Jaguars’ ‘Lot J’ fall like a house of cards

Article posted by Coliseum, January 18^th, 2021

Image: Jacksonville Jaguars

The Jacksonville City Council in Florida (US) recently nixed a $233 million development deal with Jacksonville Jaguars owner Shad Khan to construct his proposed ‘Lot J’ development next to the Jaguars’ residence – TIAA Bank Field.

The deal fell through as it faced a volley of criticisms as regards using too much of taxpayers’ money and offering too little in return.

The Jacksonville City Council defeated the so-called ‘Lot J’ proposal for development of the area around TIAA Bank Field. The proposal needed a 13-vote supermajority; the effort failed, 12-7. The proposal hinged on a $152.7 million public investment that now won’t be made.

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The Jacksonville Jaguars are a professional football franchise based in Jacksonville, Florida. They compete in the National Football League (NFL) as a member club of the American Football Conference South division. The team plays its home games at TIAA Bank Field.

TIAA Bank Field is an American football stadium located in Jacksonville, Florida, that primarily serves as the home facility of the NFL team Jacksonville Jaguars.

The surprising vote bookended the effort to pass the deal, which came in for a lot of flak and scrutiny that derailed a final vote scheduled before the end of the year. Although the deal appeared to be on track to in the beginning of January this year when it secured 15 votes in a non-binding committee vote, it lost that momentum during the January 12^th, 2021 meeting.

Supporters of the bill defeated an attempt made on January 12^th by the Council President Tommy Hazouri to strip a controversial $65.5 million interest free ‘breadbox’ loan from the deal, which Khan’s development team said was a rider for them to build the development.

Breadbox is a turnkey lending program that provides a long-term, nonrecourse, non-interest bearing loan to private real estate developers in lieu of a taxable grant. Since Breadbox is a loan, the funds from public entities are not taxed as ordinary income.

However, their efforts were a Pyrrhic victory. Without the removal of the loan, the deal lost supporters and died in a 12-7 vote, one shy of the two-thirds majority it needed to pass muster.

Council members Danny Becton, Matt Carlucci, Randy DeFoor, Garrett Dennis, Al Ferraro, Tommy Hazouri and Joyce Morgan voted ‘No’.

Said DeFoor, “We can’t do the right thing the wrong way. If we vote for this deal in its current form, we have not garnered public trust.”

Hazouri opined that he still wants to the project to see the light of day and advised Khan’s development team to start parleys on a new deal with the Downtown Investment Authority. He squarely put the blame for the deal’s failure on the shoulders of Jacksonville Mayor Lenny Curry, whose administration singlehandedly negotiated it.

While the Jaguars are keen to return to the negotiating table, Jaguars President Mark Lamping said after the meeting that Khan is in no mood for the same and is ready to move on and focus on developing the Shipyards, the working name for another proposed project on nearby, City-owned land where Khan wants to build a Four Seasons hotel.

Remarked Lamping, “We pulled the plug on Lot J. I think it’s time to turn the page on Lot J. Our belief in Downtown Jacksonville isn’t changing. Our commitment to be part of that process isn’t changing.”

After the meeting, Mayor Curry issued a statement on social media suggesting the project was dead and the die is cast.

Tweeted Curry, “This sends a clear and negative message to economic development in our downtown and City. Again, it’s unfortunate but LOT J will not happen.”

‘Lot J’ development

The Jaguars’ current lease deal for the City-owned stadium still has another decade to run, through to 2030, but came under the spotlight amid the talks over financing for Lot J. The Jaguars in October saw their Lot J plans move forward after agreeing to financial terms for the project with the City. The plans moved ahead following a meeting between the City, the Jaguars and The Cordish Companies, the team’s partner in the project.

The $450m development at ‘Lot J’ was expected to spur economic growth in Jacksonville, especially in neighborhoods North and East of the sports complex. The mixed-use development, dubbed the ‘Live! District,’ was due to include two residential buildings with a total of 400 for-rent residences, a 150-250 room hotel, 75,000 square feet of street-level retail, and 40,000 square feet of Class A office space.

