City Approves Southbank Economic Development Deal For The District
With City Council approval Tuesday of an economic development agreement, developers of The District, the proposed large-scale, mixed-use development on the Downtown Southbank can now purchase the property from JEA.
Council members voted 9-5 to approve the deal between the city and Elements Development of Jacksonville LLC as well as create a Community Development District to support the project, our Jacksonville Daily Record news partner reported.
Peter Rummell and Michael Munz of Elements plan to pay JEA $18.5 million to purchase the former JEA Southside Generating Station site and redevelop it into a 30-acre mixed-use project focused on healthy lifestyles.
Elements has until July 18 to purchase the property from JEA.
Voting for the bill were council Vice President Aaron Bowman, Danny Becton, Lori Boyer, John Crescimbeni, Reggie Gaffney, Bill Gulliford, Jim Love, Joyce Morgan and Sam Newby.
Council President Anna Brosche, Doyle Carter, Garrett Dennis, Al Ferraro and Matt Schellenberg voted against.
Council members Greg Anderson, Tommy Hazouri and Scott Wilson were excused. Katrina Brown and Reginald Brown are suspended
Some council members voiced concern about the city’s contribution to the project.
The legislation includes up to $82 million in city support in the form of property tax breaks and infrastructure investments for public land.
Before the vote, Brosche said she could not support the agreement because Elements declined to share private financial information with her regarding its ability to execute the project.
“I understand the need for the city to partner on economic development projects and my voting record shows my support for such projects,” Brosche said.
Brosche said that a deal this large should require the developer to disclose its financial projections.
“How do we know that the developer isn’t using the city’s investment and making significant profit on taxpayers’ money?” she asked.
Dennis and Ferraro also expressed concern.
Downtown Investment Authority CEO Aundra Wallace pushed back, saying the public investment is only for public property and therefore there is no need for Elements to provide its private financial projections for a private development.
Wallace said after the meeting that he welcomed the question.
He said there needs to be a clear understanding of how the deal is structured.
“You can never explain everything in one particular setting,” Wallace said.
“The comment was on this $82 million in public money, let’s be honest about that,” he said, reiterating that Elements must build its development to receive a bulk of those incentives.
Others, including Gulliford, said the deal was not unlike others negotiated by the DIA.
“If they take a substantial risk and realize a substantial profit, God bless them as far as I’m concerned,” Gulliford said.
Bowman called on his colleagues to “act boldly.”
“If you want to be a second-rate city, then vote against this,” he said before the vote.
After Elements closes on the property, it must convey about 4.5 acres of riverfront and other park space to the city at no cost.
The DIA, with the help of a low-interest loan from the city’s general fund, would have $19 million to build three riverfront parks, another pocket park, a 1,900-foot extension of the Southbank Riverwalk and bulkhead construction, a walking trail around the development, a parking lot for 100 public spaces and the expansion of three roads for public access.
Wallace said the agency has nearly $9 million earmarked over the next three fiscal years and would borrow the rest from the city at a 2.66 percent interest rate over 15 years.
The loan will be paid back through tax revenue generated from the Southside Tax Increment Financing District, which is part of the Downtown Southbank.
According to a projection of the DIA’s budget over the next 15 years, the Southside TIF has enough money to pay the principal and interest on that loan each year with $2.1 million to $3.4 million left over for other projects.
Wallace said he anticipates being able to repay the general fund loan before the 15-year deadline.
Council members also approved the creation of a Community Development District with boundaries encompassing The District site.
Elements is responsible for creating the CDD and will then be able to sell up to $30 million in bonds to help fund part of the infrastructure and other horizontal development, including roads, sidewalks and utilities.
Construction costs are estimated at $24.7 million, according to the agreement.
The group has until Dec. 31, 2040, to repay the bonds through proceeds of a Recapture Enhanced Value grant worth up to 75 percent of the taxes generated from the property improvements.
The REV grant is worth the lesser of $56 million or the total principal, interest, fees and costs of any credit enhancement of the bonds.
The 2040 deadline coincides with the sunset of the Southside Community Redevelopment Area, regardless of when Elements receives Certificates of Use on the project.
Munz said the group will move on Wednesday to create the CDD and is hopeful to begin construction by 2019.