LIVE BLOG: MOBILITY FEE MORATORIUM: Rules&Finance Committee

[simms3]

^^^I highly doubt that 220 Riverside is underwritten with rents greater than $2.00psf.  Probably closer to $1.50-$1.70psf range as it would be underwritten in any other similar market.

Lake, policy needs to change in Jax for sure...but in all honesty I don't think Norfolk, St. Petersburg or Greenville are comparisons for Jacksonville.

I think, for instance, as we have pointed out that St. Pete promotes a walkable atmosphere with its pedestrian and bike mode inclusion, and it reserves the entire waterfront as greenspace to be used by anyone (which why wouldn't you then think that we should do the same here in Jax, rather than try to put condos on the Shipyards), but most of the residential in DT St. Pete is high end condo, 2-3BR units, large balconies, etc.  St. Pete is where Tampa Bay residents go to spend weekends or Thurs/Fri evenings, it's not where throngs of young profs live.  Part of the purpose of urban living is so that you have easy access to both job AND quality of life, which you don't have if you're spending forever commuting to your job.  Channelside is clearly much younger, and the new resi there reflects that.  DT St. Pete permanent resi base has more in common with Delray Beach or Clearwater than DT Charlotte or DT Tampa (we're looking at a deal in Tampa now and we also put up the Skypoint Tower as a partner).

Greenville is pretty progressive and needs to give Jax a lecture on how to do things, but it's a small town.  It's more like Chattanooga, Huntsville, Knoxville, etc, all of which have been successful in promoting tourism and growing their cute little downtown resident bases (cute being the key word).  If Jacksonville wants to shed half of its population and become a cute little town, by all means it's a different environment altogether.

Norfolk is a totally different animal in almost every way.  First of all it never demolished its entire existence, second of all it's one node out of like 5 in that region, third its employment base is almost entirely driven by the military, and finally it's downtown is not residential heavy.  Sure there are old brick apartments within a mile on all sides, but it's all relatively cheap housing for a totally different demographic than we probably want living downtown if we want a "young, vibrant, creative atmosphere".  Are there lessons to be learned from Norfolk, particularly on the tourism side and how they do their waterfront and capitalize on their role in the public (defense) sector and defense side, yes!  This is the city that is blocking military expansion in Jax after all.

I think investors lump Jax in with Charlotte, Nashville, Birmingham, Louisville, Memphis, Raleigh, Orlando, Richmond...they are all playing the markets based on what jobs are doing, hence why Charlotte and Nashville and Raleigh have taken off both in suburban development and urban development versus the others.  It just so happens that the better economies are also growing tourism (Nashville, Charlotte), which benefits downtowns in those cities.

[thelakelander]

When you have 90% or even 95% occupancy and no rent growth and there are still concessions being offered, the proof is in the numbers that there is no demand.  If there were, the Strand, 101 East, and the Carling would all be 98-100% right now (especially at those rates!...you can't get those rates in other cities).

And those only worked because of huge subsidies.

Simms-what do you think of 220 from a success standpoint? The developer would not quote me a psf number but gave me projected rents. Simple math puts it well above $2.00psf.

One of the most successful recent DT residential projects was the one that wasn't subsidized. I'm speaking of Metropolitan Lofts. What can we learn from this project that will help guide others in the future?

[simms3]

^^^GOOD POINT!!!!  Yes, though I wouldn't jump to conclusions that we know it was a complete financial success if we haven't seen the financials and know what kind of return hurdle they were going for, though one has to guess they did well.

Yea...that's a project worth looking into   Totally affordable rates, very limited hard/soft costs, good purchase price, adaptive reuse.  11 East and the Carling are pretty fancy construction projects...we don't need to go to those lengths for every building we convert, though I think Vestcor was going for a sale to a semi-sophisticated/experienced private group in the end, whereas some dude might own Metropolitan Lofts...we need more of these "dudes".  Institutional capital only plays in the fancy/large stuff like 220 Riverside and the Strand, which obviously the market can't support.

[Tacachale]

^Yeah, but part of the problem is there aren't all that many buildings that can be converted affordably. At least not enough to make as big impact on downtown residential numbers as we want. If we want to see change there the city really needs to commit to it over time. It worked in Charlotte.

