Khan, Jaguars expect Lot J development to begin early 2020

[acme54321]

That's his old yacht, the current one is a lot larger 

[Ken_FSU]

Legislation is being introduced today by Tommy Hazouri.

A couple of things stick out that the media still either has wrong, or is missing entirely:

1) The Lot J development will not include a 100,000 SF Live Arena with restaurants/bars and an additional 75,000 square feet of retail/restaurant space. At least not per the development agreement. Lot J will include a total of 75,000 square feet in retail/restaurant space, with the exception of maybe any retail space that ends up in the hotel or residential units (the agreement is vague as to whether this would count toward the 75,000 sf). The media keeps saying 100,000 square feet for the Live! portion + 75,000 sf, but this just doesn't seem to be true.

2) The 40,000 in office space appears to be built into what is considered the $100 million "Live! Venues" portion of the development. This is important because the city is paying half for the Live! venues. From my reading, this suggests that a good portion of Jacksonville's $50 million contribution toward the "Live! Arena!" could conceivably be used for Class A office space considered to be part of the development that would then be handed over to Cordish to operate.

3) The agreement is $12.5 million in cash heavier than most people think. The $25 million rev grant for the residential & hotel components has quietly turned into a $12.5 million rev grant for the residential portion (at 20 years, requiring an exception), and a $12.5 million cash payment doled out over five years as a "completion grant" for the hotel. So, if the hotel is built, we're essentially giving Cordish/The Jags their $13 million breadbox deposit back.

4) Terms have also quietly changed from the city potentially being on the hook for $15 million for a parking garage if Phase II is developed, to the city being responsible for all cost overruns up to $15 million on any public portion of the project (which includes remediation, infrastructure, and the Live! venues/office portion). I'd kiss another $15 million in cash goodbye.

5) Agreement gives Jags/Cordish the option of flipping the hotel parcel to a third-party developer if they so choose. Probably not a huge surprise, but there's no minimum specs for the hotel included in the agreement (beyond 150+ rooms). I think they're committed to building the hotel, but it doesn't seem like there's anything in the agreement that stops them from flipping it to someone to build a hotel on the cheap and then pocketing the $13 million completion grant either.

$208 million in bonds will fund the project, if approved, which should cover our $50 million for half of the Live! venue, $77 million in infrastructure, $12.5 million for the hotel grant, $15 million for cost overruns, and $65 million for the breadbox loan (minus the Jags $13 million deposit). No modification to the TIAA Bank Field lease included in the agreement (with the exception of removing Lot J from the demised premises list). Agreement between the City and the Jags/Cordish specifically for management of the property will be for 35 years, with provisions for another 40 in extensions.

It's easy to bring emotion into what's ultimately a business decision in term's the Jags' record or Khan's personal wealth, but if Lot J brings some much-needed vibrancy to the sports complex, is a step toward keeping the Jags here for another 20-30 years beyond 2029 (which we're just going on blind faith on, because no one is willing to rock the boat and have that larger conversation about everything the Jags are looking for in terms of stadium renovations and the Shipyards), and maybe helps spark some additional development between Berkman II and Met Park, I don't have a huge issue with it. That said, the agreement should be a lot more specific about what we're getting at Lot J.

[thelakelander]

I don't see this not going through. We don't have many politicians willing to say no to the Jags. I also don't see it as being anything transformational. I fear the Live! will ultimately fail worse than people think the Landing did. So hopefully, it will be designed so that it can be adaptively reused into something else like a museum when that time comes. At the end of the day, I hope everything works out for the Jags, downtown, the Eastside and the city as a whole.

[Fallen Buckeye]

The Jags can leave for all I care. I have not watched a single game this year, and I will not support them in any way as long as they continue to take advatage of us like that. Go Gators.

[Papa33]

It gets better.

https://www.jaxdailyrecord.com/article/curry-wants-to-city-to-borrow-dollar208-3-million-for-lot-j-development

[jdamiano]

Why would we trust Khan to build a successful Lot J development. He has failed at building a football team. He should have stuck with auto parts! I wish he would load the entire Jags organization on his little ship and sail to England and stay there.

[blizz01]

Maybe lot J is to compliment AEW wrasslin' at Daily's place. That's been arguably successful.  But don't get me started on Fulham FC.

[Ken_FSU]

The Jags can leave for all I care. I have not watched a single game this year, and I will not support them in any way as long as they continue to take advatage of us like that. Go Gators.

