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Big Cat Country Q&A: Let’s talk about Lot J with Nate Monroe

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Let’s answer some questions about Lot J — this time with Nate Monroe over at The Florida Times-Union taking over the column for the week.

Nate has worked tirelessly to cover the proposed developments as the tussle between the Jacksonville City Council, Mayor Lenny Curry, Shad Khan, and the general public has unfolded. The project isn’t nearly as lavish as once promised and many of the proposed benefits to the city were debunked by an auditor last month.

But that hasn’t stopped Shad Khan and Mark Lamping from going full bore, despite strategic errors and bad terms abounding in the proposal.

Let’s get to it, y’all!

Jason from Jacksonville, FL

Q: Won’t Lot J pay for itself with tax revenue? People forget the City spent 360mil on a new court house.

A: ​Short answer: No, the project will not pay for itself — at least, not in our lifetimes — and no one really expects it to. To be fair, though, Lot J doesn’t really have to “pay for itself” for one to make an argument it’s still a good investment for the city to make. There are some immeasurable, intangible — but certainly debatable — benefits the project could have.

Long answer: For perspective, two independent studies have found the direct return-on-investment for Lot J is about 40-70 cents for every $1 taxpayers spend. And even that low-end 40-cents figure is based on favorable assumptions about the future success of Lot J. Keep this in mind, too: That return doesn’t begin until the entire project is completed and opened, which could take anywhere between 6 to 10 years. And that clock doesn’t start until the day the agreement is finalized.

Although the city is financing about 50 percent of the cost of the overall development (and potentially more, depending on how some things we don’t yet know shake out), it’s not getting 50 percent of the revenue generating opportunities — not even close. A substantial portion of the project — the “Live!” entertainment center — will never generate property tax revenue because the city, as a benefit to the Jaguars, has agreed to own it. Other portions, like the hotel and mid-rise apartments, will receive long-term property tax breaks, in addition to cash “completion grants.”

The city will get to keep a portion of parking fees and a surcharge on hotel stays (assuming the hotel is actually completed), but this money will never realistically compensate for the city’s total contribution to this project over time, which could be as high as $390 million.

A similar project in Kansas City — one the Jaguars and its business partner, Cordish Companies, have pointed to as an example of a success — has never generated the kind of revenue for the city that had originally been predicted. It will take decades to make taxpayers whole there, if it ever truly happens.

Johnny from Kingsland, GA

Q: For those of us more inclined to want to see Shad get Lot J, but who also want to see the city not get screwed, can you see a path under current leadership for that to happen? Can the City Council force Curry to act like the steward he’s supposed to be?

A: The City Council could try that, but it would have to do so with the possibility in mind that such a move could blow up the entire deal. The Jaguars and Cordish Companies have not shown any willingness so far to budge an inch on the meaningful terms in the development agreement, and that doesn’t seem likely to change. This is really going to boil down to an up or down vote on the deal as-is.

In the fantasy world we’re discussing — where the council asks and the Jaguars agree to re-do this — any future negotiations would simply need to carve the mayor’s office out entirely. The Downtown Investment Authority would be a much more logical and responsible place to send those negotiations.

Faheem from Lahore, Pakistan

Q: Fundamentally, do you think the Jaguars remaining in Jacksonville is dependent on Lot J happening?

A: That really is the key question, isn’t it?

Mayor Lenny Curry sure seems to think so, but he doesn’t speak for the Jaguars. The team has alternately avoided the question and denied it in recent years (I and other local journalists know from first-hand experience the team is extremely sensitive about suggestions Khan has eyes for other cities). It’s plausible the Jaguars are actually quite upset the mayor spouted off about the team’s future.

There aren’t many examples of team owners leaving cities because of breakdowns in negotiations over ancillary projects. Usually, stadium financing is the big issue. The Jaguars have indicated as much here, and so I don’t think Lot J represents a make-or-break issue for the team remaining in Jacksonville. That will come in a few years.

But the team surely recognizes the leverage it gets from the implied threat, whether it’s true or not, so I imagine Shad Khan has been happy to let the spoken-but-also-unspoken question hang out there on the Lot J deal.

