PANAMA CITY BEACH — Bay County could lose $1.6 million on a land deal it made in 2010 to try and ensure the Navy base remained open.
County commissioners accepted an offer last week for the state to pay the county $1.3 million to buy property the county purchased in 2010 for $2.9 million from a private developer next to Naval Support Activity Panama City (NSA PC).
The property was bought as a buffer against private development in the belief that development could make it more likely the base would close.
Now Bay County officials are hoping state or federal help comes and the county doesn’t lose money on the deal in the end.
The county still has until November to exercise an option in the real estate contract to require the developer to buy back the land at the full purchase price, plus costs. However, County Commissioner George Gainer could not convince fellow commissioners to take that option at Tuesday’s commission meeting.
Gainer said Wednesday a loss of taxpayer money on the property is unacceptable, especially considering the county recently increased property taxes and has raised utility rates significantly.
Gainer, who voted against the land purchase in 2010, said he never could understand why the county fronted the federal government funds for one of its projects.
“The Navy never asked me if I’d vote for buying it,” he said. “As far as I know, they didn’t ask anyone. Some say they did. I said, ‘Show me one thing in writing, and I’ll hush.’ ”
Gainer said he doesn’t believe the base was ever in danger of closing if the county didn’t front the money for the land as some had contended before the property was bought.
“That was never even insinuated” by the Navy, he said. “There is no way the government is going to tell a county, ‘You buy the land with money out of your pocket or we’ll close the base down.’ That would never happen.”
The purchase: In 2010, county staff came up with the idea of buying the 8.44 acres adjacent to the Naval facility and holding it until the Navy could buy it. In May 2010, the County Commission voted to buy the land contiguous to the base’s southwestern boundary.
In the 2014 budget, the Florida Legislature approved purchasing the property at the state’s appraisal of $1.3 million. A $500,000 Defense Infrastructure Grant to go toward the purchase also was approved by the state, but it remains unclear whether the money would be in addition to the $1.3 million the state has agreed to pay for the property, said county spokeswoman Valerie Sale.
The property, a defunct townhouse development known as Barefoot Palms at 1700 Barefoot Lane, was under the threat of foreclosure at the time of the county’s purchase, county staff told commissioners in 2010.
An agreement approved by commissioners in 2010 stated that if the federal government could not commit to purchase the property within three to five years, the county could force the developer, or his representatives, to pay back $2.9 million the county spent on the land, plus all out-of-pocket costs, interest and fees. By contract, that move would have to happen by November of this year.
Commissioners said in 2010 they made the land purchase to reduce the odds of the base closing and in an effort to retain the 3,100 civilian and military jobs, as well as maintain the base’s $400 million impact on Bay County’s economy.
The military considers civilian encroachment when deciding base cuts and four of the five commissioners said in 2010 they wanted to keep someone else from building on the property.
Navy supported purchase: Navy documents from 2009 and 2010 show the military strongly supported purchasing the land and requested federal funding for it that never came.
“Acquisition of this 9-acre parcel is proposed to enhance the operational security of the installation,” one of the letters from the commander of the Navy Regional Southeast in Jacksonville to a Washington Navy official states.
The Barefoot Palms land was part of a 16-acre tract the Navy Base and Bay Defense Alliance tabbed in 2000 as ideal for purchase. The slow process of Congressional approval held up the Navy’s bid to buy the land, so the county, using a state grant, bought half the land from the Institute of Diving for $500,000, and deeded the land to the Navy base in 2008.
The Institute of Diving ran the Man in the Sea museum in Panama City Beach and planned to open a museum on the remaining 8 acres, but funding fell through and the institute instead sold to BC Palms Inc. in September 2004 for $2.4 million. Wes Burnham, Robert Reich and Wallace Nall were officers of BC Palms. Their planned 80-home development never materialized; only eight homes were built.
Interim county manager Dan Shaw told commissioners on Tuesday that it would be in the county’s best interest to accept the state’s $1.3 million offer before the state takes it off the table.
County Commission Chairman Guy Tunnell asked Shaw whether the county would be locked into the $1.3 million sales contract with the state if they approved it.
Shaw replied the county has some time before it’s a done deal, because the governor and the Cabinet are not slated to vote on the purchase until May, and commissioners always have the option at a later date of asking the developer to pay the $2.9 million if the state can’t come up with any other compensation for Bay County.
Developer responds: Nall said in an email to The News Herald that BC Palms Inc. had entered into an agreement with the County Commission “to facilitate the county’s preservation of approximately 8 acres adjacent to NSA PC.”
“We understand from the board’s action (Tuesday) the board is close to receiving compensation for its action several years ago to protect NSA PC,” Nall stated. “We are happy for the commission and for the community on their success. However, as developers, we stand ready and able to acquire and develop this property in the event the county elects instead to sell it back to us.”
In the 2012 election, then-District 5 candidate Jim Lawson blasted incumbent Mike Thomas for voting in favor of the deal, calling it a bailout at taxpayers’ expense.
Thomas said Wednesday that Lawson portrayed a false picture during the 2012 campaign that he brought forth the land deal to try and help a millionaire friend in Burnham. He said Navy base officials brought up the proposal for the county to buy the land.
Thomas said even if the county lost all of the $2.9 million on the land purchase, in the long run the county benefits greatly if a Navy use ends up on the property.
“The county doesn’t lose either way if we fill that up with high-paying jobs, such as an industrial park for military contractors,” Thomas said. “The county makes a lot more money [with that use] than if the property was used for apartments and condos. The high-paying jobs are all around the Navy base. All those buildings around there are full of engineers.”
Tom Neubauer, the president of the Bay Defense Alliance, in 2010 lauded the commission’s decision to prevent the land from being auctioned and potentially bought by another developer, saying that would take away a growth opportunity for the Navy base and the county.
Neubauer said last week he expects the state to try and make sure the county doesn’t lose money.
“I think there is a real interest by the state to make sure doesn’t happen,” he said. The county “acquired the property in good faith.”
The veterans clinic commissioners were trying to get on the property ended up being built on Magnolia Drive due to a timing issue, but the property always could be used in the future for another Navy base use, Neubauer said.
He said not having a residential subdivision on the property is important for security reasons.
“If you go out there, you can literally jump over the fence there,” he said. “It also gives you long-term protection for a buffer. It may not get used for anything.”