A Downtown Investment Authority board committee voted unanimously Sept. 15 to advance a $35.88 million city incentives deal for American Lions LLC’s proposed 44-story residential tower at the former Jacksonville Landing.
The 5-0 vote all but ensures passage by the full board next week. The Jacksonville City Council will make the final decision on whether to provide the incentives and an additional $27.576 million in public loan financing for the estimated $166.6 million project.
New York-based American Lions is a joint venture between Fetner Properties and the Lions Group.
American Lions and international architect Bjarke Ingels Group are pitching a 480-foot-tall tower with 332 apartments, 15,000 square feet for resident amenities, 5,000 square feet of outdoor terrace space open to the public and 31,000 square feet of retail and restaurant space. It will integrate with a new Riverfront Plaza, the park that will take up most of the former Landing space.
The incentives
The incentives package includes property tax refunds, grants and land.
Board members were complimentary of the term sheet negotiated by DIA staff as well as the “creativity” of the public loan structure.
Board member Jim Citrano said the size of the proposed city investment is outmatched by the more than $50 million investment by American Lions.
“I think that’s important to note. We have a significant project equity investment coming in,” Citrano said.
“We are talking about a significant incentive package here but we have 30% of the cost coming in with project equity.”
A DIA staff analysis shows the city would receive $1.06 for every $1 of public investment.
The deal would give American Lions a city-owned 1-acre parcel on the northeast corner of the former Landing site at 2 Independent Drive valued at $3.48 million to build a tower up to 480 feet tall. The site is next to the Main Street Bridge.
According to DIA CEO Lori Boyer, the return on investment did not include a profit-sharing provision in the agreement because it is too speculative and market conditions after 2027 would be difficult to predict.
The DIA would earn 10% over a 23% initial rate of return if the tower is sold and 15% over a 30% return, according to the term sheet.
The city would make an estimated $27.576 million construction loan to be repaid over 20 years with one 10-year extension option.
Here’s how the incentive package breaks down:
• A Recapture Enhanced Value Grant capped at $28.557 million in the form of a 20-year, 75% property tax refund.
• The DIA will cover interest payments on the loan for two years during construction, valued at $1.344 million.
• A $2.5 million completion grant based on the Sky Garden Terrace paid after the tower is substantially complete.
• The land appraised at $3.48 million.
The term sheet allows for the city to provide a larger construction loan, capped at $29 million.
The deal says American Lions would have to receive final design approval by the Downtown Development Review Board by June 1, 2024, and start construction by Sept. 1, 2024.
American Lions would have until Dec. 31, 2027, to finish construction.
The full DIA board is scheduled to take a final vote on the term sheet Sept. 21.
The financial gap
In its initial response to the city’s request for proposals to build the tower, American Lions asked the city to rebate all property taxes, including the school board portion.
The city doesn’t have the authority to grant that request, and Boyer said that led to a $30 million financial gap in the negotiations.
The agreement requires American Lions to either sell back or provide an easement for the city to use the tower’s Sky Garden Terrace on top of the parking garage as a public space. The feature creates a connection with the proposed civic stairs that lead to the park’s centerpiece sculpture and a 1,500-square-foot cafe.
The terrace also has a 5,000-square-foot plaza that fronts several retail suites.
“The combination of the completion grant for the Sky Garden Terrace that would be given back to the city and the loan is how we bridge that gap,” Boyer said.
American Lions would be able to take advantage of the city’s lower borrowing costs than the interest on a market rate loan, but Boyer says it would create a better return on investment for the city and a more secure position.
“If you think about it, had we been able to provide that REV Grant (property tax refund), that money would have never come back to us. In this case, by providing it as a loan, the city actually gets a repayment of it 20 years in the future,” she said.
The developer projects that rent rates for the residential would range from $2.45 to $2.80 per square foot, or up to $2,240 a month for an 800-square-foot apartment. That is higher than rates today. According to Downtown Vision Inc.’s 2021-22 annual report, the average monthly residential rent Downtown was $1,579 per month.
The rates for the tower’s retail space is projected at $60 per square foot. Kelley called that “the area of greatest speculation.”
The park connection
The building’s proposed physical connection to the 7-acre park at the former Landing, now Riverfront Plaza, is the most important part of the tower design, according to DIA and city officials.
Council is poised to approve $25 million Sept. 27 for the park’s construction as part of the fiscal year 2022-23 city Capital Improvement Plan.
Boyer said that’s enough money to fully fund the work. The city hopes to start soliciting construction bids by January 2023 and start construction no later than June.
The DIA CEO showed an aerial rendering for the park that reserves a small riverfront parcel of the southwest corner that will be marketed for sale to a restaurant developer at a later date.
The rendering also has an updated look at the park’s playground, event lawn, beer garden and Riverwalk/Emerald Trail connection to the park and Main Street Bridge.
Fetner Properties CEO Hal Fetner said his company is working on a project on Jackson Avenue in New York where the city allowed the developer to integrate two buildings adjacent to an overpass with a public park.
“When the RFP (in Jacksonville) came up, and we saw that it was basically building a building and integrating a park into the building, there were a lot of symmetries between the two projects. We generally thought we knew how to do this,” Fetner said.
The developer said American Lions and the architect will invite Riverfront Plaza designer Perkins & Wills meetings to integrate project designs.
DIA board Chair Carol Worsham praised the combined tower and park site plan, design coordination and the city’s contractual rights to protect some of the “iconic” design features.
“Which is always something that we as a board worry about. We see the beautiful renditions and schematics and then when it comes to actual design-development, we know things change,” Worsham said.
“I was glad to see the protections that we have in there and the experience of the design team working in some really incredibly tight urban spaces.”
