by Bradley Parsons
Staff Writer
Shortly after being told by the mayor not to “rubber stamp” incentive deals, the Jacksonville Economic Development Commission’s board grilled potential Northside developers Friday, holding up approval of $16 million in bonds until repayment was personally guaranteed by the investors.
The board voted unanimously to issue the bonds and waive some purchasing requirements to help Ramco–Gershenson Properties Trust develop 464 acres near the airport into homes, hotels and large–scale retail. The deal, which still requires City Council approval, finances the debt with property tax revenue. Once an annual debt of about $1.27 million has been paid, the City and the developers will split surplus tax revenue up to $24 million.
The revenue sharing gives the project a large financial upside for Ramco, said JEDC executive director Kirk Wendland. In exchange, trust managers guaranteed the City would not be liable for the debt if the project cannot make money as predicted.
“It’s a trade off,” said Wendland. “We’ve taken out our (the City’s) risk at the bottom side of the equation.
“All the risk is 100 percent on their shoulders. At the same time, if the project is wildly successful, there’s more opportunity for reward on the positive side.”
Negotiations between the City and Ramco continued until late Thursday night — the JEDC commissioners reviewed revised packages shortly before their meeting began. Even as the commissioners questioned Ramco manager Richard Gershenson, the developer’s attorney could be heard pressing JEDC director of business development Jeanne Miller to make changes.
“We are not renegotiating now,” Miller told Foley and Lardner attorney John Welch. Her hushed tone raised enough to turn Gershenson’s head as he spoke at the JEDC chambers’ podium.
The most “contentious” point throughout the talks, Miller told the commissioners, had been Ramco’s desire to relieve itself as the debt guarantor in favor of a local partnership. That idea crumbled when Charles Appleby repeatedly asked for the local partnership’s net worth.
“In a doomsday scenario I want to be assured that the guarantor has the net worth to cover the debt,” said Appleby.
Following a half–hour discussion, Gershenson agreed that the parent trust would back the debt with $240 million in assets. He did not provide the net worth of the local partnership.
Several City Council members watched the exchange, including Finance Committee chair Warren Alvarez, whose district includes the property at the junction of I-95 and Duval Road. Alvarez said the developers could be counted on to bring needed retailers, restaurants and entertainment to the Northside and suggested the commissioners were nitpicking.
“It’s kind of like a row of vultures, sitting on a fence and flying down to pick at a corpse. Everybody’s flying down from the fence and picking at it,” said Alvarez. “You can pick at it all you want, but we’re going to build this project.
“People are tired of spending 35 minutes in the car every time they want to go to a Home Depot.”
Development on the Northside has been slow, Alvarez said. And an established developer like Ramco was needed to attract large retailers to the area. Ramco–Gershenson owns 61 shopping centers and approximately 12 million square feet of space across 12 states. Major retail tenants at other properties include Wal–Mart, Kmart, Publix, Lowe’s Home Centers and Kohl’s.
Gershenson said listing the parent company as guarantor would make the deal “much more difficult to finance,” because the debt would have to be tallied as a balance–sheet liability.