by Bradley Parsons
Staff Writer
When the JEDC emerges in August from its two-month overhaul, the mayor expects it to do a better job holding developers accountable for City incentives. On Friday, the commission’s executive director made an unusually public announcement that the City would seek to hold back incentive dollars from underperforming developers.
The news won’t shock Humana Corp. and DB Holdings. The Jacksonville Economic Development Commission already told the developers that the City wouldn’t pay until they deliver parking — Humana — and a restaurant — DB Holdings — as promised. But several commissioners were pleasantly surprised that JEDC executive director Kirk Wendland brought up the pair of defaults at the commission’s monthly meeting.
“I found it foreign to report at a commission meeting on contracts we have out there and how we follow up,” said commissioner Susan Hartley. “It’s good. We are holding people accountable to their agreements and making sure they’re doing the things they need to do.”
Mayor John Peyton shut down City incentives in June, allowing the JEDC to clear its decks for a review of its staff, organization and practices. Peyton charged four committees with reviewing how the JEDC uses and tracks development incentives and to recommend improvements. Several of the committees have recommended that the commission improve the way it monitors incentives. Better accounting, they reasoned, would ensure the City gets what it pays for and would provide insight into the incentives and companies that work the best.
The development deals with Humana and DB Holdings haven’t paid off for the City so far.
Wendland said the City wanted to keep a portion of about $1.1 million in tax credits from DB Holdings, because the Atlanta developer failed to build a restaurant as promised in their Berkman Plaza development.
The City’s deal with former Berkman owners DB Holdings has become the poster image for what the City hopes to avoid by revamping the JEDC. The City granted Berkman developers more than $9 million to build the $36 million luxury development. The development was then sold for $46 million in July 2003.
The deal with Humana has also cost the City. The City approved $3 million in incentives to help pay for a 1,000-space parking garage, which was supposed to solve parking problems at the Landing. The City promised then-owner Rouse Co. that the shopping center could use 300 of the spaces.
According to the contract, the parking garage was supposed to open July 1. Construction hasn’t begun, meaning the City will continue to lose about $200,000 a year in rent credits to current Landing owner Toney Sleiman.
Wendland said he didn’t intend any message, but JEDC chair Ceree Harden said developers should get used to having their results evaluated, and discussed, by the commissioners.
“As we’ve already seen this morning, the results of these projects need to be reported,” said Harden. “It’s the best way for us to see what we’ve done, see what works and what doesn’t, and be able to adjust accordingly.”
When the JEDC resumes business, Wendland said his staff would continue to update commissioners on the progress made by developers with City money. He said the commissioners could weigh the information when considering future deals.
“It’s a case where knowing what happened in the past can affect your judgment on what you do in the future,” said Wendland.
Wendland said the JEDC always kept careful account of how individual projects performed. But he said the commission would increasingly look at developers collectively. Where the JEDC used to look for simple compliance, he said future reviews will look for trends in good and bad investments.