Khan, Jaguars expect Lot J development to begin early 2020

[thelakelander]

LOL, probably. I figured the big public critic would be Nate Monroe.  I personally haven't written much about it. I don't mind infill development at the stadium. I'd like to see development on all of our surface parking lots. However, only a fool would believe having a smaller Landing next to the stadium is a "game changer" for downtown. That's about as suburban oriented of a perspective as they come. I prefer discussion around what may be the real issue at hand. Figuring out what's needed (and how much it will cost) to keep the Jags in town long term. This seems to be a small part of that. I see another +$100 million request for incentives for the next phase of Lot J.

[heights unknown]

Soooooo...would it be appropriate in saying that MAYBE this is one of the reasons why, aside from the debacle between the City and Landing Owner Sleiman, that the Landing was allowed to be razed? Just a question and my hunch. But still, they really need to build something on the Landing property as Lot J is far removed from the bullseye of the Downtown Urban Core.

Two reasons why tearing down the Landing plays into Khan's hands:

1.  Eliminates entertainment competition in the greater Downtown area.  Live! will be all by itself and now likely suck out whatever little night life remains in the central business district if it takes off.
2. Offers the City another riverfront parcel to barter with the National Park Service so Khan can get control of Metro Park.

Curry taking care of his #1 campaign supporter.  We need to count the $15 to $20 million spent on the Landing as an additional subsidy to these projects.

To me this is off kilter, out of character and to say the least insane. I guess no one wants all of downtown to prosper just the area in and around the stadium...again, insane! If you look at other successful and thriving cities downtowns, ALL of their downtown has something to offer in ALL areas; not just one particular area. Not everyone will want to come to the stadium area. Something similar to the Landing in the urban core would be a sane and viable alternative for those who do not want to fight the crowds at the new entertainment venue around the stadium.

[heights unknown]

The Jags long string of poor performance, and we get this.  I hate everything about this project. If the money was spread around all of downtown we would get so much more bang for the $$$.   Don't forget, the stadium and Lot J sit in an Enterprise Zone.  At the end of the day Khan walks with all the money, if there is any left.

That's exactly what I was trying to say as well "Music Man." Why cram all of the goodies at Lot J; why not have something in various areas in the downtown central core and not just crammed up at Lot J? I guess that's too hard for them to do. At least build something, a replacement at the Landing site.

[Bill Hoff]

Curry and the 1010XL guy have no clue of what they're talking about when it comes to planning and the urban core. They don't get it. It is what it is. Hopefully, in the future for downtown's sake, someone will. Things will really blossom a lot faster than we imagine when that day comes.

The majority of sports talk guys have *zero* idea about anything urban core. A couple of the younger ones do. Frangie does an occasional remote broadcast from Strings Sports Brewery in Springfield now, and you can tell by his comments he spends no time anywhere but the suburbs & beach (like many in Jax). Clueless. Frustrating to hear the misinformation spread so far & wide.

[CityLife]

I think Khan, Cordish and co should have to disclose to the public how they will utilize the federal Opportunity Zone as part of the project.

I would normally say this is none of the public's business, since it is related to their personal or business capital gains taxes, but the City is giving away so much local money that the public should also know how much the federal government will be subsidizing the project in terms of tax breaks on capital gains. Khan will be able to defer a substantial amount of recent capital gains upon the initial investment and if he keeps the initial investment in the property for more than 10 years, will not pay any capital gains on the appreciation of the property. I believe Khan and Cordish are able to lure additional investors into the project through the same process.

I'm all for REV Grants and reasonable incentives, but think Jaxons need to understand the total financial picture of the development, before throwing so much free money at Khan. I wish I had the time to do some estimates of how much he will save/make by using the Opportunity Zone model, but perhaps someone else can. This page describes the process well.

https://www.wellsfargo.com/the-private-bank/insights/planning/wpu-qualified-opportunity-zones/#:~:text=To%20defer%20a%20capital%20gain,in%20Qualified%20Opportunity%20Zone%20Property.

[Ken_FSU]

^Mark Lamping said back in January that Lot J would not use the opportunity zone program, though the quote reads somewhat ironically now, seeing as how the Jags have asked the city to loan them $65 million.

The area around the stadium is part of a Federal Opportunity Zone that city officials successfully got designated in 2018 by then Gov. Rick Scott and the federal government.

The national program offers tax breaks to investors who put money into developing opportunity zones. The stadium area is one of several in Jacksonville that got designated.

Lamping said the Lot J development would not utilize the opportunity zone program, however.
He said the program is "really beneficial for projects that are looking for investors," but "we're not in that situation."
He said Khan and the Cordish Companies, which would split the private investment on a 50-50 basis and already are able to finance their portions of the project.

Source: https://www.jacksonville.com/story/news/politics/county/2020/01/14/jaguars-president-says-talks-with-city-close-to-deal-for-700-million-lot-j-development/112152302/

[CityLife]

^Mark Lamping said back in January that Lot J would not use the opportunity zone program, though the quote reads somewhat ironically now, seeing as how the Jags have asked the city to loan them $65 million.

