Are You Okay Investing $233 Million For Lot J?

[Tacachale]

After years of anticipation, Mayor Lenny Curry has announced that the City of Jacksonville, the Jacksonville Jaguars, Iguana Development as well as other nationally-renowned partners have reached a deal for the development of Lot J at TIAA Bank Field. If approved as proposed, $233.3 million in public subsidies will be provided for the $450 million project. For additional details, here is a copy of the Lot J term sheet.

Read more: https://www.thejaxsonmag.com/article/are-you-okay-investing-233-million-for-lot-j/

[Charles Hunter]

This section is interesting, under "Development Scope and Investment

In the event ... the Developer desires to expand the area of the Project to achieve the density desirable for success, the City will provide the Developer with the development rights to the surface parking lot constructed in the place of storm water retention pond and/or other adjacent property at no additional cost to the Developer.  If the Developer chooses to develop the newly-constructed surface parking lot and/or other adjacent property, the City will provide access to REV grants similar to those provided for the Project.

1. The "pond" lot is now a surface lot, instead of a multi-level garage as in earlier proposals. The rendering in the article shows what appears to be a parking structure, with green space on top.
2. The parking lot will be "constructed in the place of storm water retention pond " - where will the retention provided by the existing pond take place?  The development is increasing the amount of impervious surface by replacing the pond with a paved parking lot.
3.  If the developer wants more land, they get it free, and the REV grant is increased accordingly.

Although specific uses (boutique hotel, luxury apartments, office building) are listed, the agreement also says the developer can do whatever they want, if the market isn't there for the original uses.

Which brings up a question - who is going to want to pay premium prices to live 800 feet from a football stadium and amphitheater?  Will there be high level soundproofing on the apartment tower (or mid-rise building)?  Besides the noise, just getting to/from your apartment during an event will be a nightmare.

[Kerry]

Why 'luxury' apartments.  Why not just market-rate apartments?  Freaking 1%ers always have their hands out.

[KenFSU]

Pardon my language, but what in the actual f*ck is this development agreement?

I know some of you guys say we shouldn't compare the Lot J development to Kansas City's Power & Light District, but I think it's absolutely the best comparison.

Kansas City was in a state of desperation in terms of downtown development in the early 2000s, enlisted Cordish, and made a deal that reeked of desperation that they're still paying for today.

This agreement has that same feel, perhaps worse. Cordish gets the land for free in Jacksonville's case. The city even pays to clean it up for them. Taxpayers pay for parking garages for private hotel, residential, and office uses and bankroll a surface parking lot over a retention pond that Cordish could immediately take back at any point while requesting new parking elsewhere. Further, Cordish operates all of this city financed parking and keeps proceeds above "historic levels" (which I'd imagine would be very, very, very low for the area).

Unless the city has $200 million in spare cash floating around, I imagine this project is going to be debt-financed, with grand promises about how, with the new taxes it generates (even with massive abatements), it will all but pay for itself. And, just like Power & Light, when the realities fail to meet the promises, our already cashed-strapped city is going to be dipping into the general fund every year to pay down the debt (KC was spending up to $15 million a year in debt service for Power & Light before refinancing to extend the payments).

To me, what's most troubling in the development agreement (and again, something that Kansas City is still struggling with) is the clause that seems to guarantee Cordish/Gecko similar incentives for any additional development they do on surrounding properties. Kansas City has been on the hook for over $50 million in cash and tax abatements for the TwoLight and ThreeLight luxury apartment towers Cordish developed there.

To me, it's one thing to throw $100 million at this standalone Lot J district that the Jags are planning and call it a day. It's another thing to throw $230 million at it and agree to keep incentivizing adjacent projects in perpetuity (much of it luxury residential).

Love the Jags, realize we need to play nice with them to keep them in the city, and I think a Live! entertainment space would be fantastic for the stadium complex.

But to me, this deal puts literally 100% of our long-term downtown investment eggs into the sports complex and Shipyards. If Lot J is successful, there's going to be pressure to put all of our resources into the Shipyards to keep the momentum going. If it isn't successful, there's going to be similar pressure to develop the Shipyards/sports complex in order to increase density and stop the general fund bleeding on Lot J.

It is just so frustrating and insane that a city with limited dollars for capital improvement projects is spending $20 million to demolish our festival marketplace, and another $50 million+++++++++++ to rebuild it in a less desirable location.

[CityLife]

This section is interesting, under "Development Scope and Investment

In the event ... the Developer desires to expand the area of the Project to achieve the density desirable for success, the City will provide the Developer with the development rights to the surface parking lot constructed in the place of storm water retention pond and/or other adjacent property at no additional cost to the Developer.  If the Developer chooses to develop the newly-constructed surface parking lot and/or other adjacent property, the City will provide access to REV grants similar to those provided for the Project.

2. The parking lot will be "constructed in the place of storm water retention pond " - where will the retention provided by the existing pond take place?  The development is increasing the amount of impervious surface by replacing the pond with a paved parking lot.

This is done fairly easily, though expensively. You can make up for the loss of retention with underground storage vaults or exfiltration trenches throughout the development. I've done work on a cramped hospital campus, where we filled in a retention pond to construct a cancer center. We did exfiltration trenches throughout the campus and actually increased the amount of storage that was provided pre-filling of the pond. Unfortunately, it looks like the taxpayers will be footing the bill for this type of work.

