JACKSONVILLE, Fla. — City Council has passed the Lot J legislation to move out of the committee and is pushing it forward to a final vote on Tuesday night.
The legislation passed 15 to 4. The people who were against the vote were Councilmembers Matt Carlucci, Al Ferraro, Danny Becton, and Council President Tommy Hazouri. Some of the Councilmembers voted in favor of the legislation Thursday night, with the understanding that things will change before Tuesday.
A 2/3 majority was needed for the vote to go through.
Councilmember Brenda Priestly-Jackson said that she will need to know what the Lot J bill will do to the city’s debt capacity. Right now that debt capacity is roughly $750 million to $850 million.
The Council heard 19 total amendments on Thursday. Eleven of the amendments were proposed before the meeting. Eight of them were proposed on the floor.
Some of the proposed amendments include the DIA Recommendations and the Council Auditor’s Recommendations. One last-minute amendment that was proposed was from Councilmember Ron Salem was that if the Jaguars move before 2034 and Gecko Investments sells the property, then the City of Jacksonville gets fifty percent of revenues or net sale proceeds from that sale.
The proposed deal is $450 million development that includes two residential buildings with 250 units, a hotel with 120 rooms, 35,000 square feet of Office Space, an entertainment venue, and 1,200 parking spaces.
Mayor Lenny Curry did make an appearance at the council meeting. He made a brief statement thanking the Council for going over this legislation. He is not expected to stay as there is a Press Conference scheduled for noon.
After a 30-minute break following the passing of the first amendment, Tarik Bateh, the Senior Director of JLL Capital Markets, spoke about his opinion on the project. He was invited by the Council President Tommy Hazouri.
He says that there are four red flags in the Lot J Project:
Flag 1: The Developers should submit more information to the City Auditors.
Flag 2: The Developers should invest their money into the project first, before the city puts their money in.
Flag 3: The City of Jacksonville should conduct a simple GAP analysis through the DIA.
Flag 4: The City must retain long-term ownership over Lot J and to lease the land to the developers. Also, there should be provisions that would allow the City to terminate the lease if the Jaguars leave.
Following Bateh’s talk, there was a debate over the Breadbox loan.
The first amendment on the packet is the omnibus amendment. These are items agreed to by the Developers and the DIA Board. The amendment by Councilmembers Becton and Cumber to include a 1.5 percent hotel surcharge is included in this amendment as well.
Changes That Has Been Made:
- Minimum now of 120 Hotel Bedrooms
- The City will retain savings from the Infrastructure improvements and that the developer is responsible for the Live! Capital expenses.
- The REV Grant will not be part of the credit for the Developer, if it gets terminated.
- No City Funds will be used to fund a parking garage.
- The Developer of the Hotel will not be allowed to transfer 5 years after completion of construction.
- Improvements to other surface parking lots will not be included as part of the Project costs.
- Gecko will increase evidence of financial capacity from $229 million to $279 million. This is backed by a letter from the CFO of Flex-N-Gate (another corporation that was connected to Shad Khan). However the Auditor’s Office would ideally like an independent verification through audited financial statements.
- The Developer will give notice to the City of any capital improvements in excess of $100,000 in the developer’s own dollars. This would mean that the City does not need to approve these improvements - something that the Auditor’s Office initially recommended.
- The city will share in revenues from events at Lot J made during the two days before and the day of the Florida/Georgia game. There is current debate happening between Councilmember Becton and Chief Administrative Officer Brian Hughes about other City events. OGC Chief John Sawyer clarifies that the tenant receives all profit from ticketed events that they both host, and other events. The only exceptions are the Florida/Georgia games and any City Event.
- Operating Costs for the Residential Parking Garage will be split 50/50 between the City and the Developer. The City will be responsible for all operating costs for the surface parking lots.
- The Developer will give notice to the City of any capital improvements above $50,000 to the pedestrian walkway.
- City Council Auditors are allowed to review and audit the Parking Operators books, records, and documents.
