The Downtown Investment Authority board voted 8-0 July 15 to reject an unsolicited proposal for a $550 million convention center at The Ford on Bay riverfront site.
Board Chair Ron Moody said the DIA has a responsibility to continue negotiations with New York-based Spandrel Development Partners LLC.
DIA awarded the bid in February to Spandrel to develop a $136 million mixed-use residential and retail project at the former Duval County Courthouse and City Hall site on the Northbank riverfront. It held a competitive bidding process.
Moody and other DIA board members said their decision July 15 would not preclude the city from considering the Jacobs Engineering Group’s proposal or issuing another request for proposals should negotiations with Spandrel fall through.
Jacobs’ unsolicited bid rejected by the board July 15 was submitted in January. The developer resubmitted that proposal on July 14, which Moody asked to be reviewed by the DIA Strategic Implementation Committee."
“I think we’re obligated to follow through on that,” Moody said. “But what I would say, in the next 90 days as the chair, I’m going to suggest and ask the (DIA) Strategic Implementation Committee to be available to review the convention center site in the event that Spandrel, for one reason or another, is not finalized. We’ll know what our options are going forward.”
The sites are adjacent at 220 and 330 E. Bay St.
Jacobs announced in a news release July 14 that it was submitting its proposal for a 843,000-square-foot convention center and 190,000-square-foot covered civic plaza with a marina, despite the pending vote to reject the company’s unsolicited offer.
Jacobs Engineering’s team of developers, architects and interested parties included Hyatt Regency Jacksonville Riverfront parent company Westmont Hospitality Group Inc., according to the release.
City attorneys and DIA staff have been negotiating with Westmont since February to allow the city to sell the former courthouse and city hall sites.
Westmont has the first right of refusal to purchase The Ford on Bay’s 220 E. Bay St. parcel, north of the hotel, if the city moves to sell the property.
Board members appeared to agree that market timing is not right for a Downtown convention center.
Todd Froats argued that any initial interest in the facility would be tempered by a lack of entertainment and destination options in the Downtown area.
Bill Adams and Braxton Gillam were not in favor of Jacobs Engineering’s financing for the convention center, which would hold the city responsible to pay for the facility’s operating loss and debt service payments.
According to KBJ-L&B Architects LLC President Tom Rensing, the developer would privately finance construction and the city would begin payment after the convention center is in operation. Rensing’s firm is a lead designer on the proposal.
“I will never support a project coming to this board that deals with deficit funding of operations the way they proposed at this time,” Gillam said. “We’ve made mistakes, historically, in this city with that kind of process. That’s dead on arrival from my perspective.”
This is Jacobs Engineering’s third attempt to build a convention center at the Northbank riverfront site.
The company’s bid scored the highest among three convention center proposals in September 2018, the DIA’s last attempt to redevelop the East Bay Street property.
The DIA halted those plans after resistance from Mayor Lenny Curry, who said a Strategic Advisory Group study in 2017 indicated Jacksonville wasn’t ready to build a convention center.
“There was not a dispute or a question about whether that was a good design or whether that would be a viable convention center, if built,” DIA CEO Lori Boyer said July 15. “No term sheet was entered into (and) no contract was awarded. This action was taken to the (DIA) Strategic Implementation Committee and, subsequently to the board. The decision was made not to move forward with a convention center at this time.”
According to Boyer, the SAG study determined that 60% of planners interviewed or surveyed at the time were not interested in building a convention center in Jacksonville without “destination development.”
Jacobs Engineering’s unsolicited proposal was submitted to the city’s Procurement Division in January while the city has an active request for proposals on the site.
Spandrel negotiations
The DIA unanimously approved Spandrel’s two-phase project Feb. 21 for 520 apartments and up to 74,000 square feet of retail space at the sites.
It is negotiating a term sheet with Spandrel for the Phase I of The Ford on Bay development that has to work around the Hyatt’s first right of refusal.
Phase I of the development at 330 E. Bay St. can proceed without the hotel’s approval.
Rensing said in a July 14 phone interview that Westmont has no intention of giving up its contractual rights to the parcel for Spandrel’s proposal.
He said the Jacobs team met Westmont representatives last week.
Joe Ayers, CBRE vice president and co-lead of the real estate firm’s North Florida Multifamily Investment Sales Team, helped market the Ford on Bay site on behalf of the city.
In an email sent July 15 to the DIA board, Ayers said that while the scoring criteria for the Ford on Bay project emphasized residential and retail density, it did not stop Jacobs Engineering or other developers from submitting a bid through the RFP for a convention center.
“Developer qualification criteria and project scoring criteria ultimately dissuaded several of these interested groups from engaging as they would have pursued projects that would not have scored well or projects that they knew would be good for the developer but not the city,” Ayers said.
“After thorough analysis, mixed-use, for-rent multifamily was, at the time of award, the highest and best use of the combined property,” Ayers said. “CBRE believes that despite current economic uncertainty, this is still the case today.”
