Laura Street Trio developers will seek 'substantial public investment'

[thelakelander]

The developer with a plan to renovate the Laura Street Trio will likely seek a "substantial public investment" in the project, the chairman of City Council's finance committee said Thursday.

Councilman Greg Anderson didn't have an exact dollar figure or structure for the incentives the trio developer may seek, only that it would be a "big number," after a meeting with Aundra Wallace, CEO of the Downtown Investment Authority.

full article: http://www.bizjournals.com/jacksonville/news/2013/11/07/councilman-laura-street-trio.html

[tufsu1]

I've heard the number $20 million thrown around...of course some of that could be in the form of incentives or tax rebates after the complex has been built.

[Bativac]

This project is taking on the distinct "I'll believe it when I'm standing in the middle of it" aroma of previous projects involving the trio.

[tpot]

Agree with Bativac......

[Noone]

let's not forget that OED had the DIA vote away their control of the $4,100,000 on 7/24/13. Board member Jim Bailey was the only No vote. There were 6 total projects.

[jcjohnpaint]

Yeah I don't get too excited when anything is announced about the north bank.  I think the Brooklyn residential projects will do more to help this project than any DIA or whatever.  If the DIA has shared power with the council, then why have the group?   

[JeffreyS]

20 million should be doable in the form of tax credits.

[Kerry]

Hmmm, $64 million for giant TVs used 10 times a year or $20 million to get this project going.  I know which I prefer,

[tufsu1]

^ to be fair, it is $42 million...Khan (who financed the Laura St Trio deal) is spending $21 million...what I'm saying here is without the Jags, Steve Atkins would likely not have been able to buy the properties in the first place.

[vicupstate]

The city gave something around $17 mm each for the Carling and 11E projects, as memory serves.

[Rynjny]

Hmmm, $64 million for giant TVs used 10 times a year or $20 million to get this project going.  I know which I prefer,

Maybe a little research before posting this comment.

[JeffreyS]

The fact that we support the Jags being here is one of the few indicators that this city is cognizant of the fact that it should invest in QOL.

[simms3]

$20M for a project that can't surely top $80M, worst case scenario.  25% public incentive, leaving some portion of the remaining 75% to be financed.  Then rethink those numbers if it's only $50M, or less, to get the Trio up and running.

To me that sounds like putting an awful lot of public incentive eggs in one small basket.  Just as we wouldn't look to any other single project in Jacksonville as the "turnaround" that cures all woes and sets the future on a whole other path, so too I wouldn't look to this project to do either.

Sadly, I don't think any single project conjured up so far is worth $20M in city assistance - there are far cheaper and arguably better ways to kick start downtown, and all of those have been discussed ad nauseum here on MetroJacksonville.  $20M to one developer also sets a huge precedence and opens the city up to potential lawsuits, in my opinion.

[tufsu1]

^ did you ignore the part where I stated that some of the money might be in the form of tax rebates...it has nothing to do with financing the construction

[simms3]

That is true - but let's think aboout future tax obligations for a property the size/value of Laura St trio when it is complete and filled with occupants/lessees.  Do you honestly think for a minute that it's going to generate close to $20M in tax revenues over the course of its existence over the ~5-10 years after it is completed?  Let me frame it this way:

Bank of America tower has an assessed value of $57,334,000 and pays the following taxes:

Taken from Tax Assessor's website for Bank of America tower:

If Paid By   Amount Due   
11/30/2013  $1,117,350.65 
12/31/2013  $1,128,989.72 
1/31/2014  $1,140,628.79 
2/28/2014  $1,152,267.86 
3/31/2014  $1,163,906.93 

This includes City, Schools, DVI, Wtr Mgmt, and other special assessments.

What honestly do we think would a complete, filled and stabilized Laura St trio will pay in taxes?  It would take many years, well into the future, to get to $20M.  Tax break burnoffs in other cities (such as 421A in NYC) are 10 years.  And they are burnoffs with 80% of would-be taxes owed not payable in years 1-5, and then that percentage decreases each year thereafter until 0% of would-be taxes owed are not payable by year 11 (or 100% of would-be taxes owed are payable).

I think the developer wants up-front city assistance.  It's Jacksonville - the tax liability isn't going to be that great once the property is up and runinng.  But where people get into trouble is finding the money to get a project up and running.

Granted, having good comparisons to other commercial properties in other cities, with the income that can be achieved with commercial properties in Jax, clearly the tax burden is higher than it should be.  I will be the first to say that.  But I would think that it's more difficult for folks to find up front and need that first and foremost, before considering back end help.

A tax break could help NOI and make the asset more marketable, but I think anyone who develops or rehabs a project in DT Jax can't make the assumption that there will be a market for their asset after it's complete/stabilized.  Thus, I envision a proforma that develops and holds the asset.  It'll come down to what kind of financing is available to Atkins on if he wants upfront assistance or backend assistance.