The Downtown Investment Authority's Future

[Ken_FSU]

P.S. What's really frustrating and sad to me, which is probably why I come across so cranky, is that, as a Dad who loves Downtown Jax, I'd love to be able to share that with my daughter. We have so much fun exploring Nashville, Savannah, St. Augustine, MidTown Atlanta, and other urban areas together. She's 9 now. When she was born, I thought, "Downtown is going to be so much fun for us by the time she's 3." And then, "Downtown is going to be so much for us by the time she's 6." And then, "Downtown is going to be so much fun for us by the she's 9." Half of her childhood has passed, and there's still park downtown I even feel safe taking her to. These are the real world consequences of the lack of urgency and progress. On the other end of the spectrum, you have retired folks living out their golden years being robbed of years of vibrancy. It's just sad.

[heights unknown]

Man is Laura Street every bleak lately.

Walked from JWJ Park to the old Landing site this morning.

You walk from a fenced-off James Weldon Johnson Park.

Past a boarded up Snyder Memorial.

Beside a gross old empty billboard and gutted/boarded up Chamblins apartment building.

Past a boarded up Jacobs Jewelers.

Beside the Laura Street Trio that looks like it was hit by a bomb.

Down to Lenny's lawn, where construction is beginning.

Had a crazy gentleman at the corner of Duval and Laura shout in my face that I was going to burn in hell.

Crazy gentleman in front of Jimmy Johns barking at clouds.

Woman sleeping on the street in front of Snyder with her hand inside of a Honey Smacks box.

Literally almost no non-homeless person out and about on the sidewalks.

Five years ago, things felt so much different. Barnett was under construction. Friends of Hemming Park were planning a $100k stage and Black Sheep container restaurant. Snyder was being RFP'd. Aundra Wallace and Southeast had signed a deal for the Trio. Hyatt Place was planning a hotel across from an active Jacksonville Landing. There was talk of a Hotel Indigo opening with a rooftop bar. And there was just so much more life on the streets.

Sad state of affairs.  I am also so confused by Snyder Memorial.  Like what the hell are we trying to do with it?

Also, I took part in the DVI/Build Up Downtown southbank cleanup this weekend, and walked around Friendship Fountain...literally WHAT THE LITERAL F?!?  I kind of assumed behind the fencing they were actually doing work all this time and it was just taking so long in typical Jax fashion, but they are not doing anything.  Doesn't look like it's been worked on in FOREVER.

I'm blown away by how this could happen.  Come to think of it, I assume the machinery, cranes, barges etc on the Northbank Riverwalk are generally working, slowly, but every time I'm walking around to get some air from my office, there is no movement, no workers, and rusting machinery just hanging aroun.

I've also heard that the city made some sort of mistakes on some of the roadway bids (2-ways and Park St), and they have to go back out to bid.  What in the freaking hell is going on here...we literally suck at doing anything.

Not sure if blame rests squarely on DIA or City Hall or both...it's impressively bad though.

It probably is both, but to me, City Hall is dealing with an 800 square mile metro, and the DIA's sole job is to aggressively push downtown forward. They should be steering the ship and pushing hard to expedite development of key properties, rather than passing the buck when things remain unaddressed for years. Amongst the lowest hanging fruit in all of the northbank core is the redevelopment of Snyder Memorial into bar, restaurant, or music venue. There's a blueprint for success for this type of redevelopment all over the world. It was last formally RFP'd SEVEN YEARS ago. Over a year ago, the DIA said they were considering another RFP and that they had a running list of interested parties (that they apparently refused to share, https://www.jaxdailyrecord.com/news/2022/jun/27/dia-may-put-historic-snyder-memorial-building-on-the-market/), but to the best of my knowledge, nothing has materialized yet. How many of those interested parties moved or lost financing opportunities while the DIA naval gazed and took no action. Meanwhile, the property remains off the market, costing the city millions over the last decade in upkeep and security.

Where is the urgency?

