Core Lot J incentives intact as bill moves toward final City Council vote
Posted by Carlos Renteria on
By: Mike Mendenhall
A City Council Committee of the Whole spent nearly 10 hours Jan. 7 making changes to the bill authorizing a $245.3 million taxpayer-backed incentives package for Jacksonville Jaguars owner Shad Khan’s proposed Lot J development, but the core package remains unchanged.
When the $450 million public-private partnership between the city, Khan’s company Gecko Investments LLC and development partner The Cordish Companies heads to the full Council Jan 12 for a final vote, it will have a city-backed $65.5 million “breadbox” loan and no financial clawback provisions.
The loan is the most publicly criticized part of the development deal negotiated by Mayor Lenny Curry’s administration.
“I think we did the best we could to get some great things included in this, but it doesn’t address the amount of money that we’re having to put up,” Hazouri said.
Cordish COO Zed Smith told Council member Randy DeFoor his company will not share the project pro forma and financial viability gap analysis with the city. The information could show if the loan is needed to make Lot J economically viable.
DeFoor agreed to table an amendment that would have inserted a liquidated damages clause into the bill seeking $152 million should the Jaguars leave Jacksonville or fail to complete Lot J.
Despite Cordish and the Jaguars balking at both of her requests, DeFoor voted in favor of the bill Jan. 7.
Gecko representatives have been resistant to the City Council Auditor’s request to provide an audited financial statement of assets from K2TR Family Holdings 2 Corp., the company Khan will use to guarantee Lot J’s private investment.
A letter dated Oct. 28 was sent to the Curry administration from the company, which is owned by Khan and his family.
K2TR CFO Thomas D. Clarkson said he could confirm the company’s net worth of more than $229 million.
Gecko agreed Jan. 7 to increase its financial guarantee from $229 million to $279 million, added to the bill Jan. 7 through an omnibus Council Auditors’ amendment that included other small changes and language cleanup provisions.
In a 3-16 vote, the Council voted down an amendment by member Joyce Morgan requiring the audited statements.
Council members Matt Carlucci and DeFoor joined Morgan in her “yes” vote.
Any taxpayer protection?
Council member Ron Salem negotiated an amendment with the Jaguars to require Gecko to pay the city 100% of the net sale proceeds of the company’s stake in Lot J if Khan moves the NFL franchise from Jacksonville before 2034.
Gecko and Jaguars lobbyist Paul Harden agreed that the payment to the city would be no less than $50 million.
Gecko will have to sell its interest in Lot J within two years of a Jaguars’ departure, according to the amendment.
Salem said he considers it a compromise in place of a stadium lease extension with the team.
“I’ve heard from my constituents that we want something if the Jags leave,” Salem said in an interview Jan. 7. “I went to the Jags and said ‘help me get something that gives me a comfort level in the horrible event that the Jags leave Jacksonville.’”
The amendment would not apply if Khan sells the Jaguars franchise. If a non-Gecko affiliated company moves the team out of Jacksonville, the city will not receive the Lot J net sale proceeds.
The bill will include a 1.5% extra charge for visitors to the Cordish Lot J hotel.
The amendment by Council member LeAnna Cumber would generate $7 million to $12 million over the 50-year life of the economic development agreement, according to Council Auditor Kim Taylor.
• A Council Auditor’s amendment clarifies that the city will have a revenue-sharing agreement with Gecko and Cordish for events held at Lot J during the two days before and the day of the annual Florida-Georgia football game through a ticket surcharge.
• A recommended Downtown Investment Authority amendment will require Gecko to pay property taxes on the 35,000 square feet of commercial office space at Lot J.
• The first of three amendments by Council member Garrett Dennis approved 19-0 asks Gecko and Cordish to ensure 30% of the Lot J construction and operational management jobs comply with the Jacksonville Small and Emerging Business program, which targets women and minority-owned businesses.
• Council approved a Dennis amendment that makes the city an insured party in the Cordish Lot J insurance policy for loss and business interruption.
• A third Dennis amendment establishes an Eastside Development Trust Fund to fund existing and prospective businesses to boost job creation, available serves and redevelop existing vacant buildings in the neighborhood north of Lot J.
The amendment requires Cordish and Gecko to deposit $2 million in the trust in 2021 and $500,000 annually for 16 years beginning in 2025.
The 15-4 vote at the Jan. 7 Committee of the Whole puts the Lot J agreement on a path for likely approval.
Because the bill amends the city’s 2020-21 fiscal year budget with $208 million in bond debt to fund the public investment in Lot J, it will take a 13-vote majority to pass Jan. 12.
To keep her yes vote, Council member Brenda Priestly Jackson said during the committee meeting she needs documented assurance from the Curry administration that Lot J will not put constraints on the city’s debt capacity to fund infrastructure projects in underserved areas of Jacksonville.
The Council Auditor said Jan. 7 that city borrowing power stands at $750 million to $850 million.
In a news conference Jan. 8, Curry pushed back against the notion that Lot J would handicap the city’s credit.
Curry touted his 2017 deal that has deferred the city’s pension fund liability to free tax revenue for neighborhood projects, establish reserves and pay down city debt.
He said he’ll soon announce details for several projects in these areas of Duval County.
“I’m not concerned. My administration, the Council and the Council before this one have been incredibly responsible,” Curry said. “We can handle Lot J and we can continue to invest in our neighborhoods in a responsible way.”
Council members Danny Becton, Al Ferraro, Carlucci and Hazouri voted against the bill Jan 7.
Becton said he will not support the bill Jan. 12 without changing some of the $65.5 million loan to a Recapture Enhanced Value Grant, a property tax refund, or other changes to the city’s ownership stake in Lot J’s parking garages.
Becton and Ferraro said they want Lot J to move forward, but are concerned with the size of the public investment.
The Jaguars, Cordish and Lot J supporters can lose two votes from the Jan. 7 count and still pass the bill.
City Council meets at 5 p.m. Jan. 12 at City Hall at 117 W. Duval St.