Metro Jacksonville

City Council member Matt Schellenberg has filed an emergency bill to possibly give several downtown properties away to help reduce the city's unfunded pension liabiliity.  These sites include the Shipyards and the old county courthouse.  Is this a good idea?

(http://photos.metrojacksonville.com/photos/453492897_t9xqA-M.jpg)
The Shipyards site in July 2008.

(http://www.metrojacksonville.com/assets/thumbs/image.2250.feature.jpg)
The old courthouse site.

QuoteBill would give city property to pension fund

The Shipyards, old courthouse, former City Hall and several Downtown parking facilities could be off the city's hands and into the Police and Fire Pension Fund's to help lower the city's unfunded pension liability.
City Council member Matt Schellenberg says the transfer of the properties, whose assessed values total $69 million, would go toward paying down the $1.7 billion unfunded pension liability. He said more properties could be added to the list.

"There is no reason why these properties that are underutilized shouldn't be looked at," he said.

He said making the deal will lower the pension liability in the short-term, by substituting cash for real estate, and in the long-term when the fund develops the properties and sells them.

Fund Administrator John Keane said Thursday that profits from any sales would be applied toward that obligation and the fund.

The Jacksonville Civic Council suggested real estate be a part of a pension solution. Keane worked with the council and is also the author of the legislation.

Full article: http://www.jaxdailyrecord.com/showstory.php?Story_id=540574

So what he's suggesting is that we just give them $69M worth of land to pay on $1.7B worth of unfunded pensions and then....  then if they develop the land, they can apply the profits to the rest of it?

Riiiigggghhhhhhhtttttt.

We're giving them essentially a 4% down payment while the 'balloon payment' if you will, will be up to the Pension fund to work on from developing and/or selling the properties;  All the while, we're still paying interest on the remaining 96% of the unfunded pension;  AAAANNNNDDDDD   all the while it is still growing because we haven't found a workable solution to even begin to actually make it sustainable.

Sounds great.  Where do I sign up?

If this city can't utilize all of its human capital on staff,  as well as power, connections, and incentives to redevelop or sell those properties more effectively than the Police and Fire Pension Fund can, just close the doors to City Hall.

I don't know that I have faith in the city to properly redevelop those properties, but what makes anyone think the Police and Fire Pension fund is capable of doing so? I had a meeting with a former lobbyist/political type in Tallahassee a few weeks back, and this person mentioned a few suspected shady dealings with the Police and Fire Fund management when we were talking about Jax.... This sounds like the Police and Fire Pension fund is going for a cheap land grab based on the city's poor financial state in the short term. The reality is that its a long game, and we can't look for cheap, easy short term solutions.

I think its a good idea for the city to use those properties to generate revenue, sell them on the free market, or form a P3 to redevelop them, all with the intent of using proceeds to pay down the liability, but I don't think putting them into the hands of the Police and Fire Pension Fund is the best long term strategy for the city. Unless, Mr. Schellenberg would like to provide any hard data proving otherwise.

Also on the list:  Main/Forsythe Garage & Water St. Garage.

Lake (or anyone) - is the city still paying debt service on these garages until they have become 'profitable'? (JFC, I got into the wrong business out of college) Or are they in the clear?

If it were me, I don't think I'd sell any of my major downtown assets until the CRA plan is completed. At this point, without a plan, you really don't know what land you may or not need or what the best leverage options may be.

Here's how the last downtown land deal with the Fund worked out for the City:

QuoteJacksonville City Council bill weighs buying vs. leasing downtown building

A Jacksonville City Council member wants the city to buy a renovated building it leases across from Hemming Plaza, arguing that spending about $15 million now will save money over time.

"While I don't want to assume any more debt, my feeling is we're swapping debt," said council Vice President Bill Gulliford, who filed a bill to buy the building at 407 N. Laura St., across the street from City Hall.

QuoteHe said the pre-agreed lease increases and hikes in purchase price make buying the building the smarter choice, even if the city has to borrow money to do that.

"We're sort of doing the police and fire pension fund's job for them," he said " ... We're guaranteeing them a better return than they can get anywhere else."