[Snufflee]

So i am not overly familiar at the financials behind this:

1) Is it assumed that the City will assume a massive amount of debt to finance this project?
2) If the sales tax revue fails to pay for servicing this debt, does the debt service come from the general fund?
3) If Cordish/Kahn decide to develop adjoining properties is COJ on the hook for more land transfer/tax breaks/infrastructure improvements?

Thanks for the ELI5.

[tufsu1]

I am totally "amp"ed about this - can't wait for this thing to go live! #JaxOnTheRise

[DrQue]

It will be interesting to watch this plan play out in tandem with round two of the JEA privatization push. 

[Kerry]

I assume the Jags are still going to want some kind of dome-like structure in a few years as part of their stadium improvement demands for staying in Jax.

Just to protect ourselves we should have a clause that says if the Jags leave Jax they owe repayment of all the incentives and ownership of all properties revert to the City.

[KenFSU]

The more I process this deal, the crazier it seems.

I think we all kind of assumed that public incentives would come primarily in the form of REV grants, with a large chunk of cash upfront for infrastructure improvements and parking.

The $80 million incentives given to the District, for example, was roughly 30% cash for infrastructure, and 70% tax abatements based on future value.

The $36 million incentives package proposed for Berkman II was roughly 60% tax abatements based on future value, with 40% coming in the form of actual cash grants.

This Lot J agreement is legit 90% cash.

$208.3 million cash versus a mere $25 million in REV.

A $450 million project with only $5 million more in REV grants than the $100 million (failed) Berkman II.

Looking at the how that money breaks down:

1) $93 million in infrastructure improvements from the city for integrated parking garages, surface parking, environmental remediation, landscaping etc. I'm not crazy about the city giving away the land for free, while also paying the full price for remediation, but we knew the infrastructure ask was going to be high, particularly for parking.

2) $50 million for half of the Live! venue/entertainment complex. Again, not crazy about the city paying $50 million to "own" a mall it won't see operating income OR property taxes from.

3) $65 million in free taxpayer money in the form of a grant meant to "facilitiate the project." We're paying for the infrastructure. We're providing the land. We're paying for half of the Live! venue. And on top of that, we're just going to gift the developers $65 million to build a hotel, luxury apartments, and an office building??? And this isn't even explicitly stated as a completion grant. More of a starter grant.

And, here's the real kicker.

The developer has the right to shift funding from any of those three cash buckets as it sees fit. In other words, let's say the developer decides to cheap out and only make $60 million in infrastructure improvements or only builds an $80 million Live! complex, they can turn around and put that $43 million into their hotel, apartments, or office building.

This is on top of a $38 million pre-facilitation grant in the form of the Hart Bridge ramp removal.

I mean, is it just me, or are the terms of this agreement absolutely baffling?

I get why we'd subsidize a Jacksonville Live! entertainment complex by the stadium, but $203 million in cash ($53 million more than our city's ENTIRE capital improvement budget for the year) for apartments, hotel, and office seems almost comical, doesn't it?

[dp8541]

We all get "why" right?  Gotta keep the team here, and this (and stadium renovations in the near future) is what it is going to take.

This is a terrible deal for the city, but its what needs to happen to keep the team here.

[thelakelander]

Pretty silly when you consider what's already proposed/under construction within a three block radius of Hemming Park is basically Lot J without the infrastructure costs.

VyStar corporate headquarters - $79 million
JEA corporate headquarters - $72 million
Ambassador Hotel and Apartments - $53 million
Barnett Building - $34 million
Laura Trio & Forsyth Garage - $44 million
Jones Brothers Furniture Building - $13 million
Hyatt Place Hotel - ??
.
.
.
Jacksonville Landing demo - $22 million & counting

More residential units, comparable amount of hotel units, way more office, more vertically mixed use and a larger centralized LIVE! if revamped. Take a fraction of the money proposed for Lot J and target a few key sites in the vicinity (ex. Old JEA Tower, revamping BOA and Wells Fargo at street level, etc.) and you'd be on the verge of seriously changing the face of downtown's heart virtually overnight.

[thelakelander]

We all get "why" right?  Gotta keep the team here, and this (and stadium renovations in the near future) is what it is going to take.

This is a terrible deal for the city, but its what needs to happen to keep the team here.

I actually prefer this argument over a hotel, apartment, office building and Landing 2.0 being pushed as the catalyst for revitalization of a central business district that's really a mile west of the site. The "keep the team here" line has way more merit.

[heights unknown]

So now I understand much better Curry's haste to demolish the Landing. Less competition from the Landing versus Lot J? Hmmm...I wonder. And what about the Northbank core? How will the assembling of Lot J affect the downtown urban core? Robbing peter to pay paul in my opinion. I know there are a lot of things going on in the CBD/urban downtown core; but it just seems that it's being ignored more and more. Don't gut or destroy Jacksonville's true heart and move it east displaced from the CBD/UC.

[Bill Hoff]

The solution to all our problems, including paying for Lot J:
https://floridapolitics.com/archives/302275-curry-debt-free-jea

It's a miracle cure for what ails ya.