by Mike Sharkey
Staff Writer
Both the Jacksonville Economic Development Commission and the Downtown Development Authority Thursday unanimously approved a deal that would have the City pay Stein Mart $1.8 million over the next seven years. The funding is needed to offset the lease costs in providing additional parking at Stein Mart’s corporate headquarters on the Southbank.
The deal was actually struck three years ago when Liberty Properties, Stein Mart’s landlord, agreed to add 200 parking spaces to an existing garage for the benefit of Stein Mart’s 400 Southbank employees. Per the agreement, in exchange for $200,000 a year for the next 10 years, Stein Mart agreed to retain its corporate headquarters on the Southbank for at least the same amount of time. Because it was a parking issue, the funding was actually funneled to Liberty Properties through the Jacksonville Transportation Authority.
However, after the first payment to JTA was made in fiscal year 1999-2000, the Council auditor determined that the deal should have been approved by the JEDC and because that didn’t happen, the next two $200,000 payments weren’t made. With Thursday’s JEDC vote, those payments — which will go directly to Stein Mart instead of through JTA — are just City Council approval away from resuming. But, Council approval may not be a slam dunk. And JEDC commissioner Susan Hartley, a relative newcomer to the Commission, said she’ll be much more analytical of such projects in the future, especially considering the fact the project didn’t follow City protocol when it was originally orchestrated.
“I cannot promise to vote favorably for projects that do not follow the provisions and protocol established by the City for economic incentives,” said Hartley.
Several Council members expressed concern that providing Stein Mart with the funding is exactly the type of corporate welfare that they have insisted the City should begin to avoid. Considering that Stein Mart reported a net profit of $15.4 million last year, Council approval may not be a guarantee.
“It could be tough to swallow,” said Council member Warren Alvarez, one of Council’s most outspoken opponents of economic incentives. “But, I don’t believe there are enough votes on the City Council to say no.”
Despite his belief that the incentive package will pass, Alvarez says the project represents an opportunity for Council to call a company’s bluff. Too often, corporations come to the DDA and JEDC wanting economic incentives while holding jobs over the City’s head.
“It’s almost like blackmail. It might be one we ought to roll the dice on,” said Alvarez, who attended the JEDC meeting and listened intently as Hartley openly questioned many facets of the deal. “That’s the first time I’ve been to a JEDC meeting and heard some questions asked. I hope we [Council] discuss this at length and there’s a good chance I’ll vote against it.”
Council member Lad Daniels has grown increasingly concerned about the amount of money the City has been handing out lately. According to Daniels, because the funding is a reaffirmation of a previous agreement, he’ll probably approve it. That does not mean he likes it though.
“I’m looking at it as the City made a deal to keep their headquarters in the downtown area,” said Daniels. “Do we honor that deal even though the fortunes of the company may have changed? We played that card and I’m inclined to say we ought to honor that commitment.”
If the economic package was a new deal in the pipeline, Daniels said his attitude may be radically different. Especially, he says, considering the City recently approved another new parking garage deal (Ocwen Financial on the Southbank) while the Kings Avenue Garage is a half-mile down the road and is underutilized.
“Ocwen was a lousy deal and we should have never done it. If this [Stein Mart] was a new deal, I would look much more closely at it,” said Daniels, adding that having a company threaten to move or not come at all without incentives isn’t pleasant. “You always run the risk that a company will do that to you. But, you have to do what’s best for the city.”
Council member Jim Overton said he’s not bothered by the fact that Stein Mart made over $15 million last year. He says it is always great news when local companies report solid financial gains. His issue is with the incentive and whether or not it has a proven beneficial value.
“My opinion is that I haven’t been persuaded that the City gets a significant benefit,” said Overton. “What is the public purpose? They say ‘We’ll move if you don’t pay us.’ I’ve voted no on a number of incentives over the past several months and I’m inclined to vote no on this one.”
For Hartley, the owner of Sunbelt Coffee & Water, Stein Mart’s bottom line is intriguing. Companies that report huge profit margins, she says, should be held to more scrutiny than others with genuine economic needs. Although she promises to be more leery in the future, Hartley conceded there’s not much she can do now.
“As a small business owner, that’s [$15.4 million] a lot of profit to me,” she said. “At this point, because of the way the agreement was handled, that’s where we find ourselves.”