Whether to buy now is "a business decision" that carries costs on both sides, said John Keane, the pension fund's administrator.

Keane noted the fund ended up in the 2009 Godbold Annex deal through a chain of agreements that reduced the city's unfunded liability to the pension system. He said he hopes the city will be open those types of agreements in the future.

Read more at Jacksonville.com: http://jacksonville.com/news/metro/2013-03-29/story/jacksonville-city-council-bill-weighs-buying-vs-leasing-downtown#ixzz2fStjI26m

We have a crazy, reasoning , problem. That helped me make my vote.

Quote from: Non-RedNeck Westsider on September 20, 2013, 04:02:18 PM
Also on the list:  Main/Forsythe Garage & Water St. Garage.

Lake (or anyone) - is the city still paying debt service on these garages until they have become 'profitable'? (JFC, I got into the wrong business out of college) Or are they in the clear?

I'd have to go back and verify, but I believe we are still subsidizing those garages to the tune of millions each year.  I believe they cost us more than the Skyway does annually.

Quote from: thelakelander on September 20, 2013, 04:07:04 PM
If it were me, I don't think I'd sell any of my major downtown assets until the CRA plan is completed. At this point, without a plan, you really don't know what land you may or not need or what the best leverage options may be.

Here's how the last downtown land deal with the Fund worked out for the City:

QuoteJacksonville City Council bill weighs buying vs. leasing downtown building

A Jacksonville City Council member wants the city to buy a renovated building it leases across from Hemming Plaza, arguing that spending about $15 million now will save money over time.

"While I don't want to assume any more debt, my feeling is we're swapping debt," said council Vice President Bill Gulliford, who filed a bill to buy the building at 407 N. Laura St., across the street from City Hall.

QuoteHe said the pre-agreed lease increases and hikes in purchase price make buying the building the smarter choice, even if the city has to borrow money to do that.

"We're sort of doing the police and fire pension fund's job for them," he said " ... We're guaranteeing them a better return than they can get anywhere else."

Whether to buy now is "a business decision" that carries costs on both sides, said John Keane, the pension fund's administrator.

Keane noted the fund ended up in the 2009 Godbold Annex deal through a chain of agreements that reduced the city's unfunded liability to the pension system. He said he hopes the city will be open those types of agreements in the future.

Read more at Jacksonville.com: http://jacksonville.com/news/metro/2013-03-29/story/jacksonville-city-council-bill-weighs-buying-vs-leasing-downtown#ixzz2fStjI26m

From the comment section as an add by Steve Patterson:

Quotehere's what a summary for City Council members says about the history behind the deal:
"Background Information: The City purchased the Laura Street Trio of buildings (Bisbee Building, Florida Life Building, and Marble Bank building) in 2006 at a price of $3 million and conveyed the buildings to the Police and Fire Pension Fund (PFPF) in return for a credit of $3 million against the City's unfunded actuarial liability to the fund, along with a commitment to an additional $5 million contribution to the pension fund for renovation of the structures for commercial re-use. In 2009 the City agreed to purchase and convey the Haverty Building to the PFPF in exchange for another $3 million credit against its UAAL to the fund and a release from its $5 million obligation with regard to the Laura Street Trio. The City then leased the building back from the PFPF for use as City office space for a term of 44 years at a rate that would guarantee the PFPF an 11.9% rate of return on its investment of $10 million in renovation costs, plus a guaranteed 12% inflation rate applied every 4 years."

Read more at Jacksonville.com: http://jacksonville.com/news/metro/2013-03-29/story/jacksonville-city-council-bill-weighs-buying-vs-leasing-downtown#ixzz2fSxZooQV

So if history holds true, we'll give the properties away, they may or may not get developed, but then we'll start paying rent on them to make up for some other deal. 

Again.  Where do I sign up?  Lol.

I wouldn't sign up for anything this guy proposes.  One of the dumbest of the group on council.  Looking forward to day this guy is voted out the door.  Unfortunately he is my representative. 

