The path for City Council to vote on Jacksonville Jaguars owner Shad Khan’s proposed $450 million Lot J project in 2020 has narrowed.
Council President Tommy Hazouri deferred the Lot J bill Dec. 3, potentially blocking the legislation from a final vote next week.
Following a four-hour meeting and workshop, Hazouri determined city lawmakers and the Council Auditor’s Office needed more time to review edits and recommended changes to the city’s potential $245.3 million economic development agreement with Lot J developers.
The project is a partnership of the city, Khan development company Gecko Investments LLC and The Cordish Companies of Baltimore.
The deferral means the Lot J bill, Ordinance 2020-0648, will not automatically be on the agenda when the full Council meets Dec. 8. That is the final Council meeting scheduled for 2020 before a three-week holiday recess.
To bring the bill to the floor, Hazouri would have to sign off on an addendum to the agenda that includes the Lot J bill, which must pass with 13 votes of the 19-member Council.
Lawmakers backing the proposal would need another two-thirds vote to discharge the bill from the committee, since no vote was taken Dec. 3.
The ordinance is an amendment to the current budget year’s capital improvement plan because it calls for $208.3 million in borrowing to pay for the direct city investment for Lot J. That requires 13 votes for passage.
Concerns voiced
Several Council members, including Danny Becton and Al Ferraro, voiced concern Dec. 3 that a long list of questions still needs to be answered by the Jaguars, Cordish and deal negotiators in Mayor Lenny Curry’s administration.
Details have been in flux in the city-backed agreement for Khan’s proposed residential, entertainment and retail development west of TIAA Bank Field.
“You get a recommendation from our Council Auditor at 1 o’clock in the morning and expect our legal counsel to be able to absorb that and give answers to some of the concerns that we have?” Hazouri said in an interview after the Dec. 3 meeting.
“There’s no way to work that. It’s not possible. They’re asking for the impossible at the expense of serious and judicious study,” Hazouri said.
The Downtown Investment Authority sent a list of recommended changes to the agreement late Dec. 2, and Council Auditor Kim Taylor provided her own recommendations hours before the Dec. 3 committee meeting.
Taylor’s findings showed interest on the bond debt to fund the project will be $157.5 million. That brings the total debt service cost to taxpayers to $365.8 million with a $12.2 million annual payment.
Hazouri criticized Curry for what he sees as a rush to approve Lot J.
“I’m a 25-year season ticket holder. He (Curry) was 20 years old, or whatever he was back them. I know how hard it was to bring an NFL team here following (former Mayor) Jake Godbold. That was our No. 1 economic development issue and it still is but not at any price,” Hazouri said.
Answering questions
Paul Harden, a lobbyist and lawyer for Jaguars subsidiary Gecko Investments LLC, told the Council that developers and administration officials would meet with Taylor on Dec. 4 to narrow remaining disagreements in the deal from 12 to four before the next Council meeting.
Harden said the approval timeline is important to the development team because of the fluctuating cost of building materials and possible federal tax policy changes from President-elect Joe Biden’s incoming administration.
Lot J is in Downtown’s federal Opportunity Zone, which makes the project eligible for federal tax incentives.
Curry Chief of Staff Jordan Elsbury said the goal of the Jaguars and administration is to make sure the Council members’ questions are answered.
“I think many of them have their policy position in mind. If some are seeking to delay it without actual questions, that’s unfortunate,” Elsbury said. “Our hope is that they’re actually looking to get their questions answered. I know some of them are,” he said.
“We’ll look at having conversations over the weekend. We’ll look to next week to see if there’s an opportunity to get a policy position out for them but right now we’re in Q&A mode, and that’s OK,” he said.
Jaguars President Mark Lamping said the developers “will do whatever it takes” to bring negotiations to an end for a vote next week.
He pointed to the organization’s ability to reach an agreement with the DIA within a day of the agency releasing its Lot J report.
“We were 100% prepared to do the same thing today. I think we’re down to 12 items from the Council Auditor’s report that requires more discussion. There were tens more than that we agree on. We came here prepared to share that,” he said.
“Unfortunately, we didn’t have the chance to do that. We’re available 24/7. We will be pushing to the Council Auditor today and tomorrow to try to work through those final issues. Hopefully, continue to advance it,” he said.
Questions and substance
Despite the deferral, a few city lawmakers signaled how the final bill could look.
Council members LeAnna Cumber and Ron Salem both proposed amending the legislation to incorporate the recommended changes from the DIA staff report approved by its board Dec. 2.
Salem also proposed adding changes requested by the Council Auditor’s Office that are not disputed by the Jaguars and Cordish.
Cumber and Becton want to increase a room surcharge the DIA and Council Auditor suggested for the project’s proposed 120- to 250-room hotel from 1% to 1.5%
Lamping agreed to the increase and said Khan will expect the surcharge also to apply to his proposed Four Seasons hotel across from Lot J at the Metropolitan Park-Shipyards property.
Council member Rory Diamond said Dec. 3 he will propose an amendment to the Lot J legislation to restrict city employees from working for the developer — the Jaguars, Cordish and their subsidiaries — for five years after leaving city employment.
Finance Committee Vice Chair Randy DeFoor said she wants the city’s contracted attorney, GreenburgTraurig of Orlando, to see audited financial statements from Khan’s K2TR Family Holdings 2 Corp. being used to financially guarantee the Lot J project.
A letter dated Oct. 28 was sent to the Curry administration from the company, which is owned by Khan and his family.
K2TR CFO Thomas D. Clarkson said he could confirm the company’s net worth of more than $229 million. This is the amount defined in the agreement needed to guarantee the developer’s minimum private investment in Lot J.
Clarkson said in the letter he’s seen the company’s 2019 federal income tax returns to verify the value.
But Taylor told the Council that language in the development agreement states the city must have validated proof of the guarantor’s net worth and she said Cordish was not required to provide the same documentation in the agreement, although it is jointly liable for Lot J’s completion.
DeFoor suggested that if GreenburgTraurig attorney Orlando Evora was going to provide his legal opinion on the guarantee, he should see the financial statement for himself.
“I’m shocked by the statement that they didn’t require audited financials,” DeFoor said.