And, to your point, I feel like I'm a broken record, but someone needs to be fired for what's happened with Friendship Park. Maybe multiple people. Back in 2019, Friendship Park was a beautiful amenity for downtown Jacksonville. The fountain itself needed mechanical work, but as a pedestrian park and plaza, it was wildly popular. People went there on their lunch breaks. Families hung out in the park when visiting MOSH. Those using the Riverwalk would stop to pose for pictures in front of the skyline. It was lovely. Then, these clowns decide that the ENTIRE PARK needs to be boarded up prematurely so they can fix the fountain. We're now in our FOURTH YEAR that residents can't access the park, years have gone by with no visible work being done, and nobody in charge of downtown seems to give a shit or be willing to take the blame. No accountability.

The fountain itself has been fixed for SIXTEEN MONTHS:
https://www.news4jax.com/features/2022/03/25/vegas-or-jacksonville-friendship-fountain-shows-off-new-bells-and-whistles/

SIXTEEN FUCKING MONTHS.

And, to your point, anyone who's walked by the site knows that the "just waiting for audio equipment that's hit supply chain issues" excuse is just total crap.

2021 re-opening became a 2022 re-opening became a Memorial Day 2023 reopening became a "mid-July" reopening.

https://www.firstcoastnews.com/article/news/local/friendship-fountain-renovation-hits-snag-opening-pushed-back-july/77-3202ffa3-e7c7-4e6e-801a-f1fddd112064

How's that looking? What are we blaming it on this time? Who's taking the blame?

And the kicker is, to Marcus's point earlier this week, there's still no funding to re-do the actual park (didn't we have $100 million in the CIP specifically set aside for projects like this?), so they haven't even started the actual work. Just the fountain repairs. And we're going to have to close the whole damn thing again when we decide to get around to the park.

It's absurd, and so disgustingly disrespectful to downtown residents, businesses, taxpayers, visitors, etc.

Life is short, and this carelessness and poor execution is literally robbing people of years of enjoyment.

And NO ONE is willing to raise their hand and take the blame.

Just repeat the same gaslighty bullshit about COVID, and supply chain, and weather impact.

Heads should roll for this one.

Everyone needs to go. Clean slate.

You're hired to do a job, you fail, you don't get to keep the job.

It's how the real world works.

Love them or hate them, but compare how the DIA and City handles a project vs. how the Jags do. Daily's Place and the new Practice Facility went from concept to opening to the public in less combined time than it takes the city to fix a fountain.

Great job guys. Raises for everyone.

How about "busting some asses," in fact many asses and promulgate and make happen "firings for everyone."

[simms3]

P.S. What's really frustrating and sad to me, which is probably why I come across so cranky, is that, as a Dad who loves Downtown Jax, I'd love to be able to share that with my daughter. We have so much fun exploring Nashville, Savannah, St. Augustine, MidTown Atlanta, and other urban areas together. She's 9 now. When she was born, I thought, "Downtown is going to be so much fun for us by the time she's 3." And then, "Downtown is going to be so much for us by the time she's 6." And then, "Downtown is going to be so much fun for us by the she's 9." Half of her childhood has passed, and there's still park downtown I even feel safe taking her to. These are the real world consequences of the lack of urgency and progress. On the other end of the spectrum, you have retired folks living out their golden years being robbed of years of vibrancy. It's just sad.

^^^I actually share your *level* of frustration, but after having moved back here and living here now for almost 4 years now, I've learned that I come across as sour and uppity when I complain about our city or so much as draw any comparisons to elsewhere.  I've learned to "appreciate" Jax for its ups and downs, but deep down I really think this place is about as frustrating a place as it gets.

The local "mentality" as well is really what contributes, I think, to a lot of this.  Local people by and large simply do not care about the kinds of improvements and vision you and I might share for the place.  They literally like Jax the way it is.

RAP enthusiasts literally think Avondale is equivalent to Savannah and so much Koolaid has been drunk that we'll never get truly good infill in Riverside/Avondale where it literally makes about the most sense.

