Two Jacksonville City Council members have asked for a proposed incentive package to fuel expansion of a local financial services company to be renegotiated and revised.
After legislation containing the $21 million package for the code-named Project Paper Company began making its way through the Council process, members Nick Howland and Will Lahnen contacted parties involved in negotiating the deal in hopes of reducing its impact on the city budget and lowering the city’s financial risk.
Based on details in city documentation, Project Paper Company matches Intercontinental Exchange Inc. The city says the company’s expansion plan would add 500 employees to its current 1,500-member workforce.
As originally proposed, the package would provide a $10 million Recapture Enhanced Value Grant over 13 years; a $5 million Business Expansion Grant over 10 years; a Job Creation Grant up to $3 million; and a Job Retention Grant up to $3 million.
Working independently of each other, Lahnen and Howland said they both raised concerns to Mayor Donna Deegan’s administration and the JAX Chamber, which helped negotiate the package, about how the Business Expansion Grant, Job Creation Grant and Job Retention Grant would affect the city’s general fund at a time when Council auditors are projecting budget deficits of $44 million to $105 million through 2029.
Those grants, which total $11 million, would be paid out of the city’s general fund, which essentially acts as its savings account. A REV Grant is a refund on ad valorem tax revenue generated by a new development.
Howland said he supported Project Paper Company but hoped a revised package would include a substantially larger portion of REV Grant funding, which would protect the general fund. Lahnen said he also would like to see a higher mix of REV Grant funding.
“The way REV Grants work is theoretically you’re still winning, because someone is building something bigger, they’re building on vacant land or doing something else where you were not getting any tax dollars for and now you’re getting something,” he said. “You’re just not getting as much as you would have if you didn’t give them the incentive. I’d much rather see that than us writing a check out of our general fund.”
Lahnen also voiced concerns about the Job Retention Grant.
“An incentive, in an ideal world, is to get people to come here,” he said. “I think it is somewhat of a slippery slope if we start paying these retention grants to where we’re paying just to get people to stay in Jacksonville. We could run out of money really fast if we start playing defense to where other companies are thinking about moving elsewhere and next thing you know we’re approving retention grants for them as well.”
Lahnen and other Council members came out of this year’s city budget hearings saying they planned to more closely scrutinize incentive requests given the city’s budget limitations. In recent years, Council has almost inevitably approved incentive packages, often with little discussion.
Both Lahnen and Howland contacted Deegan’s administration and the JAX Chamber, which has been involved in the negotiations with Project Paper Company, to revisit the package.
Legislation containing the package, Ordinance 2024-0836, was deferred in the Council Finance Committee on Nov. 6. Howland said he believed a revised version could be brought before Council in as little as two weeks.
Ron Salem, Finance Committee chair, commended Lahnen and Howland and said he also had concerns about the incentives.
According to a Sept. 30 city memo, Project Paper Company is an existing financial services company seeking to expand and establish its national headquarters for its Mortgage/Technology Division in Jacksonville.
The project plans at least a $173 million capital investment and possibly more than $216 million over five years in construction, equipment and building improvements, it says.
The memo says the incentives are a material factor in remaining and expanding in Jacksonville instead of relocating and expanding in “another large Southeastern metropolitan area in which it has a presence.”
The memo says the newly created jobs would pay an average base wage of $100,000 that rises to $125,000 with benefits.
The operation would include front-office and C-suite jobs.
The 500 new jobs would be created by Dec. 31, 2031, creating a payroll topping $50 million not counting benefits; a capital investment of at least $173 million and up to $216 million “to construct and out-fit existing and future expansion office space” by Dec. 31, 2029, city documents state.
Intercontinental Exchange Inc. describes itself as a Fortune 500 company that designs, builds and “operates digital networks that connect people to opportunity.”
“We provide financial technology and data services across major asset classes helping our customers access mission-critical workflow tools that increase transparency and efficiency.”
ICE has said already it was expanding in Jacksonville.
In February, ICE reported a big increase in mortgage technology revenue in the fourth quarter after completing its acquisition of Jacksonville-based Black Knight Inc. in September 2023.
Black Knight is a software, data and analytics company that serves the housing finance market, including real estate data, mortgage lending and servicing, as well as the secondary markets.
ICE, best known as the operator of the New York Stock Exchange, also said it is upgrading the former Black Knight headquarters at 601 Riverside Ave. in the Brooklyn area of Downtown Jacksonville.
During ICE’s year-end conference call with analysts Feb. 8, Chief Financial Officer Warren Gardiner said its capital spending plans for 2024 include “$100 million related to the new office space and expansion and improvement across New York, London and Jacksonville,” according to a company transcript of the call.
ICE, which lists headquarters offices in New York and Atlanta, now owns the 327,000-square-foot Black Knight building along the St. Johns River.