After getting the Trio for $6 million, the Fund flipped it to developer Cameron Kuhn for $6 million:

QuoteOfficials from The Kuhn Cos. have sent a $6.15 million offer to the Police and Fire Pension Fund to purchase the Laura Street Trio.

The trio, which is at the corner of Laura and Adams streets, includes the former Florida Life, Bisbee, and former Marble Bank buildings.

The Police and Fire Pension Fund has been redeveloping the buildings into condominiums, office, and retail space and it has bought land around the buildings for a parking garage.

The move would make sense for Kuhn officials, who are restoring the former Barnett Bank building across the street.

But the deal is far from done. Pension Fund executive director John Keane hopes to meet with Kuhn officials next week to discuss the deal, but the parties have yet to have a phone conversation hashing details out, he said.

Kuhn vice president George Moore said the company would have more details after talking with fund officials.

The pension fund has owned the project since spring 2005, after gaining control of it from the city in exchange for a $3.25 million credit toward the city's pension fund debt.

The city has since also agreed to contribute $5 million to the fund to help with the renovations, but Keane said those agreements wouldn't jeopardize a sale.

Jacksonville Economic Development Commission executive director Ron Barton didn't return a voice message on his cell phone left Wednesday evening.

Since then, the fund has invested a couple million dollars to purchase land for the parking lot and began the renovations, Keane said.

He said he received several offers to buy or partner in the project, but up until this one the pension fund board considered the offers too low at less than $5 million.

full article: http://jacksonville.com/tu-online/stories/081706/bus_4476190.shtml

First, the profit comment is misleading.  The value ultimately realized by the Fund from the sale or the development of the properties would offset the Fund's expenses.  It was the profits realized by the Fund in the management of its assets that allowed COJ to take several holidays from paying into the Fund.

The upside is that ownership by the Fund would reduce the level of bureaucracy associated with the sale of any of the assets. Plus, the Fund has a fiduciary obligation to seek maximum value from those assets.

In the case of the courthouse site, it's been mentioned several times that it should become the location of the new convention center.  What happens if it is given to the Fund, a few months later the CRA suggests that a convention center should be located there, but the maximum value of the asset for the Fund is residential, office or maritime related?  Then we'd have a situation where the fiduciary obligation may not match the overall vision of how downtown should be redeveloped.

I think it's possible to avoid situations like this if we just finish the CRA first, which should help identify what is and is not needed to help make the plan an effective one.

Quote from: icarus on September 20, 2013, 04:37:14 PM
First, the profit comment is misleading.  The value ultimately realized by the Fund from the sale or the development of the properties would offset the Fund's expenses.  It was the profits realized by the Fund in the management of its assets that allowed COJ to take several holidays from paying into the Fund.

How so?  Whatever the value of the sale - expenses = profit.  That final number will be the one used as far as the city's contribution and not the sale price.

QuoteThe upside is that ownership by the Fund would reduce the level of bureaucracy associated with the sale of any of the assets. Plus, the Fund has a fiduciary obligation to seek maximum value from those assets.

How does this help the city?  Now the PFPF can sit on $69M worth of property until a deal falls into their lap that they want.  The city is still on the hook for maintaining the fund whether or not the properties are sold.   There is ZERO incentive to sell the property.

Quote from: thelakelander on September 20, 2013, 04:43:44 PM
In the case of the courthouse site, it's been mentioned several times that it should become the location of the new convention center.  What happens if it is given to the Fund, a few months later the CRA suggests that a convention center should be located there, but the maximum value of the asset for the Fund is residential, office or maritime related?  Then we'd have a situation where the fiduciary obligation may not match the overall vision of how downtown should be redeveloped.

I think it's possible to avoid situations like this if we just finish the CRA first, which should help identify what is and is not needed to help make the plan an effective one.

Agreed.  Based on the simple math - it's still only a 4% payment into a fund that we're on the hook for regardless.  Then we're turning them over to an agency that won't require any urgency to develop the properties, while we're still on the hook. 

Bad.
Decisions.
Galore.

I'm playing a little bit of devil's advocate here.

