The Downtown Investment Authority officially became independent Tuesday, but that newfound freedom has limitations when trying to broker deals as large and complex as the Shipyards.
Jacksonville Jaguars owner Shad Khan’s development group, Iguana Investments Florida, laid out Monday the city’s contribution for the project, which will have an expected $1 billion-plus private investment.
Handing over the land for the 48-acre Downtown riverfront site was a big piece. So is the ability for the private side to keep tax money any development would spur. And any deal would require the city to fix environmental issues on the site, improve the Bay Street corridor, extend the riverwalk and clean up parts of Hogan’s Creek.
But the authority can’t do all that by itself. Any land swap over $25,000 needs City Council approval. The tax financing portion exceeds what is allowed and needs the extra approval, too.
Public Works would have to be involved with all the improvements, which involves budgets laid out by the mayor and approved by council each year.
But the authority isn’t at that point just yet with the project. It’s never been in the position it currently is in — someone submitting a plan for a specific Downtown use.
And with less than 24 hours to digest what Khan was pitching, board members voted to meet next week to allow staff to research ordinance code and determine how to move forward.
That likely means opening up the site to all possible suitors to offer plans of their own through a Request for Proposals. It means determining a timeline for moving forward.
“I don’t think they (DIA staff) will be able to answer all the questions, but will have enough to have an intelligent conversation,” said board Chair Oliver Barakat.
Barakat said after Tuesday’s board meeting it was premature to comment on what early thoughts he might have with the terms sheet Khan submitted.
Council member Lori Boyer, the liaison to the board, said she hadn’t seen the Shipyards presentation or Khan’s terms sheet in full, but the obvious questions relate to the public side of the deal.
Attorney Paul Harden, the Jaguars lobbyist, had advice for the officials in the early stages of the deal.
“Keep an open mind,” he told both the authority and council during Tuesday meetings. “We have a lot of steps to go through.”
Khan’s group wants land-use allocations for up to 1 million square feet of office space, 100,000 square feet of commercial space, 662 residential units, 350 hotel rooms and 525 marina slips.
While the DIA board didn’t ask Harden questions, a few cropped up during Harden’s council presentation.
The first was about costs from the private side, which Harden said would be “in excess of $1 billion” and “dwarf” the city’s investment.
As a conceptual plan, Harden told council, there isn’t a fixed cost just yet and the elements of any Shipyards plan would respond to the market.
Harden said Iguana would be the master developer and take the lead on some projects — possibly the hotel and football fields — while leaving areas like residential development to experts.
Harden said one of the first misunderstandings of the terms sheet has been $35 million figure for environmental cleanup. He said a private estimate has remediation closer to $20 million, but the cap was inserted so there was no open-ended exposure to the city.
As for aspects like tax increment financing, Harden said the property-tax dollars that could be recouped should be invested back into the project.
Overall, the terms presented showed sensitivity to the city’s lack of cash for projects, Harden said.
However, components like the cleanup, riverwalk extension and Bay Street improvements are “pretty basic concepts” the city would have to undertake anyway and for which it has some dedicated money.
For instance, the Hogan’s Creek cleanup could come from stormwater funds, while the Shipyards remediation has close to $13 million set aside.
Authority CEO Aundra Wallace said it was too early to comment on the terms and instead was focusing on determining how to proceed. As with any other development deal, terms can be flexible.
“Everything is a negotiation,” he said.
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