[thelakelander]

Lake, policy needs to change in Jax for sure...but in all honesty I don't think Norfolk, St. Petersburg or Greenville are comparisons for Jacksonville.

I think, for instance, as we have pointed out that St. Pete promotes a walkable atmosphere with its pedestrian and bike mode inclusion, and it reserves the entire waterfront as greenspace to be used by anyone (which why wouldn't you then think that we should do the same here in Jax, rather than try to put condos on the Shipyards),

With the shipyards, I'm of the opinion that we should carve out the public space component of the land we want and then parcel out the remaining pieces for tax roll generating private sector infill development that can add life and activity to the public component.  I imagine that would not be ground level residential, although I see nothing wrong with a multistory project with a residential component on the upper floors.

As for St. Pete vs. the Shipyards, my reasoning is location, location, location. St. Pete's waterfront public space is located in the heart of downtown, not in an adjacent industrial zone like the Shipyards. St. Pete's waterfront anchors centralized pedestrian scale activity where the urban street grid directs people into it.  The most comparable spot in the Northbank to St. Pete's waterfront is between the Acosta and Liberty Street.  I'd focus a little more on activating the area between the river, Water Street/Independent Drive, and the Acosta/Main Street Bridges to be honest. That's one of the reasons we need to be careful of what we end up doing with the Parador garage, imo.

On the other hand, the Shipyards is roughly 0.75-1 mile east of the heart of the Northbank. Grass next to a coffee plant, jail, and elevated expressway will get no more activity than Met Park does today. If we poor millions into new public space, I'm of the opinion we need to get as much ROI and pedestrian scale activity out of it as possible. I don't be this can happen without complementing private and cultural uses being a part of the picture.


[/quote]but most of the residential in DT St. Pete is high end condo, 2-3BR units, large balconies, etc.  St. Pete is where Tampa Bay residents go to spend weekends or Thurs/Fri evenings, it's not where throngs of young profs live.[/quote]

Most of Tampa's residents don't spend weekends in DT St. Pete and most of St. Pete's residential units are small apartment buildings.  With West Shore, Ybor, the beaches, etc., there are a lot of competing places for Bay Area residents to spend off time in. DT St. Pete still has a strong local vibe. I know we tend to focus on the waterfront and recently built highrises but that place is littered with the type of urban housing DT Jax used to have. For whatever reason, they didn't tear down a lot of their affordable residential building stock and it's still used today.

Part of the purpose of urban living is so that you have easy access to both job AND quality of life, which you don't have if you're spending forever commuting to your job.  Channelside is clearly much younger, and the new resi there reflects that.  DT St. Pete permanent resi base has more in common with Delray Beach or Clearwater than DT Charlotte or DT Tampa (we're looking at a deal in Tampa now and we also put up the Skypoint Tower as a partner).

I think our discussion is only focusing on one component of the urban housing market.  Not everyone attracted to a pedestrian scale environment is a high salary young professional.  St. Petersburg is a great example of this.  It has a mix of poor people who live there because they can get good access to a variety of uses without a car, starving artist, empty nesters, those living in assisted living housing, college students, medical workers, young professionals, etc.  Outside of New Orleans, it's probably one of the most well rounded urban environments I've come across in the South.  Apartments, condo, duplexes, towhouses, high rise living, intown single family, new, old, historic, etc., whatever type of housing that floats your boat is available at all different price points.

Greenville is pretty progressive and needs to give Jax a lecture on how to do things, but it's a small town.  It's more like Chattanooga, Huntsville, Knoxville, etc, all of which have been successful in promoting tourism and growing their cute little downtown resident bases (cute being the key word).  If Jacksonville wants to shed half of its population and become a cute little town, by all means it's a different environment altogether.

Jacksonville should not have to shed half of it's population to urban residential to be feasible. The environment is what attracts people and that pedestrian scale environment can happen in places of all sizes.  How we get there (or really get back) is the problem we must resolve locally. What Greenville has done, especially with policies leading to a lane diet on Main Street and allow free time limited on street parking in certain areas, is worth exploring.