I think it oversimplifies things and distracts from the bigger issue at hand when we boil it down to "Rich Jaguars trying to steal from poor Jacksonville." I certainly understand how the public can feel like they're being fleeced by the way that all parties involved have handled this Lot J situation (pre-mature announcement, private council meetings on yachts, the stench of JEA still in the air, etc.), but I think all the headlines are missing the bigger point here.

It's exorbitantly expensive to host an NFL franchise in 2020. The salary cap just keeps rising off the back of the TV deals, cities continue to build $1 billion+ stadiums and complementary development to push up their local revenues, and because of the NFL's unique profit-sharing arrangement, teams have to keep up in terms of local revenue to be sustainable.

Shad Khan didn't move the first home game to London because he was "greedy." He moved it to boost the team's local revenue to stay competitive (jokes about on-field performance here). We're a small market that can't absorb the huge personal seat license and high ticket prices of markets multiple times our size, nor do we have the corporate sponsorship base that large cities do, so the Jags absolutely do need to rely on creative ways to boost local revenue if we're going to be a sustainable team in Jacksonville as more and more franchises boost their local revenues.

That's where things like Daily's Place and Lot J come in.

With the way that the NFL has grown in the last 15 years, these asks would be coming in no matter who owned the team.

Hence, the easy, low-hanging fruit is to be mad at the Jags and question why they're trying to fleece us, while the harder, more complicated, more relevant question is, "Do we want to keep putting all of our eggs in the NFL basket as a city to preserve this asset we kind of lucked into 30 years ago?"

And while it would be GREAT for Shad Khan to Dan Gilbert the city of Jacksonville and pay for all of this stuff on his own, I don't think he should be expected too either just because of his success in other ventures.

Best estimates I've seen have the Jags turning a profit of around $18-20 million a year.

If you look at that number in a vacuum, I think what they're actually reinvesting in the sports complex is fairly reasonable, but it's up to us as a city to have a hard conversation about whether having the NFL here is worth chipping in as much as we do.

Why would we trust Khan to build a successful Lot J development. He has failed at building a football team. He should have stuck with auto parts! I wish he would load the entire Jags organization on his little ship and sail to England and stay there.

Khan's just the wallet.

Lot J (and any subsequent development) is more about Cordish's track record, and to a lesser extent, Mark Lamping's.

Looking at Cordish's other similar developments in cities like St. Louis, Philly, Arlington, Atlanta, KC, and considering the full context (surrounding uses, taxpayer subsidies) should provide a better prediction about success/failure than the Jags' inability to retain defensive talent or kick 20-yard field goals.

Maybe lot J is to compliment AEW wrasslin' at Daily's place. That's been arguably successful.

I'd say inarguably.

AEW has been dominating cable ratings, growing a young, diverse fanbase, and has already received a massive, $200 million, four-year extension from TNT based on the success of year one.

Wish that Tony could translate that same success to the Jags.

What's interesting is that if you watch AEW or listen to Tony on podcasts, he really does seem more invested in Jacksonville than his Dad.

I also don't see it as being anything transformational.

Agreed, with the caveat that I think it will be more transformational for the CBD than it will be for downtown, and not in a good way. I don't think it's direct competition in terms of day-to-day use, but I do see the new Live! District replacing the CBD as the city's premier gathering space. All the events that used to be held at the Landing (Florida/Georgia, New Year's Eve, free concerts, political rallies, etc.) will shift all the way down to the stadium, distancing the Laura Street corridor from all of the positive externalities associated with being Jacksonville's front lawn. Especially since the bonds are going to be paid back based on incremental earnings realized in the Live! District. Unfortunately incentivizes us to shift things away from downtown proper.

[BridgeTroll]

This is not to compare Green Bay and Jacksonville  but the point about local revenue is salient for all NFL  franchises... The Packers began a "Lot J" project a few years ago an it has been  a huge success.   The Packers do not have a deep pockets owner nor is the city filled with particularly rich donors...  The Titleown (Lot J) project is essential to the future financial viability of the Green Bay Packers...

https://www.titletown.com/about/news/2018/october/titletown-development-announces-plans-for-phase-2

[CityLife]

Legislation is being introduced today by Tommy Hazouri.

A couple of things stick out that the media still either has wrong, or is missing entirely:

1) The Lot J development will not include a 100,000 SF Live Arena with restaurants/bars and an additional 75,000 square feet of retail/restaurant space. At least not per the development agreement. Lot J will include a total of 75,000 square feet in retail/restaurant space, with the exception of maybe any retail space that ends up in the hotel or residential units (the agreement is vague as to whether this would count toward the 75,000 sf). The media keeps saying 100,000 square feet for the Live! portion + 75,000 sf, but this just doesn't seem to be true.

