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Chelsea Piers: Privately Financed Manhattan Piers Show Better Path for St. Petersburg Pier.

chelseapierThe taxpayers of St. Petersburg are about to be placed on the hook unnecessarily for a new pier with few to no functional amenities.  If the city leaders were willing to open their minds and show a tax-free path to the voters of St. Petersburg, much could be done.  An example of this is in Manhattan where, without a single tax dollar, “Chelsea Piers” built a $127 million pier complex under a 49 year lease.  The complex has created thousands of jobs, offers exciting sports and entertainment options on site and is owned by a company noted for its local charitable work in the community.  Yet, the city leaders cling to the debt-financed “lens” art project with a burger joint and some suspect aluminum panels enclosing steel subject to saltwater rusting.

The Chelsea Pier built on a 25 year vacated site of pier 59, 60 and 61 in Manhattan.  They host a Golf Club, Sports Center Health Club, Sky Rink, Field House (basketball and other courts), 300 New York (bowling), PIER SIXTY and THE LIGHTHOUSE (Event Centers),  a Maritime Center (multiple charter boats) and Studios (film and TV production).  The project had some financial trouble in the beginning (1994) with cost overruns four times that expected to build. But did the company get a bailout with taxpayer dollars? NO! Instead they got a deal for an extension of the lease terms with deferred rent for a few years and a payback with interest in a lump sum in 2001. They and their subcontractors then personally spent another $90-100 million on the project (originally budgeted at $25 million). The locals pay an admission fee if they want to use the pier amenities. What once was a dilapidated government generated eyesore, is now a teeming, economically productive, jobs producing, entertaining and desirable plus to the city. (A financial analysis of the Chelsea pier project in New York is available here).  In fact, the Chelsea Pier owners are building another similar project in Stamford, CT and no reference seems to exist to any tax dollar subsidization of the project on the internet.

This is a better pathway for the City of St. Petersburg: lease the waterfront site of the pier to a private company. There could be aesthetic requirements that would satisfy the artistic needs of the city. There would be a requirement that they ensure public access to at least a part of the pier for fishing, boat use and site seeing. But allow them to charge admission to what businesses they determine would work. What would that business activity be? The St. Petersburg city leaders and citizens could determine what best fits into the city but, in the end, private developers would be best equipped to determine what the market would support so the project could pay its own way.  This plan would require the voters approve a referendum to allow a long term lease for the pier to a private developer (at least 25 years).  If the taxpayers were informed about the financial and other benefits, it is likely they would approve it.  For instance, when the lens has its certain cost overruns, will their be a private developer ready to come up with tens of millions of dollars? Certainly not; as opposed to the extra $100 million spend privately on Chelsea Pier.  Also, the local businesses would realize the substantial econmic benefit of real economic development: private development.

St. Petersburg city leaders needs to get out of the decades-old rut of taxpayer financing of money- losing public projects with large public opposition (stadium, lens, etc).  If they were to open their eyes to the benefits of private financing they would offer the citizens an opportunity to have a win-win for all.

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2 Replies:

  1. Ann in Florida

    Great post, David! Thanks for making us aware of this exciting example of economic development. Now THAT’S a real vision for the St. Petersburg Pier!

  2. Rod Moren

    Excellent story/information which should be an article in the Tampa Bay Times. That based on assuming they would print it!!
    Keep up the good work.

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