Norfolk is a totally different animal in almost every way.  First of all it never demolished its entire existence, second of all it's one node out of like 5 in that region, third its employment base is almost entirely driven by the military, and finally it's downtown is not residential heavy.  Sure there are old brick apartments within a mile on all sides, but it's all relatively cheap housing for a totally different demographic than we probably want living downtown if we want a "young, vibrant, creative atmosphere".  Are there lessons to be learned from Norfolk, particularly on the tourism side and how they do their waterfront and capitalize on their role in the public (defense) sector and defense side, yes!  This is the city that is blocking military expansion in Jax after all.

I think we can learn a lot from Norfolk and St. Petersburg. Primarily that you can find success in catering to multiple income groups. You don't have to be completely gentrified or overly cater to one end of the economic platform to have a vibrant street scene. In Norfolk's case, they literally ripped down half of their urban core and replaced it with projects. They did the exact same thing as Jax.  However, instead of surface parking, they got low income housing density and a large suburban shopping mall out of it.  So you have an environment where something like a CVS can stay open because you have all walks of life coming in and out the door 24/7.  Norfolk also benefits from not having expressways totally rip apart the connectivity between DT and adjacent urban neighborhoods.  For example, you can walk from their version of Riverside into their downtown without ever noticing you've switched neighborhoods.

I think investors lump Jax in with Charlotte, Nashville, Birmingham, Louisville, Memphis, Raleigh, Orlando, Richmond...they are all playing the markets based on what jobs are doing, hence why Charlotte and Nashville and Raleigh have taken off both in suburban development and urban development versus the others.  It just so happens that the better economies are also growing tourism (Nashville, Charlotte), which benefits downtowns in those cities.

No debate here from me.  I think some secondary markets still are able to generate/sustain decent street life because they didn't go demo happy in the 70s and 80s.  So their CBDs are still within pedestrian friendly walking distance of both high and low end urban density, plus old (afforable) housing stock still exists in large numbers.  Richmond is a great example of this.  It's environment isn't Rodeo Drive or trendy like Uptown Charlotte or Austin but it's not vacant either.

[thelakelander]

^Yeah, but part of the problem is there aren't all that many buildings that can be converted affordably. At least not enough to make as big impact on downtown residential numbers as we want. If we want to see change there the city really needs to commit to it over time. It worked in Charlotte.

Bingo.  We would be much further along if we had a large number of buildings on the peripheral still standing like these:







We really don't have many buildings left that can easily be converted in the Northbank, LaVilla, Brooklyn or the Cathedral District.  Instead of the average Joe Blow being able to invest and restore something small scale, we've virtually eliminated that urban pioneering market and have gotten to a point where we need a Donald Trump to come in with something large scale that can't be done without incentives. That's a major negative of demolishing so much older building stock.  I believe this is something that has assisted second tier cities like St. Petersburg, Richmond and even Savannah and Charleston over the last 15 years.  In the 1980s, no one wanted to go to these places.  They were considered old, blighted and high crime areas.  St. Pete even had a riot in the mid 1990s.  However, they've turned what the masses of that era considered negatives (old cheap run down buildings) into the attraction that has brought people back and created an atmosphere that does attract larger investment.

[simms3]

^^^Well we're really coming at it from different angles...I agree that not everything has to be fancy, so starving artists and poor people can live in walkable areas, as well.  I guess I'm looking at it from a financial perspective...without fancy public financing gimmicks and creative equity sources, building really affordable or low income housing is next to impossible.

So the small time capital and "hobby" capital that does 234 Oak or Metropolitan Lofts or Knight Lofts comes through about once every 2-3 years.  So obviously you can't rely on locals to fix downtown.  Now your other options are for the city to swoop in or for higher level capital.  The city is broke and inept and that shouldn't be the city's job anyway and higher level capital (like the equity sources we call on) require large scale projects in smaller cities like Jax to work.

In Miami Beach we can buy a 40,000 SF single story retail portfolio and make a larger return than buying a 400 unit apartment complex or 500,000 SF office portfolio in suburban Jax.  The same groups that will do a 250-300 unit infill deal in Atlanta or Charlotte might do a 100 unit deal in SF.

Problem is, certain boxes have to check for institutional/core capital groups.  One is JOBS.  Then one has to look at where those jobs are located, what they are paying, what the COL is, commuting patterns, local buying/living behaviors, etc.  Once again we're back to square one on my end (we can still disagree, of course, but until Mr. Haskell or Mr. Rummell or Mr. Khan start shelling out money to reuse old buildings on a regular basis, or doing little Goozlepipe type infill developments intown on the reg, you're stuck waiting for that institutional capital, which is waiting for JOBS).