The whole beaches is batsh*t crazy when it comes to NIMBYism so it will never properly develop.

Everyone I talk to outside of my little real estate circles thinks downtown is millions of homeless people and if you can't park in front of the doorway, it's not worth going to (that mentality actually affects some of my own co-workers and as we move buildings here soon there are some who are freaking out they may need to walk a block to their parking).

I run in multiple real estate groups and really not all of them care at all about downtown.  Plenty of people are basically just involved in building suburban housing, often of relatively low quality.  They have no idea what goes on downtown.  I talk to plenty of people who have never really heard of "TOD" or concepts such as that we talk about on this forum...

And by and large, despite the fact that people do travel, it really does seem like people in general here quite literally have no idea what they're actually missing, or it just doesn't compute that we too could have things that other cities have.


I say all of this because I do think this mentality around here essentially allows the city to just carry on as horribly as it does.  People just don't care.

[simms3]

The mystery for downtown's office market struggling since the 1990s is consolidation in the banking and insurance industries. In the 1980s, our skyline was larger than our size. However, we lost all those companies that built all those towers for their corporate headquarters. No more Barnett, Florida National, Charter, Gulf Life, Independent Life, American Heritage, etc. Our loss has been Uptown Charlotte's gain. We still have some backfilling to do.

Maybe in the 1990s we were a larger office market relative to our population/size (I just don't know), and that being driven by those industries/office users.  But now we are quite a small office market relative to our population/size, and for whatever reason we aren't drawing large office users to Jacksonville as much as some of our peer cities are, as evidenced by total lack of new construction here and plethora of recent deliveries and pipeline in other cities (and this despite drawing tons of new people to the area...I guess they are all either WFH or working service oriented industries).

Sad/dismayed that despite all of the hullabaloo surrounding both D&B and Paysafe, combined they aren't even occupying half of Town Center 2 at the moment, which in the grand scheme of things is not a lot of office space.  I get jealous of HQ relocations to other sunbelt cities such as Raleigh, Charlotte, Nashville, Tampa, Austin, Atlanta, etc that result in gleaming new skyscrapers, whether downtown or in the burbs.

Our peers these days are Memphis, Norfolk, Birmingham and Louisville, etc. moreso than Charlotte, Nashville, Tampa, Austin, etc. How do we stack up with those MSA's office markets?

It's really a mixed bag which cities we are comparable to.

In terms of population growth, we are doing really well.  In terms of adding wealthy residents with high and super high net worth, we are doing really well.  Certainly outperforming the first four cities you mentioned we might be closer to, and competing with the others.

In terms of how we are taking advantage of all of this to strengthen our downtown and other assets, add truly high quality jobs and nab worthwhile corporate headquarters, we trail behind basically everybody.

We'll always grow because we are in FL and offer a high quality of life for families.  But our lack of leadership both in public and private sector means we won't become nearly as "dynamic" as those other flashy metros.

[Ken_FSU]

Ford on Bay delayed for another half year:

https://www.bizjournals.com/jacksonville/news/2023/07/24/dia-grants-six-month-extension-to-hardwick-at-ford.html

Truist leaving the Northbank:

https://www.jaxdailyrecord.com/news/2023/jul/24/truist-moving-to-hanania-building-on-downtown-southbank/

Rad! Can you smell the momentum!

[marcuscnelson]

This does not sound reassuring:

Carter CEO Scott Taylor, via Zoom, said capital markets in the development industry are frozen right now. He mentioned adding a hotel portion to the project. He said the developer is trying to find a program that works

“Right now, we have 358 residential units, about 25,000 square feet of retail and then trying to bring in a hotel component that will help us solve for that (return on investment) to where we can hit a completion and revenue grant that works,” Taylor said.

DIA Director of Downtown Real Estate and Development Steve Kelley said the developer was supposed to present at the July DIA meeting.

The project is one of several projects reviewed by the DIA impacted by poor economic development conditions like interest rates. Kelley said lenders are not financing as many large deals, causing a gap in the financing.