The area around the stadium is part of a Federal Opportunity Zone that city officials successfully got designated in 2018 by then Gov. Rick Scott and the federal government.

The national program offers tax breaks to investors who put money into developing opportunity zones. The stadium area is one of several in Jacksonville that got designated.

Lamping said the Lot J development would not utilize the opportunity zone program, however.
He said the program is "really beneficial for projects that are looking for investors," but "we're not in that situation."
He said Khan and the Cordish Companies, which would split the private investment on a 50-50 basis and already are able to finance their portions of the project.

Source: https://www.jacksonville.com/story/news/politics/county/2020/01/14/jaguars-president-says-talks-with-city-close-to-deal-for-700-million-lot-j-development/112152302/

Unless they are financing 100% of their portion of the project, they would be fools to not use the Opportunity Zone benefits. Unless, Khan has enough other write offs, or some other tax strategies that us peasants aren't aware of. 

[minder]

I really don't have a problem overall with the proposal. Theres some things I think could have been done differently/better but overall I can stomach it.

For me the screwing around, dragging things out and lack of communication from Khan and Curry was/has been my main bugbears. The lack of clarity regarding lot J, combined with the continual push to the extra London games and the teams best players wanting out/being traded was just a PR mess.  This proposal now appears much more sensible and realistic. Beforehand felt like just tease renderings of glossy high rises with no substance. Although I still expect pointless bureaucratic squabbling to delay construction starting. Also, I don't feel the average joe in this city reads much into the Khan/Curry relationship. You just needed to listen to 1010 today or read the various Jags social media pages to realise this. Its all praise.

The area already has the stadium, the baseball grounds, the arena, Dailys Place. In ten years time its probably going to have a soccer stadium and a convention center of some sort as well. These are all areas that are active on evenings and weekends. I like the walkway from the entertainment area to the other ground floor retail areas. Can't say I'm jumping for joy at some of the likely tenants at the Live! venue, but the area is crying out for cluster of bars and restaurants regardless. The lack of office space is disappointing and I can't help but think given our large suburban office presence there must have been potential takers, but for whatever reason there either isn't the appetite for the market or they did a poor job of attracting tenants due to leasing terms/costs or the like and perhaps a big reason for the watered down plans. JEA was just reshuffling the deck chairs and a lazy effort. As far as retail, would like to see the usual amenities that tenants will seek. A grocery store, gym, starbucks, some casual food options, that sort of thing.

The Landing going hasn't exactly provided a boom in leasing or activity in the existing downtown units. The immediate core is just a hard sell when you are heavily reliant on office workers.

I expect something smaller (more achieveable) for the waterfront now also. A smaller convention center, a parking garage and maybe another mixed use building of some sort.

Reality has kicked it appears with regards to the pie in the sky projects.

[jaxlongtimer]

^Mark Lamping said back in January that Lot J would not use the opportunity zone program, though the quote reads somewhat ironically now, seeing as how the Jags have asked the city to loan them $65 million.

The area around the stadium is part of a Federal Opportunity Zone that city officials successfully got designated in 2018 by then Gov. Rick Scott and the federal government.

The national program offers tax breaks to investors who put money into developing opportunity zones. The stadium area is one of several in Jacksonville that got designated.

Lamping said the Lot J development would not utilize the opportunity zone program, however.
He said the program is "really beneficial for projects that are looking for investors," but "we're not in that situation."
He said Khan and the Cordish Companies, which would split the private investment on a 50-50 basis and already are able to finance their portions of the project.

Source: https://www.jacksonville.com/story/news/politics/county/2020/01/14/jaguars-president-says-talks-with-city-close-to-deal-for-700-million-lot-j-development/112152302/

Unless they are financing 100% of their portion of the project, they would be fools to not use the Opportunity Zone benefits. Unless, Khan has enough other write offs, or some other tax strategies that us peasants aren't aware of.

To use the Federal opportunity zone credits, you have to be reinvesting capital gains from disposing of an existing investment.  For someone with Khan's wealth, it likely would be not too hard for him to raise his equity portion from such gains.  Let's say he "puts down" 10%  or $45 million for this project (thanks in large part to the City picking up 33% of the risk) and in 10 years the $450 million is sold for $550 million (that's only about 2% a year appreciation so very conservative).  He clears a $100 million profit on $45 million invested and all of the $100 million is forever free of Federal income tax and the tax on the $45 million was deferred for up to 10 years or 2026, whichever comes first, and then discounted by 15%.

Someone also needs to see if this project will be subject to property taxes if it is technically on leased City owned land.

The ultimate failure of Federal opportunity zones is they do nothing for the residents who live in them as there are no requirements to cater to their needs or hire them for projects benefiting from being in the Zone.  Many residents actually lose as the Zones can speed up or encourage gentrification.

[jaxlongtimer]

Looks like Curry didn't learn anything about transparency from his JEA experience and is mimicking the pension plan's "kick-it-down-the-road-to-make-me-look-good-now, higher-costs-to-taxpayers-be-damned" smoke and mirrors approach.