I still disagree, too, that Greenville is a solid example.  Lots of stuff to learn like how to create a good park and clustering and sidewalk/pedestrian friendliness, building scale, etc.  BUT it's a different market.  It's small and NOT dynamic like Jax actually is.  It doesn't have "the beaches" or a plethora of "Main St" type neighborhoods like Jax has to compete with.  Its DT Main St is its Avondale, Beaches, San Marco, riverwalk, Memorial Park all rolled into one.  The sheer scope of Greenville also screams Main St whereas Jax is a legitimately sizable market (dare I say a high growth coastal market?).

Plus while there are studies indicating that 2-ways are better for pedestrians, etc, let me just say I cross extremely busy one-ways every day on my walking commute to work and I don't even think once about it.  I would guess that while lane diets and 2-way conversions may make a difference, surely there are much more impactful tools the city can use to improve an urban area.

I also agree Jax needs to activate its central riverfront area, but I don't trust Sleiman.  He's proven incapable of working with the deal he got himself into, and everything hinges on him, essentially.  Long term planning and indications from other cities are that the Shipyards are not indeed all that far from the central core and offer quite a bit of potential down the road.  Why not take the first steps and at least remediate and sod the land?  (I'm talking Shipyards AND JEA land)

Also, let me point out that while St. Pete has older stock available that Jax does not, to create a wide range of options and price points for a wide variety of residents who aren't necessarily there for convenience to their highrise office jobs if you catch my drift, as I think we both agree newer post-1980 construction is all geared towards FL condo owners rather than urban residents.  It's more of a clustered leisure area than a downtown area...heck Riverside could be transformed into something like St. Pete, and trends slightly that way.

And Norfolk...as you point out it's low income housing.  They do tourism well, but are we really stooping so low as to say look they can sustain a 24 hour CVS?  I think our only real option is groud up development, which Norfolk is not able to do...because the lack of office jobs and the local pay for the demographic you would fill urban housing with does not offer support data for new infill!

[simms3]

And the cities we all admire are a mixture of core capital (the kind that would do 220 Riverside) and "hobby" capital.  The hobby capital is like VC money, except it's not to grow someone else's idea, it's to gamble on their own ideas.

One of our MDs took a risk by buying and transforming a warehouse in an abandoned part of Atlanta where you could get stabbed in broad daylight.  His vision influenced others in the city who took similar risks, and now the area is hot...retailers opened in warehouses in the past year include Jack Spade, Billy Reid, Lululemon, Anthropologie, Free People, Steven Alan, J. Crew's new wedding boutique, etc.  Facebook has an office nearby.  Core capital would never look at owning something over there if it were not cookie cutter infill multifamily, but there's a lot of "personal interest" money in it.

It's no different from 234 Oak/Blacksheep or Knight Lofts, etc, it's just that there are very few people in Jacksonville interested in pitching their own money and the core capital has boxes to check so they literally can't deploy equity for the larger scale projects in the city.

Policy makers can help, certainly, but it's not like hobbyists in other cities received attention from the local governments...heck half of them invested in straight up ghettos with no help and horrible streetscapes and turned them around singlehandedly.

[thelakelander]

Why not take the first steps and at least remediate and sod the land?  (I'm talking Shipyards AND JEA land)

If the city is broke and inept, remediating contaminated industrial land is more difficult than landing urban housing. The Hogans Creek/McCoys Creek situations are prime examples.

We're screwed if our only option is to rely on large scale ground up new construction.  To be honest, with Jax's situation, that's easily a 15-20 year process before you get a lively pedestrian scale atmosphere in the Northbank or Southbank. 

We'd be better off using our pennies to improving urban core mobility/connectivity, maintaining/upgrading existing parks & schools, facade/restoration grants, and modifying policy (like 10-year tax abatement or paying people to come) to allow for more small scale incremental activity. Basically, creating the atmosphere that attracts/grows market rate jobs, living, etc. and allowing that activity to spill over into and engulf downtown organically.

[Tacachale]

^Yeah, but part of the problem is there aren't all that many buildings that can be converted affordably. At least not enough to make as big impact on downtown residential numbers as we want. If we want to see change there the city really needs to commit to it over time. It worked in Charlotte.