1. We are talking about the COJ. The same city that if I believe doesn't even know what real estate assets it owns, i.e. RFP hiring a consulting firm to inventory and value.

2. What makes you believe that the Fund is going to be less likely to develop the properties than COJ? If anything, the Fund will sell versus donating to another failed development scheme.

3. Any profit to the Fund regardless of how you calculate it reduces the potential obligation of COJ.

4. The City, as reflected in this Forum, has a number of competing wishes, i.e. dredging port, New Convention Center, Mass Transit/RTC.  We can not fund them all and can't even keep all of our libraries open let alone all our grass mowed.

5. A transfer to the Fund puts the responsibility in a single board versus the siloed departments/politics of the City.  As a businessman, I would rather negotiate with a single entity versus a plethora of departments and special interests.

On the flipside, Lakelander is correct about the Convention Center issue but I doubt we are going to see any real leadership on this unless we can arrange a photo-op for the Mayor.

Quote from: icarus on September 20, 2013, 05:06:09 PM
I'm playing a little bit of devil's advocate here.

1. We are talking about the COJ. The same city that if I believe doesn't even know what real estate assets it owns, i.e. RFP hiring a consulting firm to inventory and value.

2. What makes you believe that the Fund is going to be less likely to develop the properties than COJ? If anything, the Fund will sell versus donating to another failed development scheme.

4. The City, as reflected in this Forum, has a number of competing wishes, i.e. dredging port, New Convention Center, Mass Transit/RTC.  We can not fund them all and can't even keep all of our libraries open let alone all our grass mowed.

5. A transfer to the Fund puts the responsibility in a single board versus the siloed departments/politics of the City.  As a businessman, I would rather negotiate with a single entity versus a plethora of departments and special interests.

These are all assumptions based on past experience with the city prior to the DIA. If Mr. Wallace and the DIA can't rectify the above and redevelop these properties better than the Police and Fire Pension Fund, then the entire organization would be a massive failure. Like Lakelander said, the DIA should be given time to finalize the CRA Plan and Mr. Wallace time to get his feet wet before making a huge decision like this with long term implications.

Also tell me, who in these bio's is some type of wizard developer or real estate guru? This is the staff of the Pension Fund. Half the posters on MJ can put together a better team in 14 minutes.

http://www.coj.net/departments/police---fire-pension-fund/administration/john-keane.aspx

http://www.coj.net/departments/police---fire-pension-fund/administration/stephen-lundy.aspx

http://www.coj.net/departments/police---fire-pension-fund/administration/deborah-manning.aspx

http://www.coj.net/departments/police---fire-pension-fund/administration/troy-scherbinski.aspx

http://www.coj.net/departments/police---fire-pension-fund/administration/kevin-stork.aspx

http://www.coj.net/departments/police---fire-pension-fund/administration/lynn-west.aspx

Guillford and Boyer are crushing it these days:

QuoteBut, as Boyer and City Council President Bill Gulliford said, taking away the Downtown land also hinders the work of the Downtown Investment Authority.

"Some of these parcels are some of the most significant that the city owns," said Boyer, who serves as the council liaison to the authority. "By doing this, you take all the decision-making away from the DIA ... not just proceeds, but how it becomes implemented in the bigger Downtown plan."

Gulliford agreed.

"To surrender control could have a heck of an impact on future development," he said. "That's a huge consideration. If you ceded ownership to them with certain controls, that would be one thing. But to just give the property, you'd have no control over how it would be developed or if it would be developed at all."

Authority CEO Aundra Wallace did not return a call Thursday afternoon or Friday morning.

Gulliford and council member John Crescimbeni also questioned whether it was wise to give such a hefty chunk of real estate to the fund, when past results have been spotty.

"The Police and Fire Pension Fund historically has done a miserable job on return on investment," Gulliford said. "Why would I want to see them take on something this significant when they have not yet distinguished themselves as great custodians?"

Again, playing devil's advocate ...