2) The 40,000 in office space appears to be built into what is considered the $100 million "Live! Venues" portion of the development. This is important because the city is paying half for the Live! venues. From my reading, this suggests that a good portion of Jacksonville's $50 million contribution toward the "Live! Arena!" could conceivably be used for Class A office space considered to be part of the development that would then be handed over to Cordish to operate.

3) The agreement is $12.5 million in cash heavier than most people think. The $25 million rev grant for the residential & hotel components has quietly turned into a $12.5 million rev grant for the residential portion (at 20 years, requiring an exception), and a $12.5 million cash payment doled out over five years as a "completion grant" for the hotel. So, if the hotel is built, we're essentially giving Cordish/The Jags their $13 million breadbox deposit back.

4) Terms have also quietly changed from the city potentially being on the hook for $15 million for a parking garage if Phase II is developed, to the city being responsible for all cost overruns up to $15 million on any public portion of the project (which includes remediation, infrastructure, and the Live! venues/office portion). I'd kiss another $15 million in cash goodbye.

5) Agreement gives Jags/Cordish the option of flipping the hotel parcel to a third-party developer if they so choose. Probably not a huge surprise, but there's no minimum specs for the hotel included in the agreement (beyond 150+ rooms). I think they're committed to building the hotel, but it doesn't seem like there's anything in the agreement that stops them from flipping it to someone to build a hotel on the cheap and then pocketing the $13 million completion grant either.

$208 million in bonds will fund the project, if approved, which should cover our $50 million for half of the Live! venue, $77 million in infrastructure, $12.5 million for the hotel grant, $15 million for cost overruns, and $65 million for the breadbox loan (minus the Jags $13 million deposit). No modification to the TIAA Bank Field lease included in the agreement (with the exception of removing Lot J from the demised premises list). Agreement between the City and the Jags/Cordish specifically for management of the property will be for 35 years, with provisions for another 40 in extensions.

It's easy to bring emotion into what's ultimately a business decision in term's the Jags' record or Khan's personal wealth, but if Lot J brings some much-needed vibrancy to the sports complex, is a step toward keeping the Jags here for another 20-30 years beyond 2029 (which we're just going on blind faith on, because no one is willing to rock the boat and have that larger conversation about everything the Jags are looking for in terms of stadium renovations and the Shipyards), and maybe helps spark some additional development between Berkman II and Met Park, I don't have a huge issue with it. That said, the agreement should be a lot more specific about what we're getting at Lot J.

Great summary Ken.

A couple of other things to add. On the City's own website, it says that the maximum period for a REV Grant is 15 years. The City is giving Khan a 20 year REV Grant (property tax abatement) for the residential units. The City has an exemption from the 15 year maximum grant period, but from all indications, these are going to be your run of the mill mid-rise apartments that you find on the outer fringes of urban areas around the country. Is there anything in the term sheet even requiring some type of qualitative conditions that need to be met in terms of design and amenities?

Also, correct me if I'm wrong, but from the Daily Record article, it appears that the Live Site and Office/Retail/Hotel will all remain under City ownership. This means that Khan and Cordish will not ever pay property taxes on those parcels. This is completely counter to the concept of providing upfront cash incentives (even if from bed taxes), particularly in a TIF district. Generally, incentives are given upfront with the idea that you will at least capture future ad valorem taxes to offset the upfront payment. In the case of DT Jax's CRA, the increased taxes (after development) would go directly into the CRA to help other downtown projects. The amount of ad valorem taxes that Khan/Cordish will not pay the city over the life of the 75 year lease should also be included in the calculations of the City's total incentive package.

I'm pro-development and pro-incentives, but the City appears to be getting completely screwed here.

[Tacachale]

I don't see any way to say no to this. We can thank Curry for negotiating a bad deal for us, but no one in politics wants to lose the Jags and that's a likely outcome of not giving them what they want here.

[Ken_FSU]

Great summary Ken.

The City has an exemption from the 15 year maximum grant period, but from all indications, these are going to be your run of the mill mid-rise apartments that you find on the outer fringes of urban areas around the country. Is there anything in the term sheet even requiring some type of qualitative conditions that need to be met in terms of design and amenities?

Thanks!

Nothing in the term sheet or the legislation introduced today that lays down any minimum requirements for the residential units. Just the number of units ("approximately 400"), and the general classification "luxury residential."

