Editor’s note: This story was updated to correct an error. Panama City annexed 25 acres, and did not purchase the land.
PANAMA CITY — City Commissioners on Tuesday approved the Project Juniper reinvestment agreement, which involves the annexation of 25 acres of land for retail developments and a connector road that will connect State 390 to U.S. 231.
According to city officials, Panama City will reimburse the developer the cost of building the road — $3.3 million — and then the developer will give it to the city to maintain. The road will provide access to the retail development, which is slated to bring in hundreds of jobs and more than $500,000 in annual revenue, city officials say.
Commissioners say that by purchasing the land, it becomes part of Panama City, allowing for more growth in the area.
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The city agreed to use merchant fees to reimburse the developer, BRE Panama City LLC, over a period of time and said it would not make any upfront payments and would not be required to pay anything if the project does not happen.
City Attorney Nevin Zimmerman said they mirrored the project off previous reinvestment agreements, most recently the developers of Bay City Point in 2017. The city committed to pay Hawks Point Partners LLC the full financial feasibility gap of $9,716,447 — using 90% of all merchant taxes until the portion was paid — as an incentive to bring the Bay City Point project to the corner of 23rd Street and Martin Luther King Jr. Boulevard.
Zimmerman said the goal of these projects is to “reinvest money the city doesn’t have unless the project is successful.”
“The city generates a 1% merchant tax off of retail sales and if that project is successful, the city commission agreed to reinvest back 90% of what it received to plug, what it was very scientifically called, the feasibility gap,” Zimmerman said.
The city determined the feasibility gap to be $2.8 million from the merchant tax generated by the Project Juniper merchant-tenants.
When the city was approached to do something similar for Project Juniper, they also hired an independent economic adviser, choosing Chris Jones from the Tampa area.
“He determined it was reasonable that the developer needed $2.8 million to make this project work,” Zimmerman said. “And the money only comes in as it is earned, so to speak, as taxes are paid. Ninety percent of that will go back to the developer.”
Jones was present at the meeting and said his firms deal with these agreements all throughout Florida.
“We peeled through everything, in terms of looking at current activity in the Florida market with respect to shopping centers,” Jones said. “We really feel that everything that they put forth and estimated with the financial feasibility gaps is reflected off the latest and greatest data.”
It is expected to take 12 years for the project to payout, but Jones said there is a 15-year expectancy for reinvestment.
Jones also noted the economic progress this will bring to the area, as highlighted in his report. In the report, this one-time purchase is projected to bring 142 full-time jobs during its construction phase with an economic output of $32.7 million and earnings of $10.1 million. Annual impacts include the creation or support of 438 jobs with $37.4 million in economic output and earnings of $12 million.
“The economic impacts to Panama City and Bay County, as you can see in the report, will be significant,” Jones said.
According to Becca Hardin, president of the Bay County Economic Alliance, the development in the area of U.S. 231 and State 390 is projected to create more than 200 jobs that pay more than the average Bay County annual salary, $300,000 in ad valorem tax to government entities and $250,000 in merchant fees revenue to Panama City.
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“It’s retail-oriented, so it’s a little different than what the Bay EDA typically works on. But because this project is going to have such a tremendously positive impact on that part of the city, we are working with the city on this to try to get this project across the finish line,” said Hardin, who noted back in June the annual revenue it is projected to bring. “It’s an economic impact for sure.”
Panama City Mayor Greg Brudnicki said this expansion is greatly needed with the upcoming homes and retail developments in that area. He also said it’s great to see the city invest within itself.
“I think one of the greatest things about this is that it takes a piece of property that’s not in the city that now becomes a part of the city,” Brudnicki said. “And we’re able to build this road and use the money that is coming off of the groceries that will be purchased, or other items on that property, to reinvest in that property.”