- The Developer cannot add any additional parking garages as vertical infrastructure improvements.
- The Developer will not get a management fee for managing the parking garage and that the revenue from 200 parking spaces in the garage will be retained by the City. There are 600 parking spots in the garage total.
- Employees can park in Lots C, D, M, N, and P at no cost. This will total 500 employee spaces.
- There still isn’t a definitive required set date for when the whole project will be done. The developer is estimating that the whole project will take 7 years.
There are still open items between the Developers, the City, and the Council Auditors Office.
The Council voted unanimously to pass the amendment. The only person absent from the vote is Councilmember Garrett Dennis.
The second amendment is cleaning up three additional points by the City Council Auditor’s Office. The amendment clarifies that all records and documents related to the deal is to be kept locally, clarifying the minimum square footage requirements, and that the Live! Lease Capital Plan will be approved by City Council.
This amendment passed unanimously without discussion.
The amendment was created by Councilmember Rory Diamond. This amendment would require that any city employees who worked deeply on this project would not be able to be hired by Cordish Developments, it subsidies, and/or the Jaguars for another 5 years. The current law states that time limit to 2 years.
Councilmember Brenda Priestly-Jackson said she did not like the amendment as it would single out only the employees who worked on the Lot J project. Jaguars lobbyist Paul Harden says that he wants to follow the current local ordinance code.
Diamond says that he will file legislation next month to change the ordinance code to 5 years.
The amendment passed 15 to 4. The four people who opposed the amendment were Dennis, Priestly-Jackson, Hazouri, Morgan.
The next amendment, proposed by Council President Tommy Hazouri and Randy DeFoor, would include liquidated damages in the event the Jaguars team relocates. This would reduce the City’s payment of the outstanding debt.
DeFoor also addresses Salem’s amendment. His amendment states that if the Jags move before 2034 and Gecko sells the property, then the City gets fifty percent of revenues or net sale proceeds from that sale. She says that her amendment would give the city real protection, not his.
Jaguars President Mark Lamping spoke for the first time since the meeting began at this point. He was asked if this amendment would be a deal-breaker.
“We cannot accept this amendment,” Lamping said.
The Jaguars later clarify that this amendment would be a deal-breaker for both the Lot J Project, but also the Football Team’s Lease.
Harden quickly jumped in and said that this amendment has nothing to do with Lot J, rather deals with the Jaguar lease itself. Harden did stated that the $152 million was for the money the city has taken out for stadium improvements in the last 10 years.
Sawyer helped draft the amendment. He says that the liquidated draft cannot be seen as a penalty, and it was structured this way, in order to put the liquidated damages on a third party - which is the Jaguars.
However, Harden announced that they would consider changing terms with Salem’s amendment. if the Jaguars move before 2034 and Gecko Investments sells the property, then the City of Jacksonville gets 100 percent of revenues or net sale proceeds from that sale. The original proposed amendment stated 50 percent.
This amendment has been tabled.
Amendment 5 is from Council President Hazouri. The goal of the amendment is to either reduce or eliminate the a $65.5 million loan from the City to the Developers.
This amendment is another deal-breaker, however Harden says that he is willing to negotiate. Between now and Tuesday night, he will calculate what they can do to substitute parts of the REV Grant and that will be taken out of the Breadbox Loan.
The amendment failed 14 to 5. The people who were in favor of the bill were Carlucci, Ferraro, Dennis, DeFoor, and Hazouri.
This amendment, as well as amendments from seven through ten, focus on the disagreements the Auditor’s Office had with the Jaguars. All of these amendments were proposed by President Hazouri.
This amendment would have the City withhold disbursements if the Guarantors did not perform within a timely manner as stated in the Completion Guaranty. The original text for this was included in the original bill, but was then taken out in a revised agreement in November.
This bill failed 16 to 2. The only people who passed the bill was Hazouri and Becton.
