JACKSONVILLE, Fla. — The Downtown Investment Authority has published their recommendations and review of the Lot J Development project ahead of their emergency meeting Wednesday.
The overall consensus is that they agree with the project, but several conditions have to take place.
Some of the major recommendations include taking out the residential parking garage and any of the infrastructure serving the mixed-use space and the hotel, and reducing the breadbox loan of $65.5 million.
The loan of $65.5 million is a 50-year no-interest loan from the city to the developer. The developer does have to front $13.1 million which is twenty percent of the loan. The DIA believes that there is no need for this incentive and is risky for the city. With the donation of development ready pads, with the REV Grant and the other vertical infrastructure such as landscape, lighting, art and signage, there should be enough money to cover any gap on the Mixed-Use Component between realistic construction costs and stabilized value with a modest return on investment. The hotel also poses risk to city revenue as travel may be impacted due to COVID-19 and it is difficult to create an analysis on the revenue without an exact number of rooms in the hotel agreement.
“If a portion of it [a need for financial incentive] were provided, absent a further gap analysis substantiated by construction budgets and pro formas, it should be substantially reduced or structured as a more traditional loan,” the recommendation stated. “Nevertheless, we understand that this may be non-negotiable from the Developer’s perspective, and actual construction and operating numbers might justify this incentive.”
The residential parking garage, $18 million, and the vertical infrastructure, more than $5 million, has also been recommended to be taken out of the project due to absent detailed construction budgets and operating projections.
Another point of interest by the public that is noted in the report is the Return of Investment. The initial ROI from the administration was for every dollar spent, the city got back $1.69. The City Council Auditors then refuted that with a different calculation that excluded city incentives. They calculated that for every dollar spent, the city got back 44 cents. In the DIA’s report, they calculated that the 20-year ROI is that the city would get back 40 cents.
“This City incentive has not been included in ROI calculations prepared by others. However, we would note that this value assumes a remediated buildable site- which this is not. Without specifics on the cost of remediation, we cannot provide the appropriate reduction but believe some portion of the infrastructure budget is simply bringing the land up to this value,” the report stated.
The DIA does note that many of the recommendations have already been raised by the Administration and the Office of General Counsel, but has been rejected by the Developer.
“If, when presented to City Council, the Developer does not agree, it will be up to City Council to then make the decision whether to proceed,” the report stated. “We have provided the review and analysis requested and the DIA has forwarded a recommendation supported by this report.”
However, in a turn of events, the report that was published Tuesday morning, was later replaced Tuesday afternoon. There were a few notable changes to the language of the recommendations.
One of the changes between the first published report and the second is the absence of infrastructure detail. In the first report, the DIA recommends that the parking garage and other vertical elements be taken out of the deal. In the second report, these specific details are taken out.
Lori Boyer, the CEO of the DIA, told WOKV that the first report was a working draft that was requested by several media members, so they wanted to distribute the report, even though it wasn’t final. The second report is what Boyer said is considered the final report and will be the one presented in tomorrow’s meeting.
The DIA emergency meeting will go over the recommendations and if it passes the board, it will then go to City Council. They will discuss it in a Council of the Whole meeting Thursday. City Council members will have a chance to pass the Lot J project and have it go for final approval next week.
Last night, Mayor Lenny Curry tweeted that councilmembers should decide this week on if they want to pass the bill.