Jacksonville Mayor Lenny Curry on Thursday released a plan for the development of Lot J, which includes a high-rise apartment building, a boutique hotel, office space and 13,000 parking spaces.
Related: Jax Might Use Hotel Bed Tax To Fund Part of Lot J Deal
The city would provide more than $233 million in grants and infrastructure improvements — which amounts to just over half the cost of the project that would be a partnership with Jaguars owner Shad Khan’s company and a developer called The Cordish Companies.
That news comes a few weeks after Jacksonville’s public utility, JEA, approved a resolution to explore privatization, a move that proponents say could get rid of the city’s $2.2 billion debt. Meanwhile, demolition fencing for the 32-year Jacksonville Landing is going up.
Related
- Experts Say Sale Of JEA Would Be Biggest Public Utility Transaction In The Industry
- Mayor’s Office: It’s Time To Move Forward With Demolishing The Jacksonville landing
With so many changes in Jacksonville underway, WJCT News Friday sat down with the mayor to discuss Lot J, JEA, and The Jacksonville Landing. This interview was lightly edited for clarity.
The City of Jacksonville recently reached an agreement with Jaguars owner Shad Khan to redevelopment Lot J. Under the proposal, the city would invest $233.3 million in the project. Where exactly is the money coming from?
First, I would just say this is a big deal for downtown. There hasn't been a massive project, a transformational project, and in many, many years — decades, frankly. A live entertainment district, three additional vertical towers, which are residential, commercial, and hotel. It's a game changer.
You know, we've long talked about doing something big downtown, a commitment to it. And this demonstrates that. It's important to remind people that downtown is not a zero sum game. So four years ago, five years ago, just before I was sworn into office, the city had invested almost no dollars in neighborhoods all over our city. [In] each of my four budgets, including my fifth one now, we have invested hundreds of millions of dollars in neighborhoods all over this city, so others aren't being left behind. Now it's downtown's time. We can’t be a suburb of nowhere.
So this incentive package [has] a number of components. Some of it is a REV grant. So right now that development is a parking lot; doesn't generate any tax, property tax revenue, because there's just cars on it. Once these buildings go vertical, they'll begin to generate property taxes. Those property taxes, those new property taxes will go back into a fund, which will be part of the incentive package that will help fund the infrastructure and the work around the project. And then the city will do infrastructure as well, like it would in any neighborhood. And that'd be part of the project and the plan.
Phase one, in the beginning of this, I should say, some of this will be paygo [pay as you go]. We are financially stable, the city has cash. And at some point, we'll use debt wisely. But at this point, we are fiscally sound, we can handle this project. We've paid down over $300 million in debt since I've been in office. We reformed pension so we can invest all over this city and we can do this project.
The city is providing more than half (52%) of the $450 million for this development - one of the biggest investments in any project. So, why do you think developing Lot J is so important?
Yeah, it's a $450 million project. There's $200 something million in… Well, it's interesting. So if you say over $200 million in incentives, you got to really break this out. Because part of it is the Live Entertainment piece the city will own. We will own that. We will pay for half of that and our partners, the Jaguars, will pay for half, just like the amphitheater and will lease that back to them. And so the other pieces are incentives that will go to private development, if you will.
Look, downtown has been talk, talk, talk for years, while other cities have realized their downtowns and they’re booming. People are living there and they’re working there and they're playing there. It’s important that we have residential, commercial, retail, and that’s what this does.
How do we know what the return on investment will be for the taxpayers if they [Khan’s company] get these incentives?
Well, the live piece, that's our facility, so we have a private investor investing in half the construction of that. So that's an immediate return. On the other pieces, what we have right now is a term sheet. And the term sheet is the big picture, a four- hundred-something million dollar development. These are the buildings that will happen.
The next piece will be a development agreement, which we'll be negotiating in the weeks ahead. Once that's complete, that will lay out specific details, dates, timelines, returns. That's what will go before the Downtown Investment Authority and that’s what will go before the City Council. That negotiation is still happening. What this announcement was, is that we have agreed to the basic big terms on this deal, how much it's going to cost and what's it going to look like.
If JEA is sold and city debt is paid down, what sort of yearly dollar amount might that open up for other city projects?
So let me backup on JEA. The JEA independent board resolved to examine whether privatization and recapitalization made sense. We don't know if that's what they'll conclude when this is over. If they do conclude that's the way forward, it doesn't happen without the vote of the people. The people of Jacksonville will have the ultimate say as to whether or not this makes sense. If in fact they travel that road, the only way I would be supportive of it is if it protects employees, their pensions, their benefits.
In fact, I'm introducing legislation that will make it law that their pensions and benefits are protected. And that, B, the rate payers are protected [with] access to market rate electricity and clean water. And then finally, protect the taxpayers, which is why they did this strategic view.
If in fact this transaction happened and the $3 billion minimum would come to the city — that’s what the JEA board has said — the first thing I would do is pay down all of our city debt, the $2.2 billion. What that means is you get detached, you wipe out $240-plus million of debt service every year. So right now we spend $240-plus million to service our debt. That cost will be gone and would be accessible in our operating budget to invest in neighborhoods all over this city.
At this early juncture are there any specific projects you might see pursuing with JEA proceeds if a sale were to occur outside of paying down debt?
First thing I would pursue is a debt free city, pay off all of our debt, pay down $2.2 billion in debt. The Better Jacksonville Plan and the general fund and the enterprise debt. And then if it was the minimum $3 billion, you'd have approximately another $800 million left. I would propose that most of that — we would have to agree to a number — be put in a lockbox, be stored in an annuity. The principal could never be touched and it would throw off dollars for the generations ahead.
The other piece of this is if you paid off the Better Jacksonville Plan debt right now, it would trigger the pension revenue tax that we passed a couple years ago to begin paying down pension debt immediately, which would reduce our pension liabilities by approximately $800 million, which is another $800 million over time that could be invested again in neighborhoods, public safety, kids and all the things we do.
Brian Hughes has previously referred back to the 2015 Landing development plan as the reason public input wasn't needed again concerning whether to repurpose the existing structure. That plan included residential, restaurants and possibility a museum. Do you envision those components moving forward? How much of a blueprint will the 2015 plan actually be?
I think that those are the options that are on the table. What will happen is, as demolition happens, the Downtown Investment Authority will put out a request for proposal to the market to say, you know, to private investors, what would you like to do here? What can you do here?
My personal opinion is it should be a combination of some green space, not all, we don't want just a park there, but a combination of some green space, and then some sort of buildings that are iconic, that serve the public. It's an important piece of property. I also think should you be able to see the river from Laura Street. We don't want to block the view of that wonderful jewel.
Do you have a timetable for requests for proposals for the Landing?
That would fall under that Downtown Investment Authority’s authority. We work closely together, however, I would expect by the end of the year.
