Khan's Jacksonville Shipyards Plans Revealed

[thelakelander]

^

[Noone]

Wow. Tryimg to put a positive spin on the TriLegacy. Poor mayoral oversight.  Millions and millions lost. Nice try.

+1
We are going to need a midnight email for an EXTRA, EXTRA mil or two not only from the DIA Board but the city council too.

[Steve]

One of the interesting points brought up is that if this were to happen, we likely aren't seeing much office/residential/hotel for a while, since we'll need to wait on the absorption of this space.

The one exception might be hotel-IF the city builds the convention center. I think with this development and a convention center, Jacksonville can transform very quickly into a pretty decent convention city.

[JaxArchitect]

Without getting into the weeds, this is an extraordinarily bad deal for the City as currently drafted.  It places all of the risk and upfront cost on the City with all (OK, the vast majority of it) of the upside (profit) going to Khan.  He will receive the property with very few obligations other than to act as a broker by selling the parcels to others to develop.  Understanding the challenges of developing downtown and the softness of the market, it's likely that this land will sit vacant for many years to come with the only outcome being that the City has given away the land. If we're lucky, we might get a football practice field built on prime riverfront property that does very little to improve the experience of everyday Jacksonville residents or even tourists...and I don't believe for a second that he'll build the practice facility as depicted in the presentation.  Can you say "Value Engineering?"

[vicupstate]

Question to Simms or anyone with insight:

If the city simply paid out of it's own pocket (which is exactly what Khan is proposing) to clean up the site and complete the Riverwalk, and then RFPed the site, what kind of response would they get?  Would the city still have to give away the site or could it expect at least some payment for the land? 

If the city had to pay the aforementioned bills and still had to give it away, it would at least still get the taxes revenues that would come later. 

I don't see how this flies when the only way to recoup millions of city expenditures is 20% of future land sales, considering the first few sales will likely be relative bargains.   

This is a very big pill to swallow, IMO.   

[Tacachale]

^If were just going to divide it up and sell it off, we could do it ourselves and keep 100% of the profit and 100% of the tax revenues, instead of 20% and 0%.

[Non-RedNeck Westsider]

^If were just going to divide it up and sell it off, we could do it ourselves and keep 100% of the profit and 100% of the tax revenues, instead of 20% and 0%.

Taca, the city has already stated that there's no interest in dividing up the parcel.

[CityLife]

^If were just going to divide it up and sell it off, we could do it ourselves and keep 100% of the profit and 100% of the tax revenues, instead of 20% and 0%.

Taca, the city has already stated that there's no interest in dividing up the parcel.

There is no "interest" because Shad Khan is guiding the process and playing puppetmaster.

I do agree with Taca that the city could act as master developer and keep 100% of profits. However, I think in that scenario just about anyone would seek property tax abatements of some sort. I think pretty much everyone is asking for the REV Grant from COJ these days. I don't think Khan should be punished for being wealthy and should qualify for abatements just as any old Joe would. However, I do think that the 80-20 proposition is ridiculous. That needs to get a lot closer to 50% before the city takes it on....unless of course Khan has a few aces up his sleeve (like a major corporate relocation). 

[MEGATRON]

The City's basis in the Shipyards is the $36.5M given to TriLegacy.  That's it.  It owns the Shipyards strictly as a secured creditor (oh, and under state and federal regs, as a secured creditor, it becomes entirely liable for the contamination if it does not actively try to convey the property in a commercial feasible manner). 

Under Khan's proposal, the City's basis in the property is $36.5M plus whatever capital costs Khan is seeking.  Seems to me, the 20% that goes to the City plus future tax revenues eventually covers the City's basis in the property.

If the City breaks even on this deal, it's a win.  That property has been idle for far too long. 

[MEGATRON]

^If were just going to divide it up and sell it off, we could do it ourselves and keep 100% of the profit and 100% of the tax revenues, instead of 20% and 0%.

Taca, the city has already stated that there's no interest in dividing up the parcel.

