Fleet Landing Riverside seeks DDRB conceptual approval

[Ken_FSU]

More form the JBJ, which IMO really speaks to our rubber stamp problem as a city.

The property lies between Riverside Avenue and the St. Johns River, where DIA's incentive plan generally caps REV grants at 50% unless additional qualifying riverfront features are provided. The proposal does not meet those requirements, prompting the request for a Council-approved waiver.

DIA staff said the incentive is needed to help the project meet the debt coverage required to secure financing. Under the agency's financial analysis, projected stabilized debt service coverage would rise from approximately 1.30 times without the grant to 1.41 times with it, meeting a financing target of at least 1.40 times.

PFM Group Consulting, DIA's financial consultant, reviewed the financial calculations and the coverage target. Its review did not independently test Fleet Landing's underlying pricing and operating cost assumptions against market comparables, consultant Mallory Richards told the board.

So, to recap:

The DIA specifically capped REV grants at 50% along Brooklyn's waterfront because these are among Downtown's most desirable development sites.

Now, the City of Jacksonville is being asked to wave $50 million in property taxes because a developer's (undocumented) financial model shows a debt coverage ratio of 1.30 instead of 1.40.

But the DIA's independent consultant blindly reviewed the math without independently verifying whether any of the underlying revenue and expense assumptions were accurate? And without asking whether the standard 50% grant would close the gap, or whether alternative financing structures could accomplish the same thing.

Those smarter than me might be able to correct me, but feels like this (undocumented) gap in a luxury developer's revenue model could just as easily satisfy their (undocumented, potentially arbitrary) target by increasing the equity they put in themselves to reduce the loan, or by reducing the project budget? Versus just letting the taxpayers make up the difference.

Maybe they genuinely need assistance, but no one seems to have demonstrated that they do to the level necessary to sacrifice $50 million in future tax revenue when we are struggling as a city to even seed a $4 million affordable housing trust.

If I'm City Council, I'm asking, "Why establish a geographic limitation on subsidies if developers can so easily get around it just by demonstrating that a larger subsidy would improve their financing? And if we ARE going to override our own incentive policy, shouldn't we first require an independent analysis establishing that the exception is genuinely necessary?"

[Ken_FSU]

P.S. RE: Master plan. In general, the city needs to stop playing this decades-long numbers game with downtown units, step back, and figure out what type of residential community it actually wants to create downtown before making all these decisions about subsidies in a vacuum. Would be genuinely fantastic if things like REV grants and completion grants rewarded the inclusion of mixed-income housing that is actually accessible to the average person that is currently working in the urban area instead of just being a race to the highest-end units, with the highest appraisals, to drive the highest $ tax rebates.

[jaxlongtimer]

Ken, I would one-up your suggestions at this point.  I would eliminate all incentives except those that promote public infrastructure and spaces to be enjoyed by all.

You can be assured all these developers have built in 20% to 30% or more returns, likely before incentives, and the incentives are just gravy or icing on the cake to give them even greater returns.  Who would invest in land, designs, lobbying, financing, etc. if they didn't think they could make a good return out of the gate, even without incentives?

This is now a scam and the City is a patsy for it.

[Ken_FSU]

Ken, I would one-up your suggestions at this point.  I would eliminate all incentives except those that promote public infrastructure and spaces to be enjoyed by all.

^I can get behind this for large, luxury projects.

Broken record from me by this point, but I think the Related deal on the Southbank is one of the worst incentive packages we've signed in the last 25 years. $40 million in cash and $20 million in tax rebates for ultra-luxury housing with a restaurant that turns its back to the park.

If I'm City Council, I'm pushing back on the Gateway Jax Riverfront Plaza hotel as well. I'm all for a max REV grant here, due to its strategic importance for Laura Street. I'm all for the $20 million completion grant, funded by the DIA. Gateway is the best partner we've had downtown in 50 years.

But I can't in good faith give those massive incentives when the proposed CRA pad is literally walling park goers off from the development.

When the only access point is a narrow side staircase, it's clear that the developers want the park to be an amenity for their hotel guests and residents, but they don't want their development to be an amenity for the park.



Find a way to go back to something closer to the original pitch, where the private development is integrated into the park instead of separated from it (which was the spirit of the CRA pad to begin with), and I'm fully on board.



Can't be handing out $20 million from the general fund and a 20-year 75% tax rebate for something that the public can't easily enjoy.

[simms3]

I definitely support the REV grant to get this one done.  I work in the capital markets - our team underwrites these deals (not this one specifically but ones like it, some here in Jax).  They truly don't pencil here like they do in Tampa, Nashville, etc.

We are a LONG way from coming close to the buying/renting firepower those cities have cultivated through much better job growth.

I also did a personal study on the taxes that Fleet Landing paid out at the beach - wish I could find it right now but I remember it.  Needless to say, their facilities out on Mayport Road still generate nearly $1 million a year in ad valorem from the residents.  There are abatements on some of the facilities but it's a bifurcated bag.  This project will be no different - probably result in higher tax revenue even than the other community out at the beaches even with the abatement.

Finally, THESE are residents I think will make great downtown residents.  They are the patrons of the arts and cultural venues.  They will be closer to the Symphony, Florida Theater, and will certainly go to downtown restaurants with their disposable income.

Downtown Milwaukee IS the empty nester retired boomer base, and it is thriving.  We don't have a ton of young people in Jax who can afford downtown living right now, but this generation CAN and they will support downtown businesses.  I think we need more of this not less.

Meanwhile, our city economic development department and Chamber/JaxUSA and other civic leaders and business leaders who have been on the sidelines should figure out a way to get more high paying jobs to Jax in general and especially downtown.

[Ken_FSU]

I definitely support the REV grant to get this one done.  I work in the capital markets - our team underwrites these deals (not this one specifically but ones like it, some here in Jax).  They truly don't pencil here like they do in Tampa, Nashville, etc.

When it comes to prime riverfront property like this, in an area that the DIA has already classified as limited incentive, would you consider it fair to require a developer to open their books to demonstrate that the REV grant above and beyond what is allowed for the property is actually needed?

Finally, THESE are residents I think will make great downtown residents.  They are the patrons of the arts and cultural venues.  They will be closer to the Symphony, Florida Theater, and will certainly go to downtown restaurants with their disposable income.

You might be privy to different research than me, but I've seen estimated average ages for continuing care retirement communities like this at 80+. Fantastic humans that we deserve A+ care in their golden years, but isn't a huge part of the appeal of facilities like this the fact that they can essentially get everything they need on site? Even the performance arts experiencing is being in-housed with an on-site theater.