by Bradley Parsons
Staff Writer
At first glance, there’s nothing unique about the $47 million development agreement passed unanimously by the Jacksonville Economic Development Commission, Thursday.
The deal offers a pair of Southbank developers up to $3.6 million in grants to build about 150 residential units in San Marco just off Prudential Drive near Morton’s Steakhouse. But here’s the twist: the developers hope they never pocket a dime.
The City incentives in this case are tied to the availability of market–rate housing in Riverplace Properties’ San Marco Place. The package has been hailed by both the Downtown Development Authority and the JEDC as a possible model for future development deals because it keeps a tighter rein on City money and provides incentive to build reasonably–priced housing downtown.
“We feel like the whole process was very positive,” said Riverplace Properties’ Jay Southerland of the collaborative effort with the City to forge the deal. “It’s a win/win situation for all parties.”
DDA Managing Director Al Battle spent months working with Southerland and fellow developer Mike Balanky to create the deal’s unique structure. The package includes a clawback option that will reduce City tax incentives if the condo prices climb above the mid–$200,000s.
Balanky told the DDA board Tuesday that about 50 of the units will sell for less than $300,000. Battle said the downtown market ranges from about $220,000 per 1,000 square foot unit to about $260,000.
Battle said it’s difficult to attract moderately–priced housing downtown. High real estate prices force developers to go vertical, bringing into the equation costs like elevators, sprinkler systems and parking garages.
“There’s no question the costs are higher when you want to build downtown,” said Battle. “Developers are trying to make a profit, and it’s difficult to do that and keep prices down.”
Without the incentives, Balanky told the DDA board it was unlikely the condos would be built. It would have been more cost–effective, he said, to build an $8 million office building rather than $50 million in residences.
Southerland said it would have been “nearly impossible” to provide mid–market housing without incentives.
“We have not skimped on the quality of the building we want to offer,” said Southerland. “The incentives allow us to provide some market–rate units while offering an attractive building.”
Battle said incentive packages would continue to be negotiated case by case, but he said San Marco Place could provide a model to attract more market–value housing.
A robust downtown housing market would receive a big boost from more affordable housing, said Battle. There are only so many potential homeowners with half a million to spend, and the middle class could push downtown toward the DDA’s goal of 10,000 housing units, he said.
Relatively affordable housing would also create a more diverse downtown more representative of Jacksonville as a whole, said Battle.
“Downtown is no different than other communities,” he said. “You want a mixture of people and income levels to make your downtown not unlike what you see elsewhere.”
The deal now needs approval from the City Council. Southerland said he had spoken to several Council members who seemed supportive. Although dependent on an unspecified amount of pre–sold units, Southerland said construction could start in May. He said he and Balanky would start marketing immediately.
“We feel very positive though,” said Southerland. “We feel like the demand and the momentum is there.”