This amendment would remove cost overruns from the reconciliation calculation and not include the 7.5% Developer Expense for the Minimum Developer Investment. This means the cost would go up for the Developers from $229 to $257.1. The Jaguars did compromise saying they would keep the minimum developer and if the Council would delete the proposal of removing the cost overruns. The Council approved of this change.
The amendment passed unanimously.
This amendment would revise language to base minimum investment for $95 million targets on private funding that excludes developer expenses of 7.5 percent. It failed 18 to 1. The only person who supported it was Morgan.
This amendment would have the City share in 50 percent of the profits with the Developer if there is a transfer of development rights to the hotel. The developer was proposing 22 percent with the Council Auditors. During the meeting, the Jaguars decided to agree with the 50 percent.
This passed unanimously.
This amendment would allow each party to terminate the parking agreement in the case there is a breach of terms. The Jaguars argued that this could allow for uncertainty when it came to residents and their parking situation.
This failed unanimously.
This is the amendment proposed by Councilmember Salem. The amendment states that if the Jaguars move before 2034 and Gecko Investments sells the property, then the City of Jacksonville gets fifty percent of revenues or net sale proceeds from that sale.
The Jaguars just said that they will commit to nothing less than $50 million right now if Gecko sells the property if the Jaguars leave. This only pertains if Shad Khan is still the owner.
The amendment passed unanimously.
This is the first out of eight floor amendments. This amendment was proposed by Councilmember Dennis. It would change the Small and Emerging Business program requirement from 20 percent to 30 percent.
The Jaguars state that they would concede to this if the requirement is changed to an aspirational goal.
The amendment passes unanimously.
This amendment was proposed by Councilmember Dennis. This would have the City be insured for the Live! venue in case there is any business loss.
This amendment passes unanimously without discussion.
Amendment 14 is the last amendment proposed by Councilmember Dennis. This would create a trust fund for the Eastside. The Jaguars would deposit $2 million this year to establish the fund. Developers and the Jaguars would then annually deposit $500,000 into the fund starting in 2025 and end in 2041.
The legislation states that these funds would be used to help create access jobs for residents, support expansion of existing businesses within the Eastside area, encourage the creation of new service and retail businesses, and stimulate new investment in the area.
The Jaguars agree with this fund. The amendment passes unanimously.
This amendment was introduced by Councilmember Priestly-Jackson. This would require the developers/Jaguars to report to the Council twice a year until 2027, and then annually thereafter.
The City administration and the Jaguars have agreed to this amendment. This passes unanimously.
AMENDMENT 16 & 17
Amendment 16 and 17 were require the disclosure of audited financials from the guarantor and Cordish. Both of these amendments were proposed by Councilmember Morgan.
The Jaguars were extremely opposed to these amendments, saying that they want Khan’s financial records stay private. They won’t allow for the Council Auditor to privately review them either.
Amendment 16 failed 16 to 3. The people in favor were DeFoor, Morgan, and Carlucci.
Morgan is withdrew Amendment 17 which would have required Cordish to provide financial information at the same intervals as the Khan guarantor. Because Amendment 16 failed, this was is no longer applicable.
This amendment was also proposed by Councilmember Morgan. This would require that if there are any material modifications, City Council would get the approval.
The City administration states that they believe that it would be better for the Council to be notified, rather than get approved.
Carlucci wants to know what construction materials will make up the project. Other councilmembers argue that the City Council is not a construction company. Gaffney is now suggesting that DIA take charge of this.
The amendment fails 13 to 5. The people who voted in favor of the amendment was Carlucci, Morgan, Ferraro, DeFoor, and Hazouri.
The last amendment was proposed by Councilmember DeFoor. She wants to change the lease term for the Live! lease. The amendment states that after 20 years at any time drops below 50 percent, the City will have the option to terminate the lease after notifying the developer and allowing for a 24-month cure period.
The Jaguars want the 20 years taken out, and to put in that if the Cordish does not conduct commercially reasonable efforts to keep the occupancy above 50 percent, the City can terminate the lease. This is agreed by DeFoor.
This passes unanimously.