QuoteThe developer with a plan to renovate the Laura Street Trio will likely seek a "substantial public investment" in the project, the chairman of City Council's finance committee said Thursday.
Councilman Greg Anderson didn't have an exact dollar figure or structure for the incentives the trio developer may seek, only that it would be a "big number," after a meeting with Aundra Wallace, CEO of the Downtown Investment Authority.
full article: http://www.bizjournals.com/jacksonville/news/2013/11/07/councilman-laura-street-trio.html
I've heard the number $20 million thrown around...of course some of that could be in the form of incentives or tax rebates after the complex has been built.
This project is taking on the distinct "I'll believe it when I'm standing in the middle of it" aroma of previous projects involving the trio.
Agree with Bativac......
let's not forget that OED had the DIA vote away their control of the $4,100,000 on 7/24/13. Board member Jim Bailey was the only No vote. There were 6 total projects.
Yeah I don't get too excited when anything is announced about the north bank. I think the Brooklyn residential projects will do more to help this project than any DIA or whatever. If the DIA has shared power with the council, then why have the group?
20 million should be doable in the form of tax credits.
Hmmm, $64 million for giant TVs used 10 times a year or $20 million to get this project going. I know which I prefer,
^ to be fair, it is $42 million...Khan (who financed the Laura St Trio deal) is spending $21 million...what I'm saying here is without the Jags, Steve Atkins would likely not have been able to buy the properties in the first place.
The city gave something around $17 mm each for the Carling and 11E projects, as memory serves.
Quote from: Kerry on November 07, 2013, 08:39:38 PM
Hmmm, $64 million for giant TVs used 10 times a year or $20 million to get this project going. I know which I prefer,
Maybe a little research before posting this comment.
The fact that we support the Jags being here is one of the few indicators that this city is cognizant of the fact that it should invest in QOL.
$20M for a project that can't surely top $80M, worst case scenario. 25% public incentive, leaving some portion of the remaining 75% to be financed. Then rethink those numbers if it's only $50M, or less, to get the Trio up and running.
To me that sounds like putting an awful lot of public incentive eggs in one small basket. Just as we wouldn't look to any other single project in Jacksonville as the "turnaround" that cures all woes and sets the future on a whole other path, so too I wouldn't look to this project to do either.
Sadly, I don't think any single project conjured up so far is worth $20M in city assistance - there are far cheaper and arguably better ways to kick start downtown, and all of those have been discussed ad nauseum here on MetroJacksonville. $20M to one developer also sets a huge precedence and opens the city up to potential lawsuits, in my opinion.
^ did you ignore the part where I stated that some of the money might be in the form of tax rebates...it has nothing to do with financing the construction
That is true - but let's think aboout future tax obligations for a property the size/value of Laura St trio when it is complete and filled with occupants/lessees. Do you honestly think for a minute that it's going to generate close to $20M in tax revenues over the course of its existence over the ~5-10 years after it is completed? Let me frame it this way:
Bank of America tower has an assessed value of $57,334,000 and pays the following taxes:
Taken from Tax Assessor's website for Bank of America tower:
If Paid By Amount Due
11/30/2013 $1,117,350.65
12/31/2013 $1,128,989.72
1/31/2014 $1,140,628.79
2/28/2014 $1,152,267.86
3/31/2014 $1,163,906.93
This includes City, Schools, DVI, Wtr Mgmt, and other special assessments.
What honestly do we think would a complete, filled and stabilized Laura St trio will pay in taxes? It would take many years, well into the future, to get to $20M. Tax break burnoffs in other cities (such as 421A in NYC) are 10 years. And they are burnoffs with 80% of would-be taxes owed not payable in years 1-5, and then that percentage decreases each year thereafter until 0% of would-be taxes owed are not payable by year 11 (or 100% of would-be taxes owed are payable).
I think the developer wants up-front city assistance. It's Jacksonville - the tax liability isn't going to be that great once the property is up and runinng. But where people get into trouble is finding the money to get a project up and running.
Granted, having good comparisons to other commercial properties in other cities, with the income that can be achieved with commercial properties in Jax, clearly the tax burden is higher than it should be. I will be the first to say that. But I would think that it's more difficult for folks to find up front and need that first and foremost, before considering back end help.
A tax break could help NOI and make the asset more marketable, but I think anyone who develops or rehabs a project in DT Jax can't make the assumption that there will be a market for their asset after it's complete/stabilized. Thus, I envision a proforma that develops and holds the asset. It'll come down to what kind of financing is available to Atkins on if he wants upfront assistance or backend assistance.
