by Bradley Parsons
Staff Writer
The JEDC will no longer provide development incentives for residential projects on the Southbank.
With the area’s residential market humming and development rights in short supply, the Jacksonville Economic Development Commission is ready to let the market feed off its own momentum, said Jeanne Miller, the commission’s deputy director.
The market has grown strong by feeding off a diet of City assistance and is now ready to stand on its own, she said.
“That was always the idea: Use incentives to prime the pump and to encourage interest and growth. But at some point the market takes over,” said Miller. “I think I can say that you won’t see any more incentive deals for residential projects on the Southbank.”
In May, the JEDC started calling incentives “public investment.” Using that terminology, the City has invested heavily in the Southbank market. The Strand apartment tower on Riverplace Boulevard is sprouting upward with the help of $19 million in tax breaks. Across the street is San Marco Place, another tower that could receive up to $3.6 million depending on the price charged for its condominiums.
The San Marco Place deal, where incentives were granted on a sliding scale tied to unit prices, ushered in a new kind of incentive package. The developers only received City money if they built at desired price ranges. The JEDC wants to encourage market-rate housing as a means to build a diverse housing market downtown.
Even those highly-focused incentives will no longer be available on the Southbank. But San Marco Place will serve as the JEDC’s model for its more selective approach to incentives downtown, said Miller.
“The Northbank might still need assistance, but market rate housing is what we want to encourage when we do use incentives,” said Miller. “That diversity in the market is what we need to increase the demand for greater retail services and building that vibrancy we’re looking for — more people living downtown and more pedestrian traffic.”
As the downtown market improves so does the City’s position in negotiations with developers, said Miller. The inventory of available land is dwindling and development rights on the Southbank have just about been exhausted, allowing the City to be more selective about the deals it approves, she said.
Development rights certify that a given project won’t overwhelm an area’s infrastructure. The Southbank’s market is already bumping up against residential development limits and the City is looking for ways to expand its allowance.
The latest figures provided by the JEDC show that the City is expecting 2,050 residential units to enter the Southbank market. Development rights are available for only 210.
In the short term, the City can borrow development rights set aside for commercial development. But for a long-term fix, the JEDC is seeking an exemption from the state that would allow the City to build residential density on the Southbank and exchange development rights among markets on the Southbank, downtown and Northwest Jacksonville.
Similar exemptions have been granted to expanding residential markets in fast-growing South and Central Florida, said Miller.
With development rights at a premium, the JEDC is in position to use them to help shape the markets downtown and on the Southbank, said Miller. She said the rights are most likely to be granted to developers who pay to mitigate their impact on infrastructure and who add public improvements. For example, the City granted South Shore Group Partners and Hines Corp., a pair of developers teaming up to build a residential development next to the Aetna Building, development rights only after the group promised to expand the area’s Riverwalk.
“Other cities charge developers for the rights. Here the trend will continue to be developers providing public improvements and infrastructure in exchange for the development rights,” said Miller.
The JEDC will also continue to attach the rights to “use-it-or-lose-it” provisions in its development deals. That means the developer would have to start and finish construction by pre-approved dates or else risk losing the rights.