A Downtown Investment Authority committee will have its say Nov. 12 on one piece of the city’s proposed $233 million incentives package for Jacksonville Jaguars owner Shad Khan’s Lot J development.
The five-member DIA Strategic Implementation Committee is scheduled to vote on a $12.5 million Recapture Enhanced Value Grant for the 400-unit residential component of the mixed-use Lot J west of TIAA Bank Field.
Khan development company Gecko Investments LLC and its project partner, Baltimore-based The Cordish Companies, plan two “luxury” mid-rise residential buildings as part of the estimated $445 million entertainment and retail project.
Gecko and Cordish are referred to jointly as Jacksonville I-C Parcel One Holding Company Investors LLC in the proposed development agreement with the city.
The DIA committee could vote Nov. 12 whether the 20-year, 75% market rate REV Grant requested by the developer is a good deal for the city.
A DIA staff report released Nov. 4 suggests the committee will not have some information, including total residential construction costs, that typically is provided before a REV grant is approved.
The developer told DIA and city officials the total cost for Lot J’s proposed hotel and mixed-use components is estimated at $229 million for its portion of the project. That estimate is in the DIA report.
DIA staff said it cannot break out the costs of the residential, hotel and nontaxed Live District from that number “in order to directly calculate the potential REV grant.”
Mayor Lenny Curry’s administration filed legislation with City Council to authorize a waiver to a rule that requires the city and DIA to calculate the amount and maximum term of the REV grant.
The bill gives a rationale for the waiver: “The grant is necessary to make the project financially feasible, will cause an estimated ($226.8 million) in private capital investment in the Project, and the Project will facilitate further development in the Downtown area,” the legislation states, with a slightly lower number.
To make sure Lot J’s residential units will reach an assessed value to justify the grant, DIA staff put the land value per square foot, estimated annual value increase and city operating millage into a formula to determine the apartment buildings would need to reach a total development cost of $75.4 million.
The report says it is likely the residential component will reach that total. If not, the grant will be reduced proportionately.
The residential buildings will be mixed-use but the REV grant will apply only to the apartments, according to the DIA documents and city redevelopment agreement.
If the committee approves the REV grant, it likely will go before the full DIA board Nov. 18 for a final vote.
DIA CEO Lori Boyer did not immediately return phone calls Nov. 4 to answer questions.
Waiving additional rules
The Lot J bill, Ordinance 2020-0648, also waives other city-owned Downtown property disposition procedures under the DIA’s jurisdiction because Curry administration officials thought they were not applicable when brokering the deal with Khan, according to the DIA report.
”Until very recently, we had been advised by legal counsel that property used by the City for other City purposes but within the boundaries of Downtown, did not meet that definition and was not subject to our disposition procedures and review,” the report states.
“For several years, the Mayor’s office moved forward with negotiations on Lot J also with that understanding,” it said.
“We have now been advised that several case law interpretations now lead to the conclusion that City-owned and utilized property comes under DIA jurisdiction when it is made available for redevelopment.”
The Nov. 12 agenda also includes a vote on issuing development rights for the Lot J site.
The rest of the deal
The REV Grant is one component of what Khan requests.
In addition to the grant, the deal struck by Curry’s office asks Council to approve $208 million in debt to finance the city’s contribution to Lot J.
That would pay for $50 million of the proposed $100 million Live! District entertainment venue that will be owned by the city. The bill says the Live! District will have 115,000 square feet of restaurant and retail space and 40,000 square feet of Class A office space.
Khan’s team is requesting a $12.5 million completion grant for the 150- to 250-room hotel.
The city’s portion also includes $77.4 million in site infrastructure improvements, including a 700-space surface parking lot built over an existing stormwater retention pond to the west of Lot J. It also would build parking garages totaling 700 spaces.
The city would be responsible for up to $15.1 million in cost overruns for the publicly owned portions of the Lot J project. That expense is factored into the debt financing in the bill.
The developer would pay for all other project cost overruns. Cost overruns could bring the total city investment to $233.1 million.
The city will own the retail components of the Live! District in the residential building and the parking garage, the documents state.
Council hearing
Council is scheduled to have its first official public hearing on the Lot J bill at 10 a.m. Nov. 5 at the Council Committee of the Whole.
The hybrid virtual and in-person meeting will be in Council Chambers at City Hall, 117 W. Duval St.