“We all are familiar with the changes in economic conditions during this period,” Kelley said.

Board Member Oliver Barakat said another solicitation on the property wouldn’t result in much success. He said the six-month extension could provide more clarity. Board members Joe Hassan and Craig Gibbs asked if six months is enough time to make progress on the Hardwick at Ford on Bay.

Kelley responded that uncertainty in the economy did not make Carter extension a unique case. He didn't expect an immediate remedy to a project’s capital stack, he said, but the six-month extension potentially allowed for a better situation.

[landfall]

Ford on Bay delayed for another half year:

https://www.bizjournals.com/jacksonville/news/2023/07/24/dia-grants-six-month-extension-to-hardwick-at-ford.html

Truist leaving the Northbank:

https://www.jaxdailyrecord.com/news/2023/jul/24/truist-moving-to-hanania-building-on-downtown-southbank/

Rad! Can you smell the momentum!

One disaster after another. Laure Street Trio another joke, Independent Life project stuttering. At least we have a run down jail for jobs and vibrancy.

No wonder the Jags have the city bent over a barrell. They're the only hope at this point. I'd give them what they want at any cost as otherwise nothing is happening bar some long shot cowboy developers delivering renderings.

[jaxlongtimer]

^ As we have all been harping on, it comes down to the following reasons, in no particular order:

1. No competent elected leadership and possible incompetent staffing and board
2. No viable long term plan for Downtown
3. Forcing through questionable deals based more on incentives than economic reality
4. No attention to the small details vs. chasing pots of gold under rainbows
5. Impatience to just do things without investing in proper due diligence that may take longer but get things done
6. Losing credibility with failed outcomes and crazy projects like the autonomous vehicles
7. Catering to a small cadre of establishment developers and friends of politicos instead of what is best for the community at large
8. Lack of inclusiveness
9. Lack of discipline
10. Revolving door of who is calling the shots
11. Too many cooks in the kitchen
12. Failure to be collaborative, connect the dots, take 1+1 to make 3 or 4+
13. Failure to engage and incorporate the larger city, not just the defined boundaries of Downtown
14. Failure to manage urban core mass transit properly so downtown is not so auto-centric

[Ken_FSU]

This does not sound reassuring:

Board Member Oliver Barakat said another solicitation on the property wouldn’t result in much success. Board members Joe Hassan and Craig Gibbs asked if six months is enough time to make progress on the Hardwick at Ford on Bay.

Get. Rid. Of. Them. All.

They don't even believe in their own ability to get a shovel-ready plot of prime downtown waterfront developed.

And again with the lack of accountability.

What were the interest rates like 20 months ago when the DIA awarded the contract to Carter?

With the new extension, the development agreement doesn't even need to be complete until June 2024?

What are we doing here?

It's just embarrassing.

[marcuscnelson]

The Daily Record provides a bit more context:

https://www.jaxdailyrecord.com/news/2023/jul/24/frozen-capital-market-pushes-dia-board-to-ok-6-month-extension-for-the-hardwick/

The developer altered its initial design. Carter President and CEO Scott Taylor told the DIA board July 24 it is working on more changes to help meet the city’s required 1:1 return on investment to receive the completion grant.

Taylor said as of July 24, the 358 residential units would be complemented by 25,000 square feet of retail space and Carter is trying to bring in a hotel operator to add more hospitality uses to the project.

According to Taylor, the construction costs in Carter’s project portfolio rose by 30% in 2022 due to inflation. In May 2022, Carter had estimated The Hardwick would be a $150 million project.

Taylor said Carter has eight development projects under construction in the Southeast U.S. and $600 million in development activity.

He said his company expected to break ground on five or six projects in 2023 and has only started one.

“The capital markets, basically, in our industry are frozen right now,” Taylor said.

“None of our lenders are contemplating, right now, any sort of new vertical development activity, nor are our equity partners,” he said.

“We are constantly in those markets talking to those close relationships.”

Carter is working locally with Arcus Capital Partners Managing Partner W. Ross Singletary II to try to find lenders from other regions of the U.S.