I don't think $20mm for renovations to all four buildings plus a new building is excessive, considering the impact this could have. If completed, the value of virtually every building and parcel on the Northbank would rise. How much more valuable would Chamblin's be if a new hotel and college are just steps away (as opposed to run down vacant buildings)?
Quote from: simms3 on November 07, 2013, 10:04:02 PM
That is true - but let's think aboout future tax obligations for a property the size/value of Laura St trio when it is complete and filled with occupants/lessees. Do you honestly think for a minute that it's going to generate close to $20M in tax revenues over the course of its existence over the ~5-10 years after it is completed?
no....I'm guessing they want $10-$12 million for renovations and the remaining $8-$10 million in tax credits over say a 20-year period
Quote from: vicupstate on November 08, 2013, 06:20:14 AM
I don't think $20mm for renovations to all four buildings plus a new building is excessive, considering the impact this could have. If completed, the value of virtually every building and parcel on the Northbank would rise. How much more valuable would Chamblin's be if a new hotel and college are just steps away (as opposed to run down vacant buildings)?
I disagree. Tax values won't go up until vacancy comes down and rents go up. I was poking around the assessor's website and looking at the tax bills of various DT buildings with large vacancies (BOA, Everbank, Modis, Enterprise Center), and was actually kind of astounded. Each property owner has been able to successfully appeal their invoices down as their vacancies have gone up, but I still think DT buildings are over-taxed for their current and potential income streams.
Commercial property isn't like housing, in that a fixed up property intangibly raises the value of those around it by selling for a higher $ amount - commercial prop taxes are largely based on income streams, as is a building valuation or what it would sell for. In the case of DT, income streams are so weak that no buildings are even selling at all, not even for discounts.
Maybe it can be argued that a rehabbed Laura energizes a corner of downtown and removes blight, but there's no evidence that all of a sudden tenants will want to locate downtown because of this.
Quote from: tufsu1 on November 08, 2013, 08:10:16 AM
Quote from: simms3 on November 07, 2013, 10:04:02 PM
That is true - but let's think aboout future tax obligations for a property the size/value of Laura St trio when it is complete and filled with occupants/lessees. Do you honestly think for a minute that it's going to generate close to $20M in tax revenues over the course of its existence over the ~5-10 years after it is completed?
no....I'm guessing they want $10-$12 million for renovations and the remaining $8-$10 million in tax credits over say a 20-year period
Agreed-that sounds likely. I guess in Jax it's common to receive enough tax credits as incentives to last 15-20+ years. My thinking has to change there since I'm used to reading about tax credits on a much shorter term (or no incentives of any sort at all where I live now, actually - the opposite where developers have to pay tens of millions of dollars just to play).
simms, you're like a friggin statistical encyclopedia!! :D Thanks for all of the information you share.
In my opinion, this redevlopment will be money well spent and should do a lot to help jumpstart that corner/block.
"Public investment" does not necessarily only mean local investment. Part of the deal could also include state and federal tax credits...as there are federal and state credits for rehabbing historic buildings. Not to mention enterprise/empowerment zone credits, and god only knows how many other programs there are.
We should all probably wait and see what they are specifically asking for before jumping to conclusions. Especially if a significant amount of credits/incentives aren't even from local coffers.
^Yeah, right? How about we see what the incentives are and where they can come before we determine the value of the plan.
I think you have to frame the debate on an impact basis.
1. All of the discussions on here regarding sports, conventions, etc. decry the lack of hotel rooms in Downtown Jacksonville ... this project injects a flagged hotel into the heart of downtown.
2. New restaurant venues will bring more people downtown which also helps existing locations.
3. Moving some undisclosed higher education facility into the Barnett building brings younger crowds downtown and increases likelihood of staying downtown after or in-between classes ... again more potential revenue for businesses.
4. Marketing and visual impact for other businesses and developers looking at downtown ... a finished and active corridor from Hemming to the Landing would encourage further development.
5. An active downtown corridor would further stimulate demand for housing (beyond unaffordable condos).
There are a lot of intangibles beyond just construction cost. But, you also have to keep in mind the cost of stabilizing the Trio as the new construction is abutted against it and the cost of renovating those structures. As to the Barnett building, I have toured that building on several occasions. On one such, a remediation/mold inspector advised that we should not be breathing the air in several of the rooms we were in and I am not going to even discuss all of the asbestos issues. The environmental issues were so severe and pervasive that it made no financial sense on any level. Cameron Kuhn bore some of the remediation cost but I am sure there is still quite a bit to be addressed.