There is no "interest" because Shad Khan is guiding the process and playing puppetmaster.

I do agree with Taca that the city could act as master developer and keep 100% of profits. However, I think in that scenario just about anyone would seek property tax abatements of some sort. I think pretty much everyone is asking for the REV Grant from COJ these days. I don't think Khan should be punished for being wealthy and should qualify for abatements just as any old Joe would. However, I do think that the 80-20 proposition is ridiculous. That needs to get a lot closer to 50% before the city takes it on....unless of course Khan has a few aces up his sleeve (like a major corporate relocation).

LMAO as City as master developer.

[Non-RedNeck Westsider]

Here's what stands out to me the most:  TriLagacy et al  wanted cash-in-hand and up front before doing anything.  Per my understanding, Iguana is asking for permission to use the land as they see fit AFTER the city pays for the remediation of the contamination.  Face it, the city's going to be on the hook for that initial cost regardless.  And now we have a real life "Field of Dreams" scenario. 

Worst case scenario is the city pays to clean up the property and then Iguana backs out of the deal altogether.  Now we're left with an uncontaminated parcel of property on the riverfront.  To me, it's a win-win.  At least we're not being asked to shell out $50M upfront to a developer to use at their own discretion.

[Non-RedNeck Westsider]

Can you say "Value Engineering?"

I don't disagree with much in your post except for the last statement.

I'm pretty damn familiar with it.  I can say it.  And I have worked around it my entire career. 

BUT....

In the short time that he's been here, though, please name one thing that Khan has done with VE in mind?  Everything to date has been absolute top notch.  The kind of person everyone envies to work for:  This is what I want, make it happen, send me an invoice.

I get the pessimism, but this guy has given me no reason to think otherwise yet.

[Tacachale]

^If were just going to divide it up and sell it off, we could do it ourselves and keep 100% of the profit and 100% of the tax revenues, instead of 20% and 0%.

Taca, the city has already stated that there's no interest in dividing up the parcel.

There is no "interest" because Shad Khan is guiding the process and playing puppetmaster.

I do agree with Taca that the city could act as master developer and keep 100% of profits. However, I think in that scenario just about anyone would seek property tax abatements of some sort. I think pretty much everyone is asking for the REV Grant from COJ these days. I don't think Khan should be punished for being wealthy and should qualify for abatements just as any old Joe would. However, I do think that the 80-20 proposition is ridiculous. That needs to get a lot closer to 50% before the city takes it on....unless of course Khan has a few aces up his sleeve (like a major corporate relocation).

I'm certainly not saying dividing it up is what they *should* do (in fact, I don't think it is). But it sounds like it's more or less what this plan entails, just with Iguana taking control of the land - and keeping most of the profits.

[KenFSU]

The city could act as master developer and keep 100% of profits.

To me, this is the absolute worst case scenario for the Shipyards.

Completely agree with NRW above ^

Assuming the city is competent enough to manage the cleanup (a big assumption, I concede), we win either way.

Worst case scenario is that we get a clean piece of riverfront property and a riverwalk extension.

Plus, I can't imagine the terms presented in Khan's non-binding proposal will be the final terms.

Certainly the city can negotiate a 60-40 split.

[Non-RedNeck Westsider]

just with Iguana taking control of the land - and keeping most of the profits.

My analogy (I could be totally off-base, but this is how I understand it)

Taca, you have a very sick pig.  So I come to you and tell you that this pig could be the centerpiece of the entire farm if you let me take it under my wing for a while.  First, I want you to pay for the medicine that will heal your pig.  After your pig is well, I may change mind, but at least you have a healthy pig instead of a sick one. 

I'll probably do what I say, so when I'm done, even though it's essentially my pig, I will let you use this pig to enhance your entire farm's image, but if I decide to take your pig to the butcher, I'll still let you claim that the parts are yours, but I'm going to take 80% off the top to cover my initial expense and put a little change in my pocket.  You can keep the rest.