio, $1,350 for a one-bedroom, $1,932 for a two-bedroom, and $2,100 for a two-bedroom.
Comparing the rates to downtown competitors Mirrorton, eBay, and The Gardens, the document notes, “Given 200 Oak Street’s superior location and design type compared to the current market supply, we chose to set rents slightly above the competitive set.”
Onicx Group has completed more than $500 million in real estate projects over the last five years, with more than 900 multifamily units in mixed-use projects currently under development. Among area projects are the Marriott Residence Inn Downtown Winter Haven.
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