Of course, it is a cost versus benefit equation and its outcome has to be compared to what is happening organically already.
Long and short, we have to wait and see what they are asking for and why before any judgment is made.
In 2006 the City of Oklahoma City decided to invest $19 million to help reopen the long closed downtown Skirvin Hotel. The hotel is now ranked as one of the top 5 hotels in the entire Hilton chain. Since then no fewer than 7 other downtown hotels have opened or are under construction. 4 more are in the planning stages.
Number of downtown Hotels built in the previous 25 years: 1
The moral of the story - if you don't invest in yourself no one else is going to.
This project aside, $20 million is a drop in the bucket for the ultimate amount of subsidies needed to launch something of this magnitude off the ground in downtown Jax. I'm sure, there's more to come as other proposed developments get far enough to make their financing gaps publicly known. If we can't paying for downtown revitalization of this type, maybe it's time to pull up our pants and get off the pot.
Quote from: thelakelander on November 08, 2013, 01:29:00 PM
If we can't paying for downtown revitalization of this type, maybe it's time to pull up our pants and get off the pot.
You have to decide what kind of city you want because the city is only a means to a way of life. - Enrique Penalosa (former Mayor of Bogota, CO)
Here is one of my favorite presentations from him.
http://www.youtube.com/watch?feature=player_embedded&v=W03qBlwtRJI
Right, but most of our local politicians have decided what kind of city they want... it just does not include the rest of the city. I don't think it is very hard to figure out what kind of city Richard Clark wants. Although it seems like all decisions are made by him and his kin.
I think we are going to have to get them off the pot.
I am sitting patiently, waiting to vote!
Thanks for the link.
Quote from: jcjohnpaint on November 08, 2013, 03:04:33 PM
Thanks for the link.
This is on a different site but I maintain a list of books, articles, lectures, etc... for sharing and reference.
http://www.okctalk.com/general-civic-issues/33058-new-urbanism-library.html
All the countless number of visioning plans over the last 40 years point to what type of city residents dream of. Everything at this point is continued recycled unimplemented ideas. Fund implementation of those dreams has always been our stumbling block.
Yep and so here we are - are we going to fund it or not?
Of course, there is a lot of stuff the City could that is 100% free and would go a long ways. For example, remove all parking requirements for any development in the Core (and we can use whatever definition of 'Core' you want).
Another one (although not free) is a railroad quite zone through the Southbank. CSX is one of the largest promoters of quite zones and in the shadows of their own headquarters building - train horns through residential areas. Go figure.
Anyhow, I digress.
The tracks through the Southbank are FEC. There's not much CSX can do about that.
Quote from: thelakelander on November 08, 2013, 03:56:29 PM
The tracks through the Southbank are FEC. There's not much CSX can do about that.
Oops - that's right. Anyhow, the City can do something about it and that was the main point.
Quote from: thelakelander on November 08, 2013, 01:29:00 PM
This project aside, $20 million is a drop in the bucket for the ultimate amount of subsidies needed to launch something of this magnitude off the ground in downtown Jax. I'm sure, there's more to come as other proposed developments get far enough to make their financing gaps publicly known. If we can't paying for downtown revitalization of this type, maybe it's time to pull up our pants and get off the pot.
Yes. That is all true. Not to mention, we can't give subsidies to just one developer for just one project. If we want more to happen, in the short term anyone who wants to play their part in downtown redevelopment will ask for and require subsidies of similar scale relative to their project. The city HAS to be prepared to either offer Atkins the $20M and future developers many millions more (and expect possible lawsuits if it doesn't, I would think), OR it needs to offer NO incentives and hold a fast line, being fully prepared to see nothing happen downtown at all.
Quote from: simms3 on November 08, 2013, 04:54:43 PM
Yes. That is all true. Not to mention, we can't give subsidies to just one developer for just one project. If we want more to happen, in the short term anyone who wants to play their part in downtown redevelopment will ask for and require subsidies of similar scale relative to their project. The city HAS to be prepared to either offer Atkins the $20M and future developers many millions more (and expect possible lawsuits if it doesn't, I would think), OR it needs to offer NO incentives and hold a fast line, being fully prepared to see nothing happen downtown at all.
Giving the incentives doesn't open Pandora's box and can be done to avoid lawsuits (as long as the award process is above board - not always our city's strong point).
But, otherwise, totally agree that the City has to be prepared to do more. If the bulk of the credits are done with property tax exemptions and Federal tax credits in the case of the Trio, it makes the financial pinch much easier to bare for COJ.