Author Topic: The Ford on Bay  (Read 124046 times)

Ken_FSU

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Re: The Ford on Bay
« Reply #375 on: May 10, 2022, 08:27:08 PM »
^ This is from 11 days ago.  Does anyone know if the DIA has found the time to work on the Hardwick deal?

Terms of the deal released by the DIA:

https://www.jaxdailyrecord.com/photo-gallery/dia-releases-draft-deal-for-dollar41-million-in-incentives-for-the-hardwick#photo-2

$41 million subsidy, in the form of:

- $27 million REV grant
- $10 million completion grant
- $5 million discount on the property on its appraised $10 million value

Sounds like the $5 million that Carter pays the city for the property will be used to build out the riverwalk and a marina in front of it.

Includes 25,000 sf of retail, with at least 35% fronting Bay Street, at least 7,500 square feet in restaurant face fronting the marina, and 1,500 square feet of restaurant/bar space being "rooftop" on at least the second floor.

Not crazy about giving the developer over a year for due diligence before they commit to the project, and a year after that to break ground, but also not surprised and not sure anyone else would be moving faster.

Quote
The deal would give Carter until Dec. 31, 2026, to complete The Hardwick. Carter must break ground by April 30, 2024.

However, the term sheet appears to give the developer leeway to exit its agreement with the city by May 31, 2023, without penalty based on site conditions and the project’s marketability.

“Following the execution of the Redevelopment Agreement, Carter will have through May 31, 2023 (“Due Diligence Period”) to inspect and perform tests on the Property to determine its suitability for the Project, and to investigate the quality and marketability of the title it will receive from the City,” the draft term sheet says.

“Upon notice to the City, Carter may terminate the Redevelopment Agreement and the Project any time within the period without cause and without incurring any obligations under the Redevelopment Agreement.”


heights unknown

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Re: The Ford on Bay
« Reply #376 on: May 10, 2022, 10:10:06 PM »
I'm not crazy about giving them more time and this "due diligence period" either. WHY are they giving them this long of a time? Oh....I forgot, this is Jacksonville, FL; not Tampa, Miami, Orlando, or Fort Lauderdale. Sheesh!
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Captain Zissou

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Re: The Ford on Bay
« Reply #377 on: May 11, 2022, 10:03:07 AM »
Not crazy about giving the developer over a year for due diligence before they commit to the project, and a year after that to break ground, but also not surprised and not sure anyone else would be moving faster.

I think this is a (over) reaction to the how the market has affected recent development agreements.  I know many developers are planning to go back to DIA to modify their agreements due to tight timelines, escalation, and supply chain issues making it impossible to meet the targets of their current agreements.  2 years to break ground is very generous.

fieldafm

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Re: The Ford on Bay
« Reply #378 on: May 11, 2022, 11:14:42 AM »
Not crazy about giving the developer over a year for due diligence before they commit to the project, and a year after that to break ground, but also not surprised and not sure anyone else would be moving faster.

I think this is a (over) reaction to the how the market has affected recent development agreements.  I know many developers are planning to go back to DIA to modify their agreements due to tight timelines, escalation, and supply chain issues making it impossible to meet the targets of their current agreements.  2 years to break ground is very generous.

I have a project where the GC, for cash flow reasons, didn't order certain framing lumber until once they broke ground.  They are now unable to frame out windows... yet drywall and electrical conduit were delivered ahead of schedule, forcing them to find a storage facility to store these materials in a dry space (increasing construction costs). Their other concern is that the electrical subcontractors will not be able to come back on site in time as the sub had to rearrange their work schedules at other sites... so they might have another month/two month delay when they are ready for the electrical work to start.

These labor and material shortages (and price increases- thanks to the tariffs at first and then exasperated later by supply chain disruptions) have been going on for really 4-5 years, and made even worse since the pandemic.

The larger GCs have been trying to stockpile building materials before things like a 10-set review is even complete, because they can't rely on predictable delivery schedules once the job starts.  Which hurts the smaller GCs, as well, who are then basically trying to find a needle in a haystack.

Its the reality we live in today.

