by Bradley Parsons
Staff Writer
The mayor’s office has conducted its own review of the Jacksonville Economic Development Commission’s evolving incentive procedures and recommended changes in the way the City funds and monitors development deals.
The City’s chief operating officer, Dan Kleman, told Mayor John Peyton in a Nov. 9 memo that the City’s deal with Shipyards developer TriLegacy went wrong despite numerous safeguards already on the books. The future of the riverfront luxury development remains unclear as the City tries to find a new developer and a grand jury investigates how $37 million in public money was spent.
The City says TriLegacy misspent some of the money while the developer says the money was spent within the bounds of a vaguely-worded contract. To prevent future ambiguity, Kleman recommended the JEDC tie future incentives to verifiable construction schedules with payments made according to progress. Kleman also recommended that City policy require private developers to invest their own money before City funds become available.
“As a general rule, it is desirable to have the private developer invest its money first in the project and have public monies follow,” he said. “This practice decreases the City’s risk if the project is not viable.”
To ensure all parties follow the terms of future deals, Kleman recommended the JEDC incorporate a Compliance Office into its new organizational structure. The new department would have broad powers to monitor contracts and ensure construction and payments proceed as scheduled.
Kleman recommended a three-person staff comprising a Compliance Chief, who would bear ultimate responsibility for the department’s mission, a Project Auditor to ensure contracts are properly drawn up, and a Compliance Manager, who ensure that contracts are followed once signed.
The Compliance Office would report at least twice a year to the mayor’s office and periodically to the City Council. The reports would detail private and public money spent on a project and the return on that investment. The mayor’s office is particularly interested in jobs and tax revenue created by City-assisted development, and the reports would be expected to account for those numbers.
In another apparent reference to the Shipyards deal, Kleman recommended that future development deals call for strict separation of public and private money. The confusion surrounding the use of public money on the project is due, in part, to TriLegacy pooling their own funds with money from City bonds. The developer said that practice was permitted by their contract with the City.
Kleman told Peyton that the City’s agreement with TriLegacy should have prevented their money being combined. But the fact that the funds were pooled anyway showed the need for more explicit requirements in future agreements, he said.
“The commingling of public and private funds should be expressly prohibited in future redevelopment agreements,” said Kleman.
To ensure the separation of public and private funds, Kleman recommended that future deals provide the City with an ongoing right to audit a project’s funding. The reviews could be performed by the Council Auditor or a private firm. The deals might also require periodic financial statements be delivered to City Hall.
JEDC executive director Kirk Wendland said Kleman’s recommendations were in line with his own expectations for the City’s administration of development deals. He said the commission had reached many of the same conclusions during its own internal review and said structural and organizational changes were already underway that should satisfy Peyton’s demand for a more efficient and accountable approach to development incentives.