The Downtown Investment Authority on Wednesday unanimously approved a deal to buy the Downtown Southbank property proposed to become The District.
Elements of Jacksonville LLC, led by developer Peter Rummell and partner Michael Munz, plans to invest more than $433 million to develop the site into a health-inspired, mixed-use community.
DIA’s 8-0 vote came despite member concerns about how the 30-acre development will proceed and be funded.
The deal calls for DIA to purchase the site of the former Southside Generating Station from JEA for $18.6 million. Elements, which has a contract to buy the property, would instead contribute that amount toward the estimated $46 million in public infrastructure needed to prepare the site for development.
The DIA would pay JEA $1.86 million upfront, with the remaining funds paid back to the publicly owned utility over time. The city of Jacksonville also will contribute $26.4 million toward infrastructure.
DIA board member Oliver Barakat was not satisfied with how the DIA plans to repay a $16.7 million loan from JEA to purchase the property.
Barakat persuaded the board to adopt an amendment requiring that 75 percent of the JEA loan be paid back by the revenue generated by project, with the remaining 25 percent paid back through the Southbank Tax Increment District.
Originally, the loan was to be paid back only through the Southbank TID.
JEA’s board of directors must approve the amendment at its Tuesday meeting before the deal can proceed.
While DIA unanimously approved the project, members said they wanted detailed answers about the structure of the deal, the financial ability of both the master developer and its potential partners to see the project to completion, and the use of funds from the Southside TID to pay JEA.
Elements secured the right to purchase the property from JEA in 2014 for $18.6 million, although the closing date has been extended several times.
“Those were my expectations,” said council member Matt Schellenberg about Elements purchasing the property outright.
DIA’s role as a buyer was revealed in December when terms of the deal were made public.
Schellenberg, vice chair of the City Council Finance Committee and a vocal opponent of the current deal terms, has suggested JEA should put the project back out for other developers to bid.
“I’m still haven’t moved on that position,” Schellenberg said after the meeting.
“If you have to spend four hours explaining how a deal like this works, and people still don’t understand, then that tells me all I need to know,” he said.
DIA board member Brenna Durden expressed several reservations with the agreement.
“It’s frustrating as a lawyer to be approving documents we haven’t’ seen before,” she said.
Durden said she wanted assurance that Elements would develop the property under a strict timeline, building what she believed are the most valuable parcels first.
“I don’t want to be constrained by an arbitrary set of obligations,” said Rummell in response. “We can’t do that because it’s going to depend on the dynamics of the market.”.
Elements’ plans include 1,170 residential units, a 200-room Marriott-brand hotel, 200,000 square feet of Class A office space, 285,000 square feet of retail, 125 marina slips, an extension of the Southbank Riverwalk and public parkland.
Durden also made the plea that Elements should be required to set aside some of the 1,100 planned residential units for workforce housing.
“We’ve approved three projects with affordable housing on the Northbank recently and I think we need to make an effort on the other side of the river, too,” she said.
Board member Craig Gibbs suggested that Elements should use the Jacksonville Small and Emerging Businesses program when using taxpayer money to build infrastructure.
DIA CEO Aundra Wallace said he would ask the city’s procurement department about the feasibility of the request.
Board member Braxton Gillam said he was disappointed that JEA issued a Request for Proposals to sell the property directly to a developer without the city’s involvement.
“We weren’t involved in those negotiations,” Gillam said. “We’re now left to pay for a deal that someone else is negotiating.”
Munz said after the meeting that he welcomes the debate.
“The deal hasn’t changed,” said Munz, an executive with the Jacksonville public relations firm The Dalton Agency.
“The dollars are all the same,” he said. “The JEA still, at the end, gets paid what the JEA is going to get paid.”
Munz said the city’s participation will ensure that it has some level of control “in a horizontal development that they’ve listed in their plan as a catalytic site.”
During the discussion, Munz said the development group is talking with representatives of a 20,000-square-foot “green” grocery store and a drug store chain to anchor retail parcels. He said the group was bound by nondisclosure agreements and could not publicly identify the names.
“As soon as we can, we’ll release those details,” he said.
The meeting ended after four hours because the space in the first-floor training room of the Ed Ball building had been reserved by another party.
Despite the concerns, the board voted unanimously to move forward.
“This is far too complex a deal for us to be running out of a meeting, having to leave without being able to talk about all these things,” said DIA Board Chair Jim Bailey.
“There’s too many pieces to this, it’s huge,” he said. “We’ll have another chance to discuss it further after it comes back from JEA, but this is frustrating,” he said.
Bailey said the work the group was able to accomplish will go a long way when council begins its debate about the project.
“I think this meeting opened a lot of eyes and will help people understand moving forward,” he said.
If JEA’s board of directors approves the amended deal, it would return to the DIA for approval before being introduced to council.
Wallace said the earliest the deal could be approved by council would be mid-March.