Turns out this deal is back to the taxpayers backing a scaled back project for the originally proposed $233 million in subsidies.  Starting out with a "loan" that charges no interest, takes 50 years to get repaid, if ever, and is structured so Khan gets effectively a grant without paying income tax on it.  Who knows what else follows for Phase II and the Stadium.  As the T-U points out, Khan is getting dollars roughly equal to the City's entire capital expenditure on the rest of the populace for the year.  The arrogance is simply amazing even for "give-it-all-away-in-bad-back-room-deals Jacksonville."

I see Curry looking at another JEA-type scandal for his administration.

Full article at:

https://www.jacksonville.com/story/news/local/2020/10/06/jacksonville-wants-give-khan-interest-free-65-million-loan-lotj/3636734001/

Excerpt:

Jacksonville taxpayers will give Jaguars owner Shad Khan $65.5 million through an unusually structured loan that would charge no interest, take up to 50 years to repay and significantly lessen Khan's tax burden, according to the proposed deal he's reached with City Hall to build a mixed-use development on Lot J next to TIAA Bank Field that was announced Monday.

Under the novel arrangement, the city will provide an upfront payment of $65.5 million to the billionaire's development team. Instead of repaying the loan over a fixed schedule, the developers would make an upfront deposit of $13.1 million into a trust account, where the city expects it to grow in value over decades. The city would collect the money when the account's value reaches $65.5 million or 50 years, whichever happens first.

Counting the loan, Curry has proposed committing as much as $233.3 million in public subsidies to the project, including as much as $205 million in hard cash. In comparison, the city plans to spend roughly $240 million this year across the city on big-ticket capital projects and infrastructure improvements.

Khan's development team, which is a partnership between himself and the Cordish Companies, plans to invest $229 million in the project, although the amount is actually $174.4 million when the proceeds of the city loan are accounted for.

The loan included in the deal is known in the real estate industry as a "breadbox loan," a novel financial program designed to allow developers to receive money from municipal governments, much like a grant, while avoiding the significant federal tax impact of actually receiving one, according to documents created by UTW Capital, LLC, a firm that manages these types of loans.

Although governments can expect to be repaid under "reasonable circumstances," these loans can be structured to free a developer of any future obligation to make a lender whole in the event the initial deposit doesn't grow enough over the 50-year period to repay the loan, according to the UTW Capital documents.

The city hasn't released any documents providing specific details about the structure of the loan. Mayor Lenny Curry said during a press conference Monday that the city would loan Khan's development team $65.5 million, but he didn't say the loan would be interest free or take the city as long as 50 years to be repaid.
Interest-free 'breadbox loan'

A summary of the deal provided to the media by Curry's office described the arrangement as a "breadbox loan" but also failed to mention the loan was interest free. Instead, Curry's office provided that information in response to questions from the Times-Union....

...The city had initially proposed giving Khan's development team a $65 million grant, but the development deal announced on Monday, which was the first of any kind City Hall has struck with Khan related to his grand plans to build an urban village near the stadium, called for the money to be provided in a long-term, zero-interest loan.

[marcuscnelson]

In the interest of Hanlon's razor, I'd like to ask:

Are Curry and his team actively making this deal as much in Khan's favor as they can without being too obvious, or do they just not know how to negotiate? The fact that they obfuscated the facts about the loan until the TU started sniffing implies the former. And the way that despite repeated alarm about how this doesn't include any consideration of the lease or stadium, they don't seem to have made any effort to at least demand more games are played here is ludicrous. It feels like Curry tries to fight everyone except the people he should be fighting.

[sandyshoes]

I'd like to dedicate this next song to Curry and Khan...what a power couple!  https://www.youtube.com/watch?v=liKhLNY5GYI

[Steve]

Ok, if you don't have a T-U subscription, get one:

https://www.jacksonville.com/story/news/columns/nate-monroe/2020/10/08/shad-khan-rolls-jacksonville-city-hall/5909591002/

Monroe hit it out of the park here with this column.

[Ken_FSU]

Ok, if you don't have a T-U subscription, get one:

https://www.jacksonville.com/story/news/columns/nate-monroe/2020/10/08/shad-khan-rolls-jacksonville-city-hall/5909591002/

Monroe hit it out of the park here with this column.

Great closing line.

[Ken_FSU]

It's going to be really interesting to see if stadium improvements are mentioned.

There's been a lot of buzz in the last week about this coming back online in October, potentially as part of a larger package inclusive of upgrades to TIAA Bank field. Seems to be a feeling that Lot J is a done deal. If City Council is there tomorrow for the announcement, it's gotta be at the finish line.

I also don't think it's a coincidence either that Rise closed on the Doro property a few days ago either. Paul Harden is involved with the Rise development, and has also been deeply involved with the Lot J project. Seems logical that Rise might have pulled the trigger once they knew that Lot J was moving forward.

Going to be really interesting to see what the funding mechanism is.

Sounds like the usual "backroom" dealing.  I didn't think the City Council members could commiserate on an issue without holding a publicly noticed meeting.  If they are collectively in on this already, how did they come together?  Are you telling me the mayor and Harden lobbied them individually and acted as intermediaries for the discussion that they are supposed to have in the public eye?

Mark Lamping and Paul Harden did, in fact, meet with city council members individually last week, per the Daily Record.