Price of Shad Khan’s Four Seasons hotel project climbs to $370 million

Jacksonville Jaguars executives plan to request a higher property tax rebate and more time to complete the project as costs rise.

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Jacksonville Jaguars executives said May 11 that increased construction costs, labor shortages and site conditions at the Downtown Shipyards will increase the price of team owner Shad Khan’s proposed Four Seasons hotel-anchored development to $370 million.

That’s up from the $321 million that Khan’s development company, Iguana Investments Florida LLC, proposed to the city in mid-2021.

Jaguars President Mark Lamping and Senior Vice President of Real Estate Development Drew Frick told reporters May 11 that Iguana intends to ask the city Downtown Investment Authority for a six-month extension in the project’s performance schedule that is part of a $114 million public incentives package for the project.

Jaguars President Mark Lamping
Jaguars President Mark Lamping

Lamping said the cost increase, $49 million, would mean more ad valorem property tax revenue for the city in the long term.

But he said Iguana intends to ask the DIA to increase the size of the city property tax refund it would receive as part of the incentives deal approved by City Council in October 2021.

The incentives would be increased by raising the dollar cap on the project’s 75% city property tax refund. That existing Recapture Enhanced Value Grant is a maximum of $47.68 million over 20 years.

The agreement with the city requires the Jaguars to make a minimum $301 million investment in the project. Lamping said the Jaguars want the DIA to allow the tax rebate to increase proportionally to the cost.

“We’re going back to DIA and say ‘we’ll be happy to raise that $370 (million) without affecting the project. Shad is prepared to go forward even at that higher cost,” Lamping said.

The update comes as the city Downtown Development Review Board prepares to vote May 12 on approval of the project’s final design.

Khan’s proposed five-star Four Seasons hotel and residences would have 174 rooms in a 12-story building with a parking garage below; a 25-unit, 12-story residential building; and a six-story office building, according to civil engineering plans submitted to the city.

Lamping said global market uncertainties, including supply chain slowdowns on raw building materials, and a shortage of skilled workers in the region spread thin by a development surge contributed to the rising cost to build the Four Seasons.

He said worse-than-expected conditions on the St. Johns River bulkheads and the public marina pilings also will require added work.

Frick said site surveying found undocumented utility lines bisecting the property that will need to be moved.

Jaguars Senior Vice President, Real Estate and Development Drew Frick
Jaguars Senior Vice President, Real Estate and Development Drew Frick

“There’s nothing that we’ve uncovered that is a major problem in completing the project,” Lamping said.

“All of those things combined have put us in a situation where we know it’s going to cost more,” he said.

Along with the REV grant, the city redevelopment agreement also gives Khan’s company a $25,834,887 cash grant after the hotel is complete.

Another $40.4 million from the city includes the value of public land, infrastructure, amenity improvements and easements to support the development.

Iguana  is targeting June 10 as the closing date to buy the hotel property from the city, Lamping said. The city redevelopment agreement says the site is about 4.77 acres.

Lamping said the general structure of the agreement would not change and Iguana would not ask for changes to the compilation grant.

The development agreement shows Iguana is required to start horizontal construction no later than June 1 and substantially complete the hotel and office parcel by Dec. 31, 2025.

According to Lamping, Iguana plans to break ground by the end of 2022.

Many of the DIA’s redevelopment projects have up to six months of extensions written in requiring the approval of  the DIA CEO or the board.

Lamping said the project would be completed no later than June 1, 2026. He said Iguana may not need the additional six months but it would be “ill-advised” to not have the cushion.

Lamping said the project will take 31 months to build after vertical construction starts.

“Our target was to be done by the end of 2025. So, as long as you start going vertical by about a year from now, you can still conceivably get it done in 31 months,” he said.

Completing the project in 2025 is the “best-case scenario,” Lamping said.

Shad Khan's Four Seasons Hotel and Residences will be located on the Shipyards property near TIAA Bank Field.
Shad Khan's Four Seasons Hotel and Residences will be located on the Shipyards property near TIAA Bank Field.

Despite those challenges, Lamping said there are no plans to reduce the scale, size or quality of the hotel to cut costs.

“We committed to a five-star hotel. We committed to 179 rooms. We committed to (being) best-in-class in Jacksonville. We committed to bring a residential product that doesn’t exist and Shad (Khan) was not going to compromise on those commitments,” Lamping said.