Pensacola rejected an application for an estimated $58 million tax rebate for the proposed Reverb by Hard Rock Hotel and Rhythm Lofts apartments at Community Maritime Park.
Pensacola Community Redevelopment Agency Administrator Victoria D’Angelo sent a letter to the developers on April 16 stating that the city determined the 345-page application was “incomplete and cannot be processed further in its current form.”
“While the project generally aligns with the CRA’s policy objectives, the application contains fundamental deficiencies and unresolved technical issues that prevent a reliable evaluation,” D’Angelo wrote.
The letter says the developers can reapply, but any revised application must address six issues found in the application under the CRA’s tax rebate policy after a review by real estate consultant Lambert Advisory.
Pensacola Mayor D.C. Reeves, who came out earlier this month as opposing the tax rebate for the project, said this decision was made by CRA staff after a review of the application.
“There’s a distinct difference between the mayor’s opinion, being that it’s something that he can’t support, and the CRA formal letter saying that it’s invalid,” Reeves said. “The difference is because the actual request can’t be analyzed, because it was requesting more dollars than we’re allowed to give.”
Inspired Communities of Florida, also known as The Dawson Company, and Corporate Contractors Inc. (CCI) have applied for a 20-year tax rebate that would have the city’s Community Redevelopment Agency rebate approximately $2.9 million a year for 20 years once the project is complete.
Without the rebate, the developers say in the application, only a mid-rise single-use hotel building can be built at the site and would require a redesign just months before construction is set to begin.
“If we don’t get the tax abatement, we’ll basically have to go back to the drawing board and try to figure out what our plan B is right now,” Dawson Company President and Chief Operating Officer Tamara Bowens told the News Journal earlier this month while the application was still pending. “But we’re really hoping that the tax abatement does happen, because we really believe it’s a win-win for everyone, for us, for the city of Pensacola, as well as the citizens of Pensacola.”
‘Highly questionable’ rent projections
While the application was asking for 100% of the property taxes to be rebated, the developers argued that it was equivalent to 70%, as there were 49 condo units that would be sold to private owners, which would generate $1.74 million in property taxes.
Lambert Advisory memo to the CRA says that they would need clarification from the developers as the application, as it stands, was “highly questionable.”
The consultant memo points out that the tax estimates for the 49 condo units would require them to sell at more than $1,700 a square foot and points out that the market study included in the application shows that sale prices in the market rarely go higher than $800 per square foot.
The memo says that the revenue estimates would require the apartment rentals to be rented at a monthly rate of $3,900 per month, and while they may be projecting future rent increases, it is still nearly twice as high as the newest Class A rental developments in the downtown area, which are priced at $2,200 per month.
“Even if the application’s stated multifamily rental income was taken at face-value, the bigger question is – how does this account for the 99 affordable ‘middle-income’ units that would need to be rented at levels significantly lower,” the Lambert Advisory memo said.
Six concerns with Hard Rock tax rebate request
In her letter, D’Angelo listed the six concerns with the application after the review of the consultant’s memo:
Reeves said he will be meeting with the developers to discuss the status of the project.
This article originally appeared on Pensacola News Journal: Reverb Hard Rock tax rebate application rejected. Back to square one?
Reporting by Jim Little, Pensacola News Journal / Pensacola News Journal
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