A 100,000 square-foot entertainment center was also set to be developed with bars and restaurants, as well as indoor and outdoor facilities. As part of the agreement, the total direct public investment of $152.7m was to include no more than $50m for the City-owned Live! District, $12.5m over 20 years in a REV grant to support the residential component, $12.5m over 20 years to support the hotel, and $77.7m in City-owned infrastructure.

In addition, the City was to provide a $65.5m loan to the developer, which was to be secured by the developer with a $13.1m deposit into a City-owned trust account. The City was set to own the Live! district, the infrastructure and all parking within the project.

The deal was among the most lucrative the City had ever proposed giving a private developer, and it would have seen taxpayers provide the developers $208 million in cash.

However, as per the Council’s auditors, the City would have taken on debt to cover the payments, and the cost of interest would have pushed the total cost as high as $390 million. The council’s auditors also estimated the City would have earned 44 cents of new tax revenue for each $1 spent by the City, which is far less than the goal of a $1 returned for each $1 spend on such public-private partnerships (PPPs).

Curry and a simple majority of the council who backed the deal believed the project would trigger a long-awaited construction boom in downtown and would be reason enough for the Jaguars to stay back in Jacksonville. The team’s lease expires in 2030.

“This isn’t the perfect deal, but under the circumstances, we need to approve it tonight,” said Councilman Ron Salem.

The deal’s price tag and low return-on-investment attracted criticism from council members and the general public, and the council’s auditors raised a number of concerns, too.

The Jaguars agreed to some changes recommended by the auditors, as well as a provision that would levy a fee on hotel rooms. The team also pledged to infuse capital injection to the tune of $2 million into a City-managed trust fund that would invest in economic development in the adjacent Eastside neighborhood.

However, the Jaguars put their foot down when it came to conceding to any of the major financial terms of the deal and said they had no interest in renegotiating. The Jaguars also refused to provide internal documents showing their internal projections for the construction costs and the project’s profits.

Although Mayor Curry and the Jaguars have both asserted that the development would be a major step toward securing a lease extension from the football team, the Jaguars refused to actually extend the lease as part of the deal. Instead, the team said the City would need to improve its stadium in order to convince NFL owners to greenlight a lease extension.

As far as the January 12^th meeting is concerned, it appeared that the Bill faced just five ‘no’ votes based on the previous week’s non-binding vote in committee. And while Hazouri’s attempt to remove the $65.5 million loan from the deal failed, the 12-7 vote was an early warning sign that the Bill was in danger.

During the final round of debate, doubt about the Bill’s passage grew as Council members announced how they would vote. Its defeat was all but certain when Councilman Garrett Dennis, who entered the meeting as a swing vote, revealed he would vote against the Bill.

Although Dennis has been critical of the Bill and there seems to be no love lost between Dennis and Curry – a long running personal and political feud – the two were involved in a nasty war of words on social media recently – Dennis was able to secure several amendments to the deal last week, including the Eastside trust fund.

But despite those gains, Dennis said he couldn’t ignore what he believed were fundamental flaws with the deal and the people who negotiated it.

“Let’s face it. The people don’t want this deal. The people don’t want Lenny Curry’s poorly negotiated deal,” Dennis fumed.

Khan vision

All said and done, Jaguars owner Shad Khan has a vision for the area around the stadium in which the team plays its home games in Jacksonville. Jacksonville does not share that vision.

Jaguars’ owner Khan presumably won’t be happy about the development though he has decided to move on. In October last year, he made crystal clear his belief that the ‘Lot J’ proposal was critical to the growth of Jacksonville.

“Jacksonville’s ceiling is high – remarkably so. That’s particularly true here in downtown. It’s imperative that we have the ambition and the vision to answer this calling once and for all. If Jacksonville is to be everything we can be, this project is just the beginning and it’s time we begin,” Khan said at the time.

It won’t be beginning. And it could impact in a negative way the relationship between the City and the team.

“This is part of our commitment to the City of Jacksonville – to have a vital downtown. I said this eight years ago when I was introduced as owner of the Jaguars, that I was going to look for every way to make NFL football viable here. This is just one part of the strategy,” Khan said in October last year.

That part of the strategy now stands scrapped. And speculations are rife that the team will focus instead on playing more of its games in London.

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