TAMPA - Centro Ybor, the shopping complex that was supposed to drive the revitalization of Ybor City, will wind up costing taxpayers $16.3-million in a multiyear bailout.
The project's owners cannot pay the rest of a federal loan guaranteed by city tax funds, and have asked Mayor Pam Iorio for help.
Iorio said Wednesday the city will take over payments on the loan, beginning with a $300,000 payment on Feb. 1. The cost to taxpayers this year will be $760,000.
Over the next 14 years, the total price tag, with interest, will be more than $16-million.
"There really aren't any other options," Iorio said. "If there was an easy solution, it would have been done."
Former Mayor Dick Greco struck the deal in 1997 to back Centro Ybor's birth. It was the signature project of Greco's eight years in office, and was touted as the engine to rebuild Ybor City, where Greco grew up and worked in his family's hardware store.
To make the project happen, the city pledged tax funds to cover a $9-million loan from the U.S. Department of Housing & Urban Development. If developers couldn't make the payments, the city promised it would. It pledged dollars intended for low-income housing and community development.
The city also agreed to take a second position behind a $32.6-million loan that Centro Ybor obtained from Wachovia Bank. That way, the Wachovia Bank loan would get paid first. The taxpayer-backed loan would get paid second.
"The city was facilitating the project and putting itself in a risker position," acknowledged Jay Miller, executive vice president of Centro Ybor developer Steiner & Associates.
"A traditional lender like Wachovia would not lend that much," Miller said. "They understood it was a riskier position."
The city invested millions more in Centro Ybor: $1.5-million in streetscape improvements and two parking garages to serve Ybor's entertainment district. The city also pledged to run its electric streetcar system past Centro Ybor.
At least a year ago, Greco knew the project was in trouble.
City officials met in Washington with HUD Secretary Mel Martinez to ask HUD to restructure the $9-million federal loan. HUD said no, according to Miller and city officials.
Greco could not be reached for comment.
In May 2003, Centro Ybor's auditor, Kaufman Rossin & Co., warned that there's "substantial doubt" about Centro Ybor's ability to remain a "going concern." To keep Centro Ybor afloat, investors had poured at least $1-million more into the project by May 2003, the audit said.
"We have lost a tremendous amount of money," said Miller, estimating losses between $1-million and $2-million a year.
When Greco pitched the project in 1997, Centro Ybor looked like a good bet.
The developers included the Sembler Co. of St. Petersburg, led by national Republican Party fundraiser and developer Mel Sembler, who is now ambassador to Italy.
Steiner+Associates was led by Yaromir Steiner, who created CocoWalk in Miami's chichi Coconut Grove area. Both groups had 25 percent stakes in the project.
The remaining 50 percent was backed by German investors. The group initially put up about $7.4-million and has contributed at least another $1-million.
"We are really committed to making the project a success," Miller said. "We think the project will succeed. It will just take longer."
The partners don't plan to sell or close the complex, he said.
Miller said the city has gained millions from the project while investors have not made a dime. Centro Ybor has brought in about $440,000 in new property taxes a year and about $1.8-million annually in sales taxes, and created 500 new jobs, Miller said. It also drove new development, he said.
"The city has received a significant financial benefit to date," Miller said. "I believe ultimately the city will come out ahead, fiscally as well as in a general sense with a stronger tourist destination, better neighborhoods and more jobs."
This month, Centro Ybor offered to make the city equity partners in the project, and share any losses and future profits.
But Iorio said she didn't see the sense in city taxpayers' investing in a struggling retail project, which includes stores such as Victoria's Secret.
"During my administration, we are going to be very sensitive to protecting the taxpayers," Iorio said as she stepped from her conference room, where staffers were discussing another ambitious redevelopment project, this one proposed by former Olympic promoter Ed Turanchik.
Why didn't Centro Ybor take off?
Many families and older customers still see Ybor City as a place where teenagers go to dance and party till 3 a.m.
It used to seem as urbane and hip, said City Council chairwoman Linda Saul-Sena. "Now I would characterize it as the young and the pierced."
Former City Council member Bob Buckhorn blamed the change on votes to support liquor licenses for more and more bars.
"All of us share some of that blame for creating what amounts to nothing more than a bar district," he said.
Now, the council needs to do more to attract a broader spectrum of customers to Ybor City in the afternoon and evening, officials said.
Ybor City should offer the same comforts that customers find at International Plaza or WestShore Plaza, Miller said. He wants more curbside valet parking available, and wants to open Seventh Avenue to car traffic until 11 p.m.
Centro Ybor suffered from competition it didn't foresee.
In 1997, Ybor City was the city's main entertainment destination.
By the time Centro Ybor opened in 2000, two other entertainment centers were under construction. They were Channelside, near downtown, and BayWalk in St. Petersburg.
Still, Centro Ybor was considered by most in the real estate industry as the most likely to succeed, BayWalk the most risky.
Today, many credit BayWalk with sparking a renaissance in downtown St. Petersburg.
"It is a sad commentary that BayWalk is in a better financial situation," Saul-Sena said.
BayWalk, though, didn't have the competition that Centro Ybor faces.
The movie theater at BayWalk is 10 miles from the only other stadium-seat theater south of Oldsmar in Pinellas County. The 20-screen theater in Ybor competes with theaters a mile away in Channelside and about 5 miles away in WestShore Plaza. There's also a new eight-screen movie theater in Hyde Park Village.
International Plaza also draws high-end customers away.
The mayor couldn't remember a time she bought something at Centro Ybor, but "I am not much of a shopper, period."
At lunchtime Wednesday, a trickle of customers filled Centro Ybor's red brick plaza, once home to Ybor's cigar workers and ethnic clubs. There was no one at Adobe Gila's, about three tables were full at Dish, and Fresh Mouth was about half-full.
Even Saul-Sena sees the problems. She took her took her 13-year-old to Centro Ybor to shop at the American Eagle store recently. But when they arrived, American Eagle was closed. Strolling around, they heard shouts across the street. It looked like some sort of disturbance. "Mommy, I don't like this," Saul-Sena's daughter said.
- Times staff writer David Karp can be reached at 813 226-3376 or email@example.com