These are not assumptions but practical reality.  Case in point, where is the City in evaluating whether to sell an unused ash contaminated park in the general Brooklyn Area to an existing Jacksonville Brewery for expansion and development?  I'm assuming COJ is still trying to decide what Department has jurisdiction to even consider the idea let alone which Department owns the property ... then again maybe they are going to issue an RFP to determine if they do indeed own it.

The Fund board is not compromised of developers and I can think of several fiduciary reasons I wouldn't want someone like that charged with managing pension fund assets.  What the Fund board is comprised of is individuals charged with effectively managing assets which is far more than can be said of anything COJ has shown so far. No, I am not convinced they are effective stewards but judging by the dust on the deeds ... neither is COJ.

Lastly, you ask a lot to put faith in new agency which to date has only managed to lose most its capital to other competing interests, had an influential member resign, and abdicated its responsibilities to another agency, i.e. OED for negotiations.

.......

Now personally, this is an accounting gimmick that transfers under or un utilized assets in an attempt to plug a hole that requires at least a $1b more in assets to do.

I have no real expectation of leadership from the Mayor's office on any of these issues. I do hope that by proposing something like this perhaps it engages people to get off their proverbial asses and get engaged and involved. If anything, maybe this does give Wallace and DIA an opportunity to step forward and do something ... anything.

I suggest Gulliford and Boyer seize the momentum and actually lead.  The whole City might just collectively breathe easier.

This is probably the second time. Gulliford is also a fan of not getting rid of the gas tax because it's one of the only taxes that's partially generated by non-Duval County residents.

Quote from: icarus on September 20, 2013, 05:49:29 PM
Again, playing devil's advocate ...

These are not assumptions but practical reality.  Case in point, where is the City in evaluating whether to sell an unused ash contaminated park in the general Brooklyn Area to an existing Jacksonville Brewery for expansion and development?  I'm assuming COJ is still trying to decide what Department has jurisdiction to even consider the idea let alone which Department owns the property ... then again maybe they are going to issue an RFP to determine if they do indeed own it.

The Fund board is not compromised of developers and I can think of several fiduciary reasons I wouldn't want someone like that charged with managing pension fund assets.  What the Fund board is comprised of is individuals charged with effectively managing assets which is far more than can be said of anything COJ has shown so far. No, I am not convinced they are effective stewards but judging by the dust on the deeds ... neither is COJ.

Lastly, you ask a lot to put faith in new agency which to date has only managed to lose most its capital to other competing interests, had an influential member resign, and abdicated its responsibilities to another agency, i.e. OED for negotiations.

You aren't going to get any arguements from me regarding the city's mishandling of assets. If you look back at the thread from when Intution wanted the Shipyards site, I blasted the city for not properly handling the situation or having any unified plan for disposition of assets. That is precisely one of the charges that the new DIA has. Despite the fact that I'm not all that impressed with their hire, I still would much rather give him and the DIA the opportunity to put together a disposition plan for city assets, than simply give it to the Pension Fund. As Guilliford pointed out and my previously linked bios show, that organization has ZERO capacity to redevelop the properties.

You think there is a conflict of interest between a real estate person disposing of real estate assets, but not of a former Fire employee managing a fund of retirement accounts to former police and fire employees...hmmm. I don't like airing dirty laundry in public forums like this, but like I said earlier, I was told of some pension fund management issues that the public would apparently be pretty mad about.

As for faith in the DIA...the money was gone prior to Wallace coming on board...you want to further handcuff him and the DIA? Take away all city owned land for potential redevelopment deals downtown.

Really, we're just spinning our wheels for nothing. I don't have a ton of faith in council in general, but there is no way they would be dumb enough to vote for this.

Quote from: thelakelander on September 20, 2013, 06:08:42 PM
This is probably the second time. Gulliford is also a fan of not getting rid of the gas tax because it's one of the only taxes that's partially generated by non-Duval County residents.

Don't forget that he is the one that called out the city for mishandling of the Hemming RFP and is working to correct it.

The COJ surrendering control of downtown properties to those who will invest their own money in them is far more likely to put them to prosperous use than whatever plans the COJ or DIA could come up with.  What we need downtown is more prosperity, not more vision and planning.  All of those properties should go back on the tax rolls.

