by Mike Sharkey
Staff Writer
Deal would develop Cecil Commerce Center
A deal over a year in the making could come to fruition today if the Jacksonville Economic Development Commission approves Dallas-based Hillwood Development Company LLC as the master developer of Cecil Commerce Center.
According to the executive summary provided by the City, “success at Cecil Commerce Center will be achieved once buildings are developed and businesses are attracted to the property, thereby creating jobs for our community and tax revenue for the City.”
Cecil was established in 1941 as Cecil Field Naval Air Station. In July 1993, Cecil Field was approved for closure by Congress after a recommendation from the federal Base Realignment and Closure Commission. That recommendation was part of The Defense Base Closure and Realignment Act of 1990.
In 1996, City Council approved a plan created by the JEDC to develop Cecil as a commerce center. Three years later, the property was deeded to the City. Today, about 17,000 acres belong to the City, the Jacksonville Aviation Authority and Clay County.
Under the proposed agreement, Hillwood will invest $1.3 billion at Cecil Commerce Center. That figure includes infrastructure costs, development and vertical development.
The $1.3 billion is broken down as follows: $42.4 million for public infrastructure, $190.3 million for land development and $1.072 billion for vertical development. If approved, the contract between the City and Hillwood is initially for 10 years with three five-year extensions “during which Hillwood will purchase and develop parcels at (Cecil Commerce Center) as development opportunities and end users present themselves.”
Ron Barton, executive director of the JEDC, said the agreement will allow a true land developer to negotiate the sale and development of the former Navy base.
“The Master Development Agreement with Hillwood is in the City’s best interest as it shifts the burden of development from the City to the private sector and better aligns talent, private capital, relationships and long-term commitment toward building success at Cecil,” he said.
“Success being defined by getting our problematic property ready for market consumption and constructing buildings that will grow jobs and tax revenue for the City,” he said.
Barton said the objectives will be reached at no cost to the City, including the shifting of $42 million of public infrastructure investment over to the developer while at the same time, depending on performance, generating between $58 million and $100 million in land sales proceeds and tax revenue over the term of the agreement.
Hillwood is a global development and real estate investment company owned by the Ross Perot family. It was “selected as the top-ranked respondent based on its superior business proposal, its financial wherewithal and its track record of success with complex, large-scale, long-term public-private projects,” said the City executive summary.
“Hillwood’s projects vary greatly in nature and scope, but they are all undertaken with a common spirit that embraces entrepreneurism, collaboration, innovation and a dedication to making a lasting contribution to the communities Hillwood serves,” it said.
The JEDC staff has determined the deal with Hillwood will generate tax revenue and land purchase payments. Those tax revenues are projected between $50.3 million and $88.8 million over the initial term of the contract.
The deal isn’t popular with everyone. Local developers and brokers have spoken out against the deal. Mark Scott is a broker with Cushman & Wakefield. His beef isn’t with Hillwood as much as it’s with the JEDC and the City.
“It appears as written the agreement falls short in terms of pricing, giving Hillwood a distinct advantage over other developers,” said Scott, adding some of the concerns of his clients center on the value of their land and its potential selling price in the future.
Scott explained that all land deals come with other variables that include wetlands mitigation and concurrency. In the agreement with Hillwood, the City will pick up the tab for all of those.
“It mitigates the risk of developing a site and everyone knows it,” he said, adding that allowing Hillwood to sell land below the market price hurts the value of land throughout Jacksonville.
“That concern does not resonate with the folks at the JEDC and the mayor’s office for whatever reason,” he said.
The better Hillwood does in developing the property, the more the City makes. As master developer, Hillwood will pay the City 10 percent of its net proceeds from all industrial projects and 50 percent of its net proceeds from all mixed-use developments.
Part of the development deal allows Hillwood, for marketing purposes, to rebrand Cecil as Alliance Florida. The use of “Alliance” has worked in other areas.
AllianceTexas in Fort Worth is a 17,000-acre development in North Texas, according to the summary. There are 230 companies there and 28,000 jobs have been created since 1988. Also over that time, $731 million in tax revenue has been generated.
AllianceCalifornia in San Bernandino is described as a 2,000-acre Brownfield development that’s the former Norton Air Force Military Base. The development helped create 4,000 jobs since 2002.
According to the City’s executive summary, 10 criteria were used to evaluate the returned Requests for Proposal. Those criteria included: competence, current workload, financial responsibility, description of how the proposer would approach the role of Master Developer and accomplish the Master Development Plan, description of the business relationship with the City, ability to report on progress and create performance benchmarks, past and present record of professional accomplishments with the City and other agencies, proximity to the project, past and present commitment to minority, women-owned, small and emerging businesses, and volume of current and prior work with the City.
The JEDC meets at 9 a.m. today at the Ed Ball Building downtown.
356-2466