Don't know if anyone noticed.. but its been 10 months since River City Brewing Company closed and 15 months since their development agreement was approved.  That's not because the Related Group somehow forgot how to build an apartment building with a small restaurant space :)

Its not uncommon right now that a lot of real estate funds are calling capital much quicker than their investors expected, and not paying out distributions as properties aren't coming on line within their original schedules.  With inflation the way it is, that's not really a problem as capital continues to flow into real estate as a hedge against inflation.... but its not exactly a scenario that can play out in the long term without capital finding somewhere else to park money.    Interesting times.
« Last Edit: May 11, 2022, 11:42:49 AM by fieldafm »

Ken_FSU

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Re: The Ford on Bay
« Reply #379 on: May 12, 2022, 09:29:08 AM »
^Great insight, thanks Mike!

Looks like the Jags will be going back to the DIA for some of these same reasons for a bigger REV grant.

https://www.jaxdailyrecord.com/article/price-of-shad-khans-four-seasons-hotel-project-climbs-to-dollar370-million

fieldafm

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Re: The Ford on Bay
« Reply #380 on: May 12, 2022, 10:07:36 AM »
^Great insight, thanks Mike!

Looks like the Jags will be going back to the DIA for some of these same reasons for a bigger REV grant.

https://www.jaxdailyrecord.com/article/price-of-shad-khans-four-seasons-hotel-project-climbs-to-dollar370-million

The TU article is a much better read.

https://www.jacksonville.com/story/news/local/2022/05/11/jaguars-owner-shad-khan-spend-370-million-four-seasons-hotel/9733279002/

Quote
The cost of building a planned Four Seasons hotel development on the Jacksonville riverfront has jumped to $370 million from last year's estimate of $301 million and could take six months longer than originally planned before the hotel is open for guests.

But Jaguars owner Shad Khan isn't asking the city for any changes to the financial framework of the deal, and his development team remains confident the Four Seasons Hotel and Resorts will enter into an operating agreement for the downtown hotel to have that globally recognized brand before it opens.

"There may be some things about this project we’re losing sleep over, which is scheduling and cost," Jaguars President Mark Lamping said. "The Four Seasons agreement is not one of those things."

The main change in taxpayer incentives would involve rebates of property taxes over a 20-year period. The current deal caps the total payout of those rebates at $47.7 million, but with a higher construction cost, Khan will seek to likewise lift the cap on the maximum amount of potential rebates.

Lamping said Khan will proceed to close June 10 on acquiring a parcel of city-owned land for the Four Seasons development, and site work should start by the end of the year.

The city's agreement with Khan's real estate development firm Iguana Investments sets a deadline of the end of 2025 to complete construction of the hotel and accompanying luxury residences. Lamping said while it's still possible to make that target, Iguana will ask the city to add another six months, pushing it to June 2026.

He said the request for additional time stems from work that will have to be done on the bulkheads, the marina, relocation of underground utilities and removal of gantry structures left behind by the era of ship repairs at the site.

He said the development plans had looked at building around the gantry structures but at least some of them will have to be taken out.


Here's a look at some of the stuff underneath the site, in order to get a sense of what they are talking about.  When Metro Park was built, there was literally just fill dumped over all of this to effectively bury it instead of fully remediating. 

The contractor that rehabbed the Metro Park marina a few years back didn't have as big of a scope as was necessary, so there are other issues with the bulkhead failing that also cropped up.  COJ being a bad steward of the land for decades (IE not doing the maintenance necessary) doesn't help today's redevelopment efforts.








There's still a rail spur and gantry remnants on the MOSH site, but theoretically LandMar did adequate work at fixing the bulkhead 15 years or so ago.  Whatever issues the Jags are having, MOSH will likely have similar issues/delays as things get uncovered.

Here's a referance from the early 90's.  You can see the gantry cranes (on both the Jags and MOSH portions), the rail spurs, and then the condition of the bulkheads (again, this was all fill from the original shore line and you can see that the pilings supporting the deck were essentially being washed away) on the MOSH site before LandMar starting doing work to fix those issues.  The 2nd and 3rd image are the bulkhead repair work that LandMar completed before their bankruptcy filing.







Here's another look at the site's condition in the early 2000s. I can point out many things... including building foundation remnants, monitoring wells, sinking spots likely caused by failing piers, the presence of stakes perhaps marking the location of underground utilities (or God knows what else), bulkhead failing, etc.  Some of the more immediate problems were patched up just before the Super Bowl in 2005, but much of that was just a temporary patch job.