Singletary said possible TIAA Bank Field stadium renovations by the Jacksonville Jaguars and the city and the proposed University of Florida graduate campus Downtown have drawn interest from potential investors in the Ford on Bay location.

DIA Director of Downtown Real Estate and Development Steve Kelley told the board July 24 that DIA staff, not Carter, asked for the extension.

He said the DIA and developer are hoping the extra six months will allow economic conditions and capital markets to improve or, at least, have more certainty.

Kelley said most projects similar to The Hardwick in size and scope have “been negatively affected by the impact brought about by poor economic conditions, leaving it with a larger financial gap than was originally experienced when this award was initially made.”

According to Kelley, the DIA does not have a strategy to assist Carter with the gap in its capital stack.

“That’s why I’m asking if we’ve got some strategies that we can look at other than just hoping things get better. Because that’s all it is, hope, at this point,” board member Joe Hassan said.

The DIA is working with other developers on projects similar in scope to Carter’s Hardwick that have not broken ground and are also trying to work through capital issues: Southeast Development Group’s Laura Street Trio historic renovation; the 44-story residential and mixed-use tower by American Lions of New York City at the former Jacksonville Landing site; and Corner Lot Development Group’s mixed-use residential Jones Bros. Furniture Co. historic rehab and addition.

Board member Oliver Barakat is a senior vice president for CBRE Inc.’s Jacksonville office, the real estate firm that solicited the RFP for the Ford on Bay on behalf of the city.

Barakat acknowledged and documented his conflict of interest with the city and did not work on the RFP for CBRE.

He said July 24 he doesn’t expect another six months to be “the magic bullet.”

“I think our dilemma is if we do not grant the extension, then the developer will not perform, and then what?” Barakat said.

“We would still own this property and I think doing another solicitation in the current environment would not result in much success.”

[thelakelander]

Not surprised. High rises make no sense in the Northbank market. We need to do a lot of investing in ourselves and we're 20-30 years overdue. Should have been a convention center built there 10 years ago anyway. Just pay to get the riverwalk done.

[CityLife]

Sure capital markets are weakened and costs have gone up, but it's time for the DIA to stop making excuses and do something other than just throw incentives at projects to try and make things happen. The truth is, they are generally working with firms that either don't have enough of their own capital or do, but are barely interested enough to push through when the first sign of trouble pops up.

Shad Khan doesn't seem to have a hard time getting things done (though he does have a sweet deal on Four Seasons) and neither do developers elsewhere.

Using West Palm Beach as an example, because its near where I live and loosely keep up with stuff here.  Totally different market of course, with a big market for luxury condos in Downtown WPB (because housing prices are absurd on Palm Beach Island) and a strong demand for housing for rentals for young professionals. At the same time, there are major height restrictions due to proximity to PBI, so high rises aren't as economical as Miami.  All these projects are currently under construction with little to no incentives. This doesn't include all of the stuff that has been built in the last five years or that has been approved, but not started yet. It also doesn't include five mid rise multi-family projects under construction (all 8 stories)

[simms3]

^^^Well it's what I've been saying for years.  People are always like "you can't compare Jax to __", but I'm like can't we just get 1-10% of what any of the other cities are getting?  Just 1-10%?

Regarding condos, it's a frustration of mine that we have such a weak condo market in town.  Needs $800-900+ psf in sales to build new construction high rise condos.  Villa Riva and Marina San Pablo penthouses top out at $500-600psf in resales.  The beach has $1K psf resales all the time, but now they are limited to 35 ft everywhere so you won't see new condo projects out there where the market actually does justify them.

So frustrating that Tampa can get 10 flashy new buildings along Bayshore and we can't get one anywhere.  Part of me wants that for the sake of housing diversity, skyline, etc but I also happen to have a condo development site I need to sell.  Ughhhh

[marcuscnelson]

^^^Well it's what I've been saying for years.  People are always like "you can't compare Jax to __", but I'm like can't we just get 1-10% of what any of the other cities are getting?  Just 1-10%?

