Jacksonville City Council committee approves Hillwood contract

[fieldafm]

I have to agree with Mayor Peyton on this one... we really ought to view this as a job creation project, not a land development project

Peyton said the city government does not have the tools to be a large-scale developer, citing the flailing revitalization of the LaVilla neighborhood as reflective of a good idea executed poorly.


“That is an example of exactly what you don’t want to do,” the mayor said.
The federal government handed over Cecil to the city after it was closed as a military base. Development has been slow and the biggest deals have included land giveaways, not land sales, to companies.

Anyway.... on to the story:

Via today's Time Union

http://jacksonville.com/business/2010-06-01/story/jacksonville-city-council-finance-committee-supports-making-hillwood

Critics continue to say the Cecil property is being underpriced.

A contract making Dallas-based Hillwood the master developer of Cecil Commerce Center zipped to approval Tuesday in its first test of support from a City Council committee.

After the finance committee’s 7-0 vote, the legislation heads next for a vote today  by the recreation and community development committee. The full council could vote on Tuesday.

“It’s time to flip the switch and move forward with this project,” said Councilman Jack Webb.

The proposed contract continues to draw criticism from opponents who say the city will be selling land to Hillwood for far less than what it’s worth.

Jack Allen of Allen Land Group Inc. , a Jacksonville firm, presented council members a letter from Keystone Consulting Group that said an average price of $90,000 an acre would be reasonable. The city’s negotiations with Hillwood put the average price of the land at about $7,500 per acre.

Allen hired Keystone Consulting Group to do the analysis. Allen said he sought the study “to take the mystery and abstraction out of the process.” He said the results show why the city should sell land based on property appraisals that take into account what other industrial land is selling for in the city.

Davis disputes analysis

City Councilman Daniel Davis, whose Westside district contains the commerce center, said Keystone’s finding makes no sense because Hillwood or any other developer must spend a large amount of money to make the commerce center’s land ready for construction.

“I just can’t imagine those prices are realistic,” Davis said.

The Jacksonville Economic Development Commission has determined it would cost Hillwood an average of $83,000 per acre to bring in fill dirt for elevating low-lying land, build connecting roads within the center, and extend utilities. Davis said it’s not reasonable a developer would pay $90,000 an acre for land that would require so much additional investment before any buildings could be built.

The Jacksonville Economic Development Commission and Hillwood used an income-based approach to setting prices for the land. That approach determined what Hillwood could earn from leasing buildings, and then subtracting how much it would cost Hillwood for fill, streets and utility line extensions. The difference between Hillwood’s revenue and its expenses is the sales price in the proposed contract.

Allen said in an interview that Hillwood won’t shoulder development costs that are different from other Westside industrial developments where raw land sells for much more than what the city would charge.

“The Westside of Jacksonville is flat as a sheet of plywood,” he said. “As a consequence, everybody has to do earthwork.”

[fieldafm]

Another article from the Daily Record today... interesting comment from Pete Rummell:

Davis also read excerpts from an e-mail he received from former St. Joe CEO Peter Rummell. According to Rummell, the value of the land is nothing if no one is interested in it. Rummell said only the City and Hillwood can provide the infrastructure necessary to make the land attractive to developers. However, the City doesn’t have the money or the bonding capacity, said Rummell, who added the options are to let it sit for another 10 years or allow Hillwood to market and develop the property.

Entire story here:

http://www.jaxdailyrecord.com/showstory.php?Story_id=531135

[fieldafm]

One more approval for Hillwood deal...

http://jacksonville.com/business/2010-06-02/story/hillwood-contract-cecil-commerce-center-wins-2nd-committee-backing

By David Bauerlein
Dallas-based Hillwood moved closer on Wednesday to becoming master developer of Cecil Commerce Center after a second City Council committee unanimously backed a proposed contract with a few amendments to the deal.

The 7-0 vote by the recreation and community development committee followed unanimous support by the council’s finance committee earlier this week. The legislation goes next to the full council Tuesday.

At the Wednesday committee meeting, Councilman Ronnie Fussell won support for two amendments affecting land sales and the timetable for Hillwood constructing roads and utilities.

The committee also supported Councilman Reggie Brown’s amendment promoting the use of businesses from the Jacksonville Small and Emerging Business program. The contract would establish a 15 percent goal for the share of commerce center work that would go to JSEB businesses.

Opponents of the deal have argued the proposed contract establishes land prices that shortchange the city. They have pressed the city to do appraisals. The Jacksonville Economic Development Commission has said that would be a deal-killer, and none of the amendments calls for future appraisals.

One amendment states Hillwood would pay the city for land used for roads and easements, just as Hillwood pays for land that becomes the site of buildings. The other amendment pertains to Hillwood’s construction of roads and utilities at the commerce center.

Part of the deal’s calculation for the price of city-owned land is an estimate Hillwood would spend around $42 million on utilities and roads to fully develop 2,800 acres. However, the city projects that over a 25-year period, Hillwood would develop 843 acres and spend just $3.6 million on roads and utilities for those tracts.

Fussell said because Hillwood gets the benefit of buying land at lower prices based on how much it would spend on streets and utilities for full build-out, the company should reciprocate by constructing those improvements at a faster pace. Fussell and JEDC officials will meet about how to draw up that timetable.