« Last Edit: May 12, 2022, 10:23:14 AM by fieldafm »

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Re: The Ford on Bay
« Reply #381 on: May 12, 2022, 02:56:24 PM »
^Great insight, thanks Mike!

Looks like the Jags will be going back to the DIA for some of these same reasons for a bigger REV grant.

https://www.jaxdailyrecord.com/article/price-of-shad-khans-four-seasons-hotel-project-climbs-to-dollar370-million
Here we go; but it's not entirely their fault (Khan/Iguana) I guess. Nothing ever goes smoothly in this City.
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Ken_FSU

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Re: The Ford on Bay
« Reply #382 on: May 19, 2022, 03:36:31 PM »
https://www.jaxdailyrecord.com/article/dia-board-approves-dollar41-million-deal-for-the-hardwick-with-design-changes

Gotta keep this one moving, but bummer to see the open courtyard removed.

I thought it was one of the coolest parts of the original design.


Steve

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Re: The Ford on Bay
« Reply #383 on: May 19, 2022, 04:21:08 PM »
I'm okay with the change. They also cited that some of the reason was because of some subterranean pilings that they discovered, which happens.

I did like the courtyard too, but I think I'd trade more density on the site for the courtyard. Plus they re-committed to the mid-century modern design. I don't think it would have changed my feeling that the DIA committee got it right; it's still the best design of the six to me.

Tacachale

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Re: The Ford on Bay
« Reply #384 on: May 20, 2022, 12:52:15 AM »
I'm okay with the change. They also cited that some of the reason was because of some subterranean pilings that they discovered, which happens.

I did like the courtyard too, but I think I'd trade more density on the site for the courtyard. Plus they re-committed to the mid-century modern design. I don't think it would have changed my feeling that the DIA committee got it right; it's still the best design of the six to me.

How did no one know about this? The new drain loses a showpiece of the entire project. An “open air plaza” in this context means “place to sweat your brains out for most of the year.”
« Last Edit: May 20, 2022, 12:55:56 AM by Tacachale »
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vicupstate

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Re: The Ford on Bay
« Reply #385 on: May 20, 2022, 08:38:49 AM »
^^ Seems like whatever due diligence that Carter did in the last month or so should have been done before the RFP was done. Some bidders might have shied away simply because there was that unknown. 
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Ken_FSU

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Re: The Ford on Bay
« Reply #386 on: May 20, 2022, 10:45:00 AM »
The new drain loses a showpiece of the entire project. An “open air plaza” in this context means “place to sweat your brains out for most of the year.”

Agreed. I feel like the courtyard would have been a nice compliment to whatever ultimately happens to the second parcel behind the Hyatt (particularly a reasonably-sized convention center).



On the plus side, it looks like the final deal reduces the due diligence period from a year down to 4 months, which should hopefully get things moving more quickly.

Question for you development guys:

In a city where downtown/riverfront development tends to move at a glacial pace, despite the public pushback, is there really any downside to these giant REV grant commitments?

For projects like the Hardwick, Four Seasons, and the tower proposed at the Landing, isn't it preferable to collect 25% of the property taxes for 20 years than to collect nothing for another decade on the gamble that another developer comes along willing to build a similar project without the grant? Particularly when it allows us to have some say over uses?

For example, is the general fund really going to suffer that much over the next 20 years if we hand out $200 million in REV grants to jumpstart the river and redevelop vacant properties?

Wouldn't it still be a net-positive on the tax rolls?

Hearing a lot of pushback on the "$41 million we're giving the developer," but this figure also feels a little misleading, right?

Of that $41 million:
- $27 million is a 75%/20-year REV grant
- $9.6 million is a completion grant
-$4.6 million is a discount on the property

If we assume that the Hardwick is a great use of this space (evidenced by the RFP process and its selection from amongst 6 suitors) but the market is such that, absent the tax abatement, it wouldn't be feasible for years to come (hopefully DIA is performing gap analyses on these projects instead of just handing out blanket 75%/20-year grants), than the grant isn't really "costing" us anything versus letting the property sit vacant, right?

On the $9.6 million completion grant, based on the amount of the REV grant, the property is expected to generate $36 million+ in tax revenue over the next two decades. After the REV grant, that leaves a good $10 million+ in incremental tax revenue during the REV window. So the city will ultimately break even on the completion grant too, right?

Even the discount on the land might knock $4.6 million off the balance sheets as an asset - but it's not coming out of the general fund.