^Well we do need a CRA plan for DT. It's actually legally required. You also don't get more prosperity if you have no coordinated vision.  Instead, you only end up with a clusterfuck of parts that don't work well together.  Sort of what downtown has become today.

While I agree that as much land as possible should be returned back to the tax rolls, giving all property to the Fund may not be the best solution here.  The better solution would be to issue an RFP for properties deemed disposable.

Parts that don't work well together would be a huge improvement over vacant buildings and surface parking.  Compatible uses will tend to pop up near each other like the bars in the Elbow.

QuoteParts that don't work well together would be a huge improvement over vacant buildings and surface parking.

But you still miss the goal of having a vibrant downtown. You'd have less vacant buildings because they'd be torn down for more surface parking. Instead of an F, you end up with a D+, depending on how one views a Southside looking DT.  Either way, you're still failing.

This idea is ridiculous at this time. I can't imagine it would come close to passing.

Voting ends Oct. 4, 2013 the day of the next Downtown Experience Committee meeting of the DIA. We need another round over here!

DIA Board meeting today 5pm. City hall. Anyone going? Will there even be one news crew to ask the new CEO of our DIA Aundra Wallace about this real estate take away from the DIA? I feel sorry for the man already. You have to hope that it will be discussed at the meeting.

Ron Barton
Don Shea
John Culbreath
Vince Seibold

But HEY, OED had the DIA Board Board vote away there  rights before Wallace took charge Aug. 19 to negotiate on a super list of projects that after the city council vote will be millions of dollars to the stick your hand out recipients that should have this entire city just shaking their heads. Just pull the tape and listen for yourselves. Lake, It should be interesting to see what's on the agenda. By the way has anyone received today's agenda for the DIA Board meeting that is just 14 hours out?

Thank God for the new guy Paul Astleford CEO of Visit Jacksonville and just on the job 9mos identified 32 organizations hindering tourism. Can we all say RICO.

Our city doesn't know what land they have. (Mr. Overton, I know that you know what we have.)
What are the current land holdings of the PFPF?
When I drive around Downtown I notice a number of properties. Some are FOP I believe. So what does that count for? Are they all income producing for PFPF?
Maybe there should be a list of these properties before we just give away the store?

If we are going to give away land. Why not give the land outside of the DIA zone and the land and it's use be tied in to the Jacksonville Journey?

A new Authority
Embrace It
Or
It will Embrace Us

Didn't they tell us they would sell the old court house site to off set some of the cost of the new courthouse and get a new tax revenue from it?

I don't think they do what they say.

Is the Shipyards really worth $69 million? If this property were sold at auction, how much could it really get?

Not $69 million.  The only way to realize the true value in the property is more than likely through some public/private partnership or a proposed use that generates a serious accrual to the tax base.

Quote from: Lunican on September 23, 2013, 01:42:43 PM
Is the Shipyards really worth $69 million? If this property were sold at auction, how much could it really get?

It is more than the Shipyards...per the article, "The Shipyards, old courthouse, former City Hall and several Downtown parking facilities"

Yes.  Negotiate for the maximum value and make it a part of a 20 year solution to the underfunded pension along with employee concessions and a dedicated property or sales tax increase.

Put the property back on the tax rolls.  The city has no incentive to move this property and we just continue to eat the expense of maintenance.  Private development has the incentive.  Plus our bond rating improves again because we address our pension (all pensions) issues like responsible adults.

It could possibly be a good idea down the road but should not be done now as an emergency.  God only knows how our council would mess something as big and complex as this by just passing it without debate and thinking it through. Hmmm. Ok maybe that is not a good reason since they seem to mess things up pretty good when they debate too.  Oh well.

Also he is doing this solely for political reasons in my mind.  Have heard rumors he may think of wanting to run for mayor and what better platform than to say he saved us all from that big old bad tax hike.  God help us if this guy ever becomes mayor.  Keep in mind he also voted for the Mobility Fee moratorium and also against the Human Rights Ordinance so well thought out ideas for the good of the community are not his strong points.