Fishy Deal at Cecil Commerce Center?

[thelakelander]

It is worth studying and evaluating though, particularly if COJ ever wants to work with a private developer for the Shipyards or other city owned properties.

I almost see Cecil as a completely different situation in that our region has never had a problem attracting warehouses and distribution centers.  There's an actual market for that type of stuff, so something like FedEX is just as likely to expand in Jacksonville if Cecil is around or not.  So while it definitely makes sense for COJ to bring someone who knows what they are doing to develop COJ-owned property like Cecil, depending on the deal, you are potentially screwing every similar owned private sector industrial park owner in town.

Out of that money, Hillwood is responsible for infrastructure and improvements on the land. But mayoral spokesman David DeCamp couldn't say Wednesday exactly what those improvements would cost for this particular project. Based on what Hillwood says is the average cost per acre of the work required in that section of Cecil, it could be $2.8 million.

But Peter Anderson, vice president of Pattillo Industrial Real Estate, said that the FedEx site is ready to go.
"You'll see cheaper land sales, but this is a site ready for development, fronting a road," he said.

He said FedEx considered sites owned by Patillo, and he's heard the company considered at least five other privately owned sites — all of which were asking at least $100,000 per acre. But he says that because Hillwood is able to buy for $9,000 per acre, the company will always be able to undercut the competition, which already has more invested in its land.

"It's a race to the bottom," Anderson said. "So now, arguably, I could go to $80,000 and so Hillwood goes to $60,000 — so what? 'Oh, we'll only make $50,000 instead of $70,000 without an investment?"

full article: http://www.bizjournals.com/jacksonville/news/2013/10/31/cecil-deal-will-send-land-prices-into.html

Anderson could be blowing smoke but the scenario he mentioned above does seem to suggest Hillwood has a leg up on the competition for private sector projects that would still come to Jax regardless of if Cecil existed or not. So, in essence, we're choosing to develop Cecil at the expense of other established industrial areas in town.

The story for downtown owned properties is significantly different.  For a variety of factors, many developments the city would like to see are simply not financially feasible given the market.  So it makes more sense to utilize incentives, land deals, etc. to erase the financing gap.  That gap does not exist for countywide industrial development.

[CityLife]

It is worth studying and evaluating though, particularly if COJ ever wants to work with a private developer for the Shipyards or other city owned properties.

I almost see Cecil as a completely different situation in that our region has never had a problem attracting warehouses and distribution centers.  There's an actual market for that type of stuff, so something like FedEX is just as likely to expand in Jacksonville if Cecil is around or not.  So while it definitely makes sense for COJ to bring someone who knows what they are doing to develop COJ-owned property like Cecil, depending on the deal, you are potentially screwing every similar owned private sector industrial park owner in town.

Yea that is kind of the point I was trying to make. If you're going to allow the land to be sold/developed at well below the market rate, use that to bring companies and higher paying jobs here that otherwise wouldn't come. 

[kbhanson3]

Agree with lakelander.  The ONLY beneficiary of the deal at Cecil is Hillwood.  They have made virtually no investment in exchange for the right to develop or sell land at substantially below market value.  It is essentially a free option to purchase land at a great price.  In a city with a tremendous supply of developable industrial land, it made no sense to dump several thousand acres of additional land onto the market and then to undercut market land prices to boot! And the suggestion that Cecil benefits the City by creating additional property tax revenue is disingenuous. Any project that locates at Cecil (other than a project that requires direct runway access) would have otherwise located at a private development in Jacksonville and generated the same tax revenue.   The bottom line is that the City was suckered into believing that Hillwood would leverage its relationships with companies that it has done business with in California and Texas to lure them to Jacksonville.  Anyone in industrial real estate can tell you that it simply does not work that way.  Companies locate distribution centers based on logistics models, not based on a relationship with any given developer. Many of us in the commercial real estate industry met with City leaders before the Hillwood deal was done in an attempt to explain that to them but our efforts fell on deaf ears.  The damage is done.  I'm thankful that I don't have any investment in industrial land, but I am sympathetic to Peter Anderson and other industrial developers who thought they were playing on a level field only to have the City skew the market.