Also, correct me if I'm wrong, but from the Daily Record article, it appears that the Live Site and Office/Retail/Hotel will all remain under City ownership. This means that Khan and Cordish will not ever pay property taxes on those parcels. This is completely counter to the concept of providing upfront cash incentives (even if from bed taxes), particularly in a TIF district. Generally, incentives are given upfront with the idea that you will at least capture future ad valorem taxes to offset the upfront payment. In the case of DT Jax's CRA, the increased taxes (after development) would go directly into the CRA to help other downtown projects. The amount of ad valorem taxes that Khan/Cordish will not pay the city over the life of the 75 year lease should also be included in the calculations of the City's total incentive package.

Per the legislation introduced today, the Live! Venues (Live Arena plus presumably the office space) and all roadways and right-of-way will remain under city ownership. The residential and hotel components will be transfered to the developer at no cost, and should be subject to property taxes.

City Council met tonight to discuss the legislation, and apparently, it was a real zoo.

Doesn't sound anybody has seen the full development agreement, which the legislation references, but may or may not actually exist yet.

[Florida Power And Light]

I don't see any way to say no to this. We can thank Curry for negotiating a bad deal for us, but no one in politics wants to lose the Jags and that's a likely outcome of not giving them what they want here.

No one in politics wants to lose the Jags.....

Fast backward....... a person in the State Attorney office deemed Republican nominee for Mayor.
John Delaney reportedly stunned, for days,soon grasped NFL Franchise directive.

Much of the public is done with it.

"Go Jags!"  Go Away

Not Public $$$$$$ to Lot J

Bummer for promoters to not have come up with a better Identifier than " Lot J".

I would conduct or attend formal " Protest".

Jax longtime, your comments below are positively noted.

[jaxlongtimer]

It's clear Curry has just flat out laid down for Khan to, sadly, be followed by an obedient City Council.  There is no evidence in these terms that the City is getting anything out of this deal other than a good screwing.

Live! is going to be worse than the Landing as it isn't on the river, isn't in the heart of the City and is smaller.  The City has already lost tens of millions on a lousy business deal with several garages including one in the stadium district and now were are going to pay to build another one with 700 spaces?  And, who wants to live in an apartment building that isn't near any grocery stores, pharmacies, other stores or green space of any significance (after Metro Park disappears)?  Or anything else worthwhile in walking distance?  And, is next to a noisy entertainment venue and facilities overwhelmed by traffic for major events that Khan will try to increase?

Why am  I so pessimistic?  Because Jacksonville has a long history of big dreams and "savior" projects* that fall far short of success or the grand visions promised early on and/or are poorly conceived and disappear.  And, because Khan, in all likelihood, is only doing this deal to (1) line his pockets with very little to no risk to him so failure be damned if it doesn't work out and (2) to make the taxpayers even more invested in the Jags so when their lease comes up he has even greater leverage to further extract taxpayer dollars for a new stadium so we don't lose what we already have invested in him and his projects.  Just watch.

* Examples of such projects include the Cross-Florida Barge Canal, Offshore Power Systems, the Landing, the Jags (after 25 years, the urban core or general welfare of the City is no better for their arrival), the Skyway, the convention center, Shipyards, the District, Berkman Plaza, the Landing, the county courthouse, the airport and, very likely, the soon-to-be the dredged river.  Plus countless "smaller" projects.

Interestingly, to me, some of our best advancements have been initiated and driven by our non-profit community, not the City.  They include the Emerald Trail, Riverside and Springfield historic districts, the Hayden Burns library renovation, our museums and theaters, the Symphony, our colleges and universities, Mayo, Baptist and St. Vincent's hospitals, etc.  Much of the contrast comes from these civic organizations gaining the support of our citizenry and being altruistic rather than dictating to them what's best for them with little or no citizen input and/or catering to special interests looking to get enriched.

[Tacachale]

I don't see any way to say no to this. We can thank Curry for negotiating a bad deal for us, but no one in politics wants to lose the Jags and that's a likely outcome of not giving them what they want here.

No one in politics wants to lose the Jags.....

Fast backward....... a person in the State Attorney office deemed Republican nominee for Mayor.
John Delaney reportedly stunned, for days,soon grasped NFL Franchise directive.

Much of the public is done with it.

"Go Jags!"  Go Away

Not Public $$$$$$ to Lot J

Bummer for promoters to not have come up with a better Identifier than " Lot J".

I would conduct or attend formal " Protest".

Jax longtime, your comments below are positively noted.

What?