Is it inaccurate to suggest that this "$41 million in taxpayer money" isn't really costing the city much of anything in the long-run, aside from opportunity cost that something better will magically come along?

And that offering a large, temporary tax abatement on a $150 million project like the Hardwick will generate more revenue in the long-run than offering a smaller abatement (or no abatement) on a $50 million stick-frame apartment complex from Spandrell in the same location, for example?

If we're ultimately going to offer max abatements (75%/20-year) on all of these major projects anyway (the Hardwick, the Landing, the District, the Shipyards, Related's Development), would be it be beneficia/attract more interest to just advertise the grants upfront when we're doing these RFPs?

Just curious what you gents think.

Captain Zissou

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Re: The Ford on Bay
« Reply #387 on: May 20, 2022, 01:12:30 PM »
On the $9.6 million completion grant, based on the amount of the REV grant, the property is expected to generate $36 million+ in tax revenue over the next two decades. After the REV grant, that leaves a good $10 million+ in incremental tax revenue during the REV window. So the city will ultimately break even on the completion grant too, right?

Even the discount on the land might knock $4.6 million off the balance sheets as an asset - but it's not coming out of the general fund.

Is it inaccurate to suggest that this "$41 million in taxpayer money" isn't really costing the city much of anything in the long-run, aside from opportunity cost that something better will magically come along?

As a member of a development organization, I think it is inaccurate to call it taxpayer money.  These properties aren't currently on the tax roll, so even at a discounted rate, it's a net positive in ad valorem tax revenue to the city.  The structure of the incentives also puts almost all of the risk on the developer.  If they don't complete what they promise, they receive no completion grant and the REV grant is also at risk.  It makes a better headline to say that the city "gave them $41m", but that is not an accurate depiction of the incentives. 

Steve

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Re: The Ford on Bay
« Reply #388 on: May 20, 2022, 10:35:30 PM »
^^ Seems like whatever due diligence that Carter did in the last month or so should have been done before the RFP was done. Some bidders might have shied away simply because there was that unknown. 

I mean based on the RFP timing it may not be feasible to do that kind of due diligence, then come up with a plan. My guess is I
One did the full due diligence during that time, which is why they get this period to enter into an agreement.

I mean, whatever pilings we’re there may not have been even known to the city; they could have predated the courthouse, which as we all know wasn’t a tall building and probably didn’t need major deep pilings.

I mean I liked the courtyard but it’s fine-I’m not heartbroken over it. Let’s get this built-more density is a good thing.

jaxlongtimer

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Re: The Ford on Bay
« Reply #389 on: May 21, 2022, 12:26:39 AM »
On the $9.6 million completion grant, based on the amount of the REV grant, the property is expected to generate $36 million+ in tax revenue over the next two decades. After the REV grant, that leaves a good $10 million+ in incremental tax revenue during the REV window. So the city will ultimately break even on the completion grant too, right?

Even the discount on the land might knock $4.6 million off the balance sheets as an asset - but it's not coming out of the general fund.

Is it inaccurate to suggest that this "$41 million in taxpayer money" isn't really costing the city much of anything in the long-run, aside from opportunity cost that something better will magically come along?

As a member of a development organization, I think it is inaccurate to call it taxpayer money.  These properties aren't currently on the tax roll, so even at a discounted rate, it's a net positive in ad valorem tax revenue to the city.  The structure of the incentives also puts almost all of the risk on the developer.  If they don't complete what they promise, they receive no completion grant and the REV grant is also at risk.  It makes a better headline to say that the city "gave them $41m", but that is not an accurate depiction of the incentives.

It appears to me that this may be a bit too simplistic.

Property taxes are to pay for city services related to the property's use, using property value as a best estimate of such costs.  It appears that often we only look at that we gave up $X taxes as an incentive in return for collecting greater $Y taxes in the future to more than pay back the $X we gave up.

However, during the tax abatement period, we need to recognize that additional city services will be needed for the increased intensity (especially when talking about vacant or unused properties) of the use of the property.  On this basis, the taxpayers are losing as we are now subsidizing those city services out of pocket until the abatement period ends.  And, when such abatement period ends, if the value of city services consumes the full property taxes, there is little or nothing left from the property taxes to pay for other incentives, such as grants, property discounts, etc.

« Last Edit: May 21, 2022, 01:23:53 AM by jaxlongtimer »