Regarding condos, it's a frustration of mine that we have such a weak condo market in town.  Needs $800-900+ psf in sales to build new construction high rise condos.  Villa Riva and Marina San Pablo penthouses top out at $500-600psf in resales.  The beach has $1K psf resales all the time, but now they are limited to 35 ft everywhere so you won't see new condo projects out there where the market actually does justify them.

So frustrating that Tampa can get 10 flashy new buildings along Bayshore and we can't get one anywhere.  Part of me wants that for the sake of housing diversity, skyline, etc but I also happen to have a condo development site I need to sell.  Ughhhh

Out of curiosity, a friend of mine is wondering why the sale requirement is so high. In his experience, construction costs usually come out to the $300-350 psf range, and he doesn't get why $900 is needed to finance new construction. Is land acquisition cost particularly high or is something happening with building costs? Or other costs like parking?

Sure capital markets are weakened and costs have gone up, but it's time for the DIA to stop making excuses and do something other than just throw incentives at projects to try and make things happen. The truth is, they are generally working with firms that either don't have enough of their own capital or do, but are barely interested enough to push through when the first sign of trouble pops up.

I will say I'm not quite sure what the DIA's solution should be (beyond actually making some nearer term infrastructure decisions like parks, right-sized convention center, getting city agencies into vacant office space, etc). If national firms like Related and Carter and Spandrel can't make it work, and local firms like JWB and ADG and certainly Southeast are struggling, who else is there here?

[simms3]

^^^Well it's what I've been saying for years.  People are always like "you can't compare Jax to __", but I'm like can't we just get 1-10% of what any of the other cities are getting?  Just 1-10%?

Regarding condos, it's a frustration of mine that we have such a weak condo market in town.  Needs $800-900+ psf in sales to build new construction high rise condos.  Villa Riva and Marina San Pablo penthouses top out at $500-600psf in resales.  The beach has $1K psf resales all the time, but now they are limited to 35 ft everywhere so you won't see new condo projects out there where the market actually does justify them.

So frustrating that Tampa can get 10 flashy new buildings along Bayshore and we can't get one anywhere.  Part of me wants that for the sake of housing diversity, skyline, etc but I also happen to have a condo development site I need to sell.  Ughhhh

Out of curiosity, a friend of mine is wondering why the sale requirement is so high. In his experience, construction costs usually come out to the $300-350 psf range, and he doesn't get why $900 is needed to finance new construction. Is land acquisition cost particularly high or is something happening with building costs? Or other costs like parking?

Captain Zissou can probably speak to this more relevantly based on the prominent deal he is close to, but for typical poured concrete high rise construction residential condos, the all-in (including buildout) PSF costs are $600-700 psf.  There's more to this than just the core/shell.  The land could be high, but for instance I've been told straight to my face by condo developers in S FL looking at my site that it doesn't matter if the land is worth $10M or $2M, either way is a smaller percentage of the overall deal if say 80 condo units were completed going up 20 stories.  What they want to know is that they will be able to sell the condos in our market at the pricing needed to construct the tower, and unfortunately we don't have the numbers to indicate that.  In Azure's case, the land was about $10M, and so that probably did add considerable PSF costs to each unit considering there were only 26 units!  Azure also has a glass curtain wall going up, and those are very expensive, as well.

I tried pulling some relevant permits to showcase an example - for instance, I tried finding Craft Construction's (Azure) permits both with COJ and Jax Beach, with no luck.  However, Mayo Clinic's tower addition is costing $764psf all-in including the buildout, and so being a hospital with added complexity and some major FF&E in that cost basis as well, it's above what you would expect for condos.  However, once you move past wood-frame/5-floors, and you move to high-end interior finishes, it's really a whole different ballgame from the kinds of apartment construction we see around our area, in terms of construction costs.

With condos too you have to factor in fairly major warranty reserves as a holdback, and just tons more risk overall so the return profile gets inflated by everyone involved.