$26.4 million deal for The District
The latest proposed deal from the master developers of The District includes a $26.4 million investment from the city for public infrastructure and a 22-year property tax grant for the 30-acre project.
The framework comes two months after the city and developers Peter Rummell and Michael Munz scrapped a previous agreement.
The development is on the site of the former JEA Southside Generating Station on the Downtown Southbank.
City Council member Lori Boyer and Downtown Investment Authority CEO Aundra Wallace presented the deal’s framework Monday during a lunch-and-learn meeting with the DIA board and council members.
Boyer said the deal has a much simpler structure than what was presented in January.
“It’s more straightforward and traditional, and something we’ve done for other places throughout the city,” she said.
She said the deal is a capital improvement project and a Recapture Enhanced Value grant.
The proposal is two-fold.
First, the DIA would fund $26.4 million in public infrastructure.
The DIA would build three riverfront parks totaling 3.5 acres, another 1-acre pocket park, a 1,900-foot expansion of the Southbank Riverwalk and bulkhead construction, a walking trail around the development, a parking lot for 100 public spaces and the expansion of three roads for public access.
While Elements plans to buy the property from JEA, it would need to convey the land marked for public use to the city – free of any loans or other encumbrances – before it could begin development.
Wallace said the DIA has $5 million allocated for public infrastructure costs set aside for the project and about $4 million more earmarked over the next two fiscal years.
Wallace said Mayor Lenny Curry’s administration advised him the city would provide a loan to the DIA to make up the difference, about $16 million to $20 million, at an interest rate of 2.66 percent over 20 years. That would need council approval.
“Under this scenario, we can afford to do The District and other projects as well,” said Wallace in response to a question from council member Tommy Hazouri.
Wallace said the loan would be repaid from tax revenue generated in the Southside Tax Increment Financing District, which encompasses part of the Downtown Southbank.
He said the fund has enough cash to cover the loan obligation and assist other projects on the Southbank during that time.
Taxpayers in other parts of town would not be responsible for repayment of the loan.
The DIA funding also covers the hiring of an “owner representative” to coordinate with the city’s Public Works Department to ensure public property construction was done correctly and on time.
Second, council would need to approve a Community Development District encompassing The District site within the Southside Community Redevelopment Area.
The Community Development District would be able to issue up to $30 million in bonds to help Elements fund part of the horizontal development, which includes roads, sidewalks and utility and sewer services.
Over 22 years, Elements would repay the bonds through proceeds of a Recapture Enhanced Value grant worth 75 percent of the taxes generated from The District property. The REV grant is worth the lesser of $56 million or the total principal, interest, fees and cost of any credit enhancement of the bonds.
The REV grant’s lifespan coincides with the termination of the Southside CRA, Dec. 31, 2040, regardless of when Elements receives Certificates of Use.
Munz declined to identify the Elements’ financing partner that he said would buy all $30 million of the bonds.
Wallace said the REV grant is based on a performance schedule. “They don’t get that incentive until they reach certain benchmarks,” he said.
He said those details would be outlined in an economic development agreement.
The deal presented Monday is in contrast to the structure presented in January that included the DIA buying the land over time from JEA along with contributing $26.4 million toward infrastructure, with Elements pledging $46 million for infrastructure, among other provisions.
The DIA board approved a resolution in January that allowed it to buy the land from JEA.
Wallace said attorneys for the city and Elements could not come to terms and scrapped that deal.
Munz said the two sides then “started from scratch.”
“There’s really no comparison between the two,” Munz said. “This was a fresh start and an idea that was birthed after the previous agreement was removed.”
He said the new plan allows Elements to buy the land from JEA as it previously agreed to do before the scrapped January proposal and use some of the taxes generated from the project to pay for horizontal development.
Munz declined to say when Elements would buy the land other than to acknowledge the July 18 deadline to do so.
“The clock’s still ticking on that,” he said. “It all depends on how fast we move through the DIA and the council process.”
Any economic development agreement will need approval from the DIA. Wallace said he expects to present a resolution to the board within 30 to 45 days.
From there it would need council approval.
Council member Matt Schellenberg is concerned that the development won’t get off the ground.
“They’ve had four years to start this project and they haven’t even purchased the land from JEA,” Schellenberg said after the meeting.
Schellenberg said he doesn’t believe the city should have to pay that much for infrastructure, since the amenities benefit residents of The District more than anyone else.
“Without riverfront parks or a trail, they’d have a hard time selling condos,” he said.
“You have to remember the people in Mandarin or other neighborhoods, they have other ways of accessing the river,” he said.
Schellenberg said he doesn’t want to see an economic development agreement signed until Elements buys the land from JEA, a requirement he acknowledged wasn’t business as usual.
“These are unique circumstances and, in all honestly, I’ve lost confidence in them,” he said of Rummell and Munz.
The development has been delayed for years. A purchase and sale agreement with JEA has been extended four times, but Munz said it was the last extension needed to move ahead.
Munz said Elements continues to secure commitments from retail, office and lodging partners, including a user for the 200,000 square feet of office space planned for the site.
Elements announced Thursday it contracted with Kitson & Partners to execute the plan for the project to oversee all aspects of the development, including coordinating with contractors for all horizontal and vertical phases.
Kitson & Partners is based in Palm Beach Gardens.
When completed the estimated $600 million project will include 1,170 residential units for sale and lease; 200,000 square feet of office space; more than 200,000 square feet of retail; riverfront restaurants and bars; a 4-acre riverfront park and an extension of the Southbank Riverwalk; a 125-slip marina; and a 200-room hotel.
Rummell and Munz have not said how they plan to finance the project except that they’re working with capital partners.