Bingo.  We would be much further along if we had a large number of buildings on the peripheral still standing like these:







We really don't have many buildings left that can easily be converted in the Northbank, LaVilla, Brooklyn or the Cathedral District.  Instead of the average Joe Blow being able to invest and restore something small scale, we've virtually eliminated that urban pioneering market and have gotten to a point where we need a Donald Trump to come in with something large scale that can't be done without incentives. That's a major negative of demolishing so much older building stock.  I believe this is something that has assisted second tier cities like St. Petersburg, Richmond and even Savannah and Charleston over the last 15 years.  In the 1980s, no one wanted to go to these places.  They were considered old, blighted and high crime areas.  St. Pete even had a riot in the mid 1990s.  However, they've turned what the masses of that era considered negatives (old cheap run down buildings) into the attraction that has brought people back and created an atmosphere that does attract larger investment.

Yep. It's also worth pointing out that most of the residential we do (or did) have "downtown" is really periferal to the core area of downtown. Springfield, the Cathedral District, Lavilla, and the new Brooklyn project are all many blocks away from it and each other, and the Southbank is across a major river. Within the core of downtown there's very little to work with, so new projects are by and large adaptations of things that weren't originally residential, or new buildings.

[thelakelander]

^True. That's why I've always said one of the first things we need to do with DT is connect it and adjacent urban neighborhoods with various forms of mobility and allow them to feed each other.  That gives you something to start with in the short term and builds the atmosphere and environment that will attract market rate large scale infill.  Areas like Riverside and San Marco are going great and I can't tell you how many people have chosen them over downtown, simply because they offer the urban pedestrian scale environment that the downtown core does not and will not for quite sometime.  Why not find a way to feed some of their development pressures and growth to adjacent pockets such as Brooklyn, the Southbank and the Northbank. 

It's been proven again and again all over the country that fixed transit and supporting land use policy have been highly successful in helping to spur the infill many want to see.  Even in this state, we've seen systems of marginal ridership success in Miami and Tampa lead to billions of TOD investment along their corridors.  Now it's happening in Orlando, just like it did in Norfolk and Salt Lake City, along a commuter rail line that won't open until 2015.

So my question is what happens if you tie Riverside, San Marco, Springfield, etc. together with something where DT becomes a stop along the way? What do we have to lose? My guess, is we'll see similar infill and redevelopment opportunities begin to pop up.  That infill will end up occurring in a Brooklyn or Northbank instead of a Charlotte's South End or Tampa's Channel District.  In that case, the community's cost is the same as our investment in the Atlantic/Kernan overpass and significantly less than cleaning a Shipyards to turn into a park with little spin-off development opportunity.  The difference is we'll get a lot more than a mobility fee waived 7-Eleven, Academy Sports and LA Fitness.

[thelakelander]

And the cities we all admire are a mixture of core capital (the kind that would do 220 Riverside) and "hobby" capital.  The hobby capital is like VC money, except it's not to grow someone else's idea, it's to gamble on their own ideas.

It's no different from 234 Oak/Blacksheep or Knight Lofts, etc, it's just that there are very few people in Jacksonville interested in pitching their own money and the core capital has boxes to check so they literally can't deploy equity for the larger scale projects in the city....

Policy makers can help, certainly, but it's not like hobbyists in other cities received attention from the local governments...heck half of them invested in straight up ghettos with no help and horrible streetscapes and turned them around singlehandedly.

It all starts with allowing an environment that enables the private sector to do what it does best.  For Jax, that starts with an "invisible" affordable change in policy to help encourage to incremental implementation of the desired final built environment.  All the VC and hobby money in the world doesn't matter if you can't build/invest in whatever you want to do without your project being made riskier and more expensive because of poor policy.  You would simply take your money to an area where you have a better and easier chance of succeeding.  In the last five years, in the case of downtown, it's been Riverside with hobby money.  For companies and the city's investment priorities, it's been the Southside for the last 20-30.

[fieldafm]

In the meantime, Bill Bishop made some pretty strong statements against a moratorium at today's Downtown Council Chamber breakfast. 

[JeffreyS]

Love to hear that Mike.

[Tacachale]

Good to hear.