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Lakeland is preparing to sell two downtown properties to Publix Super Markets for $10 each. City Attorney Palmer Davis told city commissioners on Friday that the $10 sale price stems from a deal negotiated 30 years ago, not a new incentive.
The two buildings are part of the information technology hub Publix has been building downtown, which is expected to create at least 200 new high-skill, high-wage jobs in Lakeland over the next four years.
The City Commission is expected to approve the transactions on Monday. The structures will be sold “as is.” In addition to $10 for each property, Publix will cover all closing costs.
The deal
The transaction includes the former JCPenney building at 321 S. Kentucky Ave., which Publix leases from the Community Redevelopment Agency and the Orange Street parking garage and adjacent 61-space surface lot, which Publix leases from the city.
It also includes the pedestrian bridges from the garage to the JCPenney building and the former Maas Brothers department store at 333 E. Lemon St., which Publix already owns.
Financial win for the city
Mayor Bill Mutz noted that the city has not had any costs related to the JCPenney building. “The CRA was given that building. They did not pay for it, so the city does not have a cost basis,” Mutz said.
“What this does for our downtown is tremendous,” Mutz said.
“We appreciate and we love the relationship with Publix,” he continued. “The improvements that are going to happen downtown, the employees that are going to be added, are so valuable.”
In addition, selling the Orange Street garage will actually save taxpayers money. The city currently loses about $59,000 a year operating the garage.
Parking Garage Costs Breakdown
The city gets about $167,000 a year in parking revenue. “But our routine annual maintenance and repair costs about $93,000, and then every three years, we perform an overhaul of the structure, structural coating and sealing of that garage, which costs approximately $400,000,” he said.
“So when you draw that out, the city is running a deficit … of approximately $59,000 per year,” Davis continued. “That’s coming out of our city transportation fund, which we obviously have some good uses for.”
“Over time, Publix has become the exclusive lessee of all 733 parking spaces in that garage, as well as 61 surface parking spaces immediately east on South Massachusetts Avenue,” Davis said.
Long-standing lease
Publix has leased the 119,331 square-foot JCPenney building since 1995, using it for offices and training. Publix has paid all of the real estate taxes on the building. It has also handled all of the maintenance and repairs.
“So they’ve essentially been treating it as owned since 1995,” Davis said.
The original lease included a clause giving the company the right to purchase the property for $10 after giving the city 60 days written notice.
“You’ll all recall back in that time period, we were begging people to come downtown, and Publix did come downtown – moved a lot of employees downtown. That was probably part of the deal,” Davis said during the briefing.
The grocery chain revealed in documents last year that it planned to spend $10 million on equipment and $61.1 million on structural improvements to the two properties.
“Publix has been engaging in extensive capital improvements in the downtown area – tens of millions of dollars in investments,” Davis said. “They are now ready to own the assets that they’ve been improving.”
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Wow, another gift for Publix and another example of the poor business judgment of our city commission (past and present). Granting a lease with an open ended option to purchase the property and structures for $10 is poor business. Essentially Publix locked up prime real estate in center city, now worth several millions of dollars for over 30 years and prevented other businesses from establishing a presence in Lakeland and deprived the citiizens of reaping the property appreciation benefit.
This deal follows the history of other questionable deals such as, the sale of Lakeland Regional hospital; the premature shut down of the MacIntosh coal fired unit and its quick decommisioning (to enable a developer to move forward developing the land along Route 92 Memorial); the special airport deal granted to Amazon without any consideration for the impacted home owners and many other similar poorly conceived development faciltating deals.
To many gifts are being granted in an effort to turn Lakeland into a mini Tampa or Orlando. Hopefully the new commission will end the “growth facilitation model” and curtail growth until the water, sewer and other infrastructure are adequate for the existing population.
The tax payors of Lakeland deserve better.