The Downtown Investment Authority now has a key detail it needed before starting negotiations with Shad Khan’s company about its Shipyards proposal.
The appraisal for the riverfront site recently came in at $26 million — $24.5 million for nearly 30 acres of developable uplands and $1.5 million for the 14.7 submerged acres.
“I’m not really sure I had any real expectations,” said DIA board Vice Chair Jack Meeks. “The simple answer is I didn’t expect it to be $100 million … and I didn’t expect it to be $10 million.”
One key aspect, he said, are the sales comparables.
The 111-page report from Integra Realty Resources uses four — with one being across the St. Johns River from the Shipards.
The former JEA site on the Southbank that Peter Rummell and Mike Balanky will build into the mixed-use “Healthy Town” concept was used for analysis. The $18.5 million “in contract” sale resulted in about $650,000 an acre for the 28.6-acre site. The adjusted price brought it up to $820,625 — about the same as the Shipyards.
“My experience is, it becomes just one point of information,” Rummell said of appraisals in general. “It’s not unusual at all for it (a sale) to go higher or lower.”
Balanky said when it comes to typical appraisals, it can make a difference to lenders. One factor that can impact the review is if a parcel is zoned appropriately. For instance, the land where San Marco Place condominiums on the Southbank were built tripled in value once it was rezoned from commercial to residential, he said.
But like Rummell, Balanky said appraisals are just one of the tools used to strike a deal.
In the case of the Shipyards, much like Healthy Town, the deal doesn’t come from two private sides but a public and private entity. That means other factors, such as community significance, can have an impact on a deal.
And this deal will be much more than just the land. Who pays for improvements to areas like Bay Street and Hogans Creek and how tax dollars will be divvied up are just a few of the points that need to be hammered out.
But as for the land, attorney Paul Harden, who represents Khan and his Iguana Investment Florida LLC, said the company would likely continue to take a look at the land but didn’t know if another full-blown appraisal was needed. “We have a feel for its value,” he said.
Given its complexity, Harden said “the Shipyards is not your typical project.”
It still has outstanding environmental issues that weren’t factored into the appraisal.
Instead, the report uses an environmental site assessment from 2005 performed by Golder Associates Inc. that “revealed no evidence of recognized environmental conditions.”
“Overall, the report gives the impression that all impacts are minimal and have been dealt with or are being monitored in a way that will not influence future development,” according to the appraisal summary. “However, environmental issues are beyond our scope of expertise.”
It’s widely known the site will require some form of environmental remediation, but the extent is not yet known.
The city late last year selected Mechling Engineering & Consulting Inc. for the environmental consulting and testing of the site.
That’s been ongoing and just how much will be needed to prepare the site for development should be known by the end of this month, Public Works Director Jim Robinson recently said.
City Council last year set aside $13.4 million for the cleanup. Those funds originate from a settlement from LandMar and its parent company, which was slated to redevelop the site before the deal fell through.
Unlike the Shipyards, the JEA site being bought by Rummell and Balanky is “clean” — JEA spent $28 million to remedy environmental issues.
According to Khan’s proposal, the city would be on the hook for up to $35 million to remedy the site. Based on private assessments, though, Harden said the range shows it closer to $15 million to $18 million.
He said the Iguana team reached out to DIA CEO Aundra Wallace last week about starting negotiations. “We’re anxious to begin,” Harden said.
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