Roosevelt Roads to undergo $50M infrastructure upgrades before seeking master developer
The former Roosevelt Roads Naval Base, which has been in the hands of the Puerto Rico government for about eight years, will undergo a $50 million infrastructure upgrade in preparation for the selection of a master developer for the property, News is my Business confirmed.
Nilda Marchán, executive director of the Local Redevelopment Authority for the former Roosevelt Roads Naval Base — which falls under the Department of Economic Development and Commerce’s (DDEC, in Spanish) umbrella — said this is the first of several phases to condition the property.
“We plan to publish the bid documents this year, so that those projects get underway before we publish the Request for Proposals seeking a master developer, as it makes the property much more attractive,” she said.
The first phase includes three specific projects: building a potable water plant, at a cost of $7.9 million, which will come from the U.S. Department of Agriculture; building a sanitary water plant, at an estimated cost of $12.6 million, to be funded through a special investment allocation from the local government; and electrical system improvements, at a cost of between $30 million and $40 million, an allocation expected to come from the Federal Emergency Management Agency (FEMA).
“We’ve noticed that the deal [with a private investor] falls through once they discover the investment they will need to make in infrastructure, which is obviously something they can’t make their money on. They make their money on the vertical investment,” she said.
“So, we decided that we need to condition the property to give them that jump-start and be able to achieve a better negotiation, to be in a better position to do that with the private companies,” she said.
The Local Redevelopment Authority is allowed to negotiate directly with private proponents, without the need for a public-private partnership-type agreement.
Once those bids are awarded, the subsequent phases of improvements to the property could push the required investment to some $300 million, Marchán said.
Wanted: Master developer
Upon being appointed to her post, Marchán said she implemented a change in the agency’s approach to developing Roosevelt Roads, which the US Navy transferred to the local government in 2013.
“That’s when the first RFP seeking a master developer was published. However, the infrastructure presented unfavorable conditions to achieve that. That has been the principal factor for why the development of the property hasn’t happened at the level that was expected,” she said.
In 2014, the Authority signed a deal with Clark Realty, which marked the first attempt to secure a private-sector master developer. However, after nearly two years of negotiations, the government and the company mutually agreed to call off the deal, for a number of reasons, she said.
“The fiscal crisis, the government’s debt obligations, the bad infrastructure, and other factors influenced that result,” she said. “They were asking for conditions that were above and beyond what the government could provide.”
The government moved on to negotiate for six months with the runner-up in that bid, but it was also unsuccessful.
The former naval base already has several projects running, including the Maritime Transportation Authority’s terminal connecting Ceiba with the islands of Vieques and Culebra ($8 million), the Loopland Development Inc. vacation property ($225 million), the LinkActiv call center ($8 million), and IBD Management renewable energy operator.
Now, instead of developing the lands based on individual tenants, the agency will shift back to looking for a master developer to implement a comprehensive plan for the property. That project could cost up to $2.3 billion, Marchán said.
“We’re going to focus on a large-scale development, which we believe is what this property deserves. It requires an integral development that is given continuity for the next 20 or 25 years,” she said.
To do that, the Local Redevelopment Authority will launch the Request for Proposals cycle in the first quarter of 2022. So far, the agency has a list of 10 potential candidates that it will invite to compete for master developer, said Marchán.
Although she refrained from disclosing the list, “because it’s not final,” News is my Business learned that Atlanta-based First Standard Assurety recently presented a letter of intent describing an ambitious plan for a World Financial and Trade Center at Roosevelt Roads.
The company has the backing of a trust that has agreed to fund the majority of the project, up to $2 billion, according to the letter.
While Marchán confirmed to have met with the proponents, she also said they were informed that the Local Redevelopment Authority is legally banned from accepting unsolicited proposals for the role of master developer.