The Downtown Investment Authority Board voted unanimously Dec. 2 to recommend City Council approve Jacksonville Jaguars owner Shad Khan’s $450 million Lot J project — but with several changes to the city-backed development agreement.
The DIA met for four hours at the Main Library Downtown to discuss and debate the $245.3 million city incentives package and contract for the proposed residential, entertainment and retail development west of TIAA Bank Field.
The project is a partnership of the city, Khan development company Gecko Investments LLC and The Cordish Companies.
Jaguars President Mark Lamping and team attorney Megha Parekh agreed to 13 changes to the development agreement outlined in the DIA’s staff report released Dec. 2
Among those, the developer will pay property taxes on Lot J’s proposed 35,000 to 40,000 square feet of Class A office space in the city-owned Live! District by putting it into a condominium interest.
Lamping said the office tenants will include Gecko Investments and businesses that support the Jaguars operation.
The Jaguars and Cordish said they would place a 1% room surcharge on the proposed 120- to 250-room hotel at Lot J. The change was recommended by the DIA and the Council Auditor as revenue for the city to pay for the $208 million taxpayer bond proposed to finance the city’s investment in the project.
The developers also will be required to have a minimum size for the bar, restaurant and entertainment venue in its lease for Lot J’s city-owned Live! District.
The Jaguars and Cordish negotiated the deal with Mayor Lenny Curry’s administration for nearly two years and before Council voted Nov. 25 to request DIA analyze the deal and recommend whether to approve, reject or amend the agreement.
“Quite frankly, the DIA was able to get some concessions out of the developer,” said Jordan Elsbury, Curry’s chief of staff. “Now we have access to a little bit of ad valorem tax revenue that we didn’t have before. They negotiated in a potential hotel surcharge. Those will go to City Council now,” he said.
“I think it’s great we had another party review it. Take a look at it and obviously very happy with the unanimous outcome.”
Breadbox loan
The DIA board voted to strike from its resolution a recommendation that Council require more information on Lot J’s viability and construction costs to determine if a $65.5 million, 50-year interest-free “breadbox” loan from the city is needed.
DIA CEO Lori Boyer told the board Dec. 2 the developer has not provided enough information for her staff to recommend Council drop the incentive altogether, reduce the amount or leave it as negotiated.
“Our analysis of financial feasibility and construction costs, based on the information provided, does not reveal a need for this additional incentive as currently structured,” the DIA report states.
“Nevertheless, we understand that this may be non-negotiable from the developer’s perspective, and actual construction and operating numbers might justify this incentive.”
The board directed staff to change the report’s breadbox loan section from a recommendation to a consideration and moved to attach the staff report as an exhibit to its resolution so Council could see the breadbox loan comments.
Board member Oliver Barakat said he didn’t think the action went far enough to address questions about the loan.
“I don’t want this issue, which is a front-and-center issue, to be watered down by this board,” Barakat said.
Board member David Ward argued that DIA wasn’t the negotiator in the deal and Council should come to its own conclusion on the loan.
“City Council needs to decide what information they need and don’t need. This city with our elected and appointed officials sacrifices progress at the altar of indecisiveness like we have for decades. We’re habitual about it.” Ward said.
Barakat said if DIA was going to make recommendations on other deal points, the breadbox loan should be no different.
“If I’m a Council person and we remove this recommendation I just don’t know where to go with that. And I’m worried that it’s a bit of a cop-out on this board’s behalf,” Barakat said.
“We’re not saying we’re against the loan, we’re not saying we’re for the loan, we’re recommending to Council that they need to get more information regarding the financial feasibility and-or construction costs of this project. To me, that is a stronger message than just attaching it as an addendum to the back of our report, which may get buried, may get read — probably won’t — by most City Council folks,” he said.
Lamping told the board the Jaguars and Cordish are willing to debate the amount of public investment versus private investment in Lot J, but he said cutting the $65.5 million loan would make the project inviable.
“The dollars are fungible as far as we’re concerned as long as they get into the project. But if the ask is we want you to reduce the public investment by $65 million, the project doesn’t go forward,” Lamping said after the meeting.
“We’ve spent millions of dollars to get to where we are right now and when you go through that process, the expectation is you know where the goal posts are. It doesn’t mean you score, but you know where the goal posts are. To have the threat of moving the goal posts, I think that’s the wrong message,” he said.
Back to City Council
It is up to Council to decide whether to put DIA’s recommendations into the final agreement.
Council member Matt Carlucci, one of two city lawmakers including LeAnna Cumber who pushed for the DIA review, approached the board Dec. 2 to commend its staff report and the board’s debate on Lot J
In an interview after the meeting, Council member Micheal Boylan said that seeing the DIA’s analysis and board debate, he is comfortable supporting the deal when it returns to a Council Committee of the Whole meeting at 10 a.m. Dec. 3.
“(DIA) understands the bigger picture. A business deal, when it involves the public sector with the private sector, it isn’t always going to be perfect,” Boylan said.
Boyer said in the report that the DIA’s standard assessment could not account for Lot J’s possible positive impact on Downtown’s entire residential, retail and commercial real estate market.
“We as the city have to look at the intangibles that come along with these kind of things and I think they were smart enough to do that as part of their process,” Boylan said.