There’s also this: Despite Khan’s comments the past few years questioning Jacksonville’s “viability” as a market, the city has actually been a great place for the team. He knows that. As is often mentioned, the team’s value has dramatically risen in the years since Khan purchased the team for about $760 million, to somewhere north of $2.3 billion today. It outperforms several larger markets in terms of dollars and cents, and it has gotten steadfast, consistent support from City Hall for a series of meaningful stadium upgrades, a much-needed indoor practice facility and the amphitheater, which has allowed Khan to expand the team’s local revenue.

Finally, I’d ask you to consider that if Lot J really is something Shad Khan is willing to walk over, then his commitment to Jacksonville is already tenuous, and giving him financing for a project as modest as Lot J won’t repair that. If he wants to move the team elsewhere, it probably has less to do with financial issues (see above on the strength of the Jacksonville market) and more to do with whatever is in his head and in his heart.

There is only one person who truly knows the substance of that: Shad Khan.

Reggie from Jacksonville, FL

Q: Was the Lot J development deal just a good reason to tear down the landing? Seemed like it was just a planned replacement with extra steps...

A: I can’t say with authority there is a bright, direct line between the Landing demolition and Lot J, but without a doubt the mayor has made a concerted effort to shift the focal point of downtown east, toward the sports district. He has said as much publicly. Whether this is good downtown development policy, and whether this shift outlives the current administration, are less certain issues.

Thomas from Gainesville, FL

Q: After Lot J, what’s the next “must have” item to keep the Jaguars in Jacksonville?

A: Jaguars president Mark Lamping said this past week a stadium ask could be as long as three years away, which could mean those negotiations won’t happen until there is a new mayor.

Shad Khan has expressed interest in building a Four Seasons on Metropolitan Park. It appears that project — which will include other components, like a medical facility — could be next in line (and when I say “next in line,” I mean the next project the Jaguars will want taxpayer money to prop up, not necessarily the next project we’ll see come out of the ground — we are talking years and years, if not substantially more than a decade, into the future).

The one hitch is that the city must wait on the National Park Service to sign off on a land swap before Metropolitan Park can be developed. The city had promised years ago to maintain a portion of that land as a park in perpetuity, and undoing that covenant is a substantial issue. The city has sounded pretty confident the Park Service will give it the green light that it and the Jaguars want. I’m not as certain that’s a sure bet, especially with a more environmentally conscious Biden administration coming in, but I also have no informed insight into that process.

Eric from Jacksonville, FL

Q: Downtown Jacksonville MUST be revitalized to have any shot at real growth, business development, and retaining the Jaguars in Jacksonville. Why are reporters like you and Vito Stellino consistently crafting and detailing your reports to illustrate an evil and greedy aurora with Shad Khan and the Jaguars? Why are you opposed to real growth and progression with downtown and this City?

A: I was really hoping this was the Twitter goblin who wanted to know why I’m a “weasel headed fuck.” That would have been more fun to answer.

This question, by contrast, is really just a statement. I don’t know how to engage with someone who thinks scrutinizing a deal in which taxpayers are going to shell out almost $400 million is akin to opposing downtown development — something everyone would like to see.

Indeed, this question sounds like the work of... a weasel-headed fuck.

(I kid, I kid — but seriously, you need some self-examination if you are offended by reporters questioning the propriety of a multi-million-dollar taxpayer subsidy package being handed over to any private interest. We are not cheerleaders; Khan, the mayor and the chamber of commerce pay a small army to do that.)

Zach from Jacksonville, FL

Q: Nate, you’re a great writer and probably the highlight of the Florida Times Union since I subscribed. Do you think Shad Khan might actually want the Lot J proposal to be shot down so he can justify moving the team? What changes in the deal do you feel need to be made for it to be considered beneficial to the city?

A: Thank you for the kind words and for subscribing! One of the few, the proud.

You asked two questions here:

1. As I said in an earlier question, if Lot J is truly a make-or-break deal for Shad Khan, then I think it’s reasonable to assume his commitment to Jacksonville is pretty flimsy, and I would expect the threat he walks away to stay with us for years to come no matter how much money City Hall throws his way.

2. Let’s assume, for the sake of this question, we can’t get back to square one on Lot J negotiations because there is a lot to get into there. How can the current deal be made better? The most obvious carrot is either a lease extension or a minimum home-game guarantee (i.e., no more than one home game in London per season). If that doesn’t fly, I’d even settle for Khan converting the $65 million cash payment from the city (they’re calling it a “loan,” but it’s most certainly not a loan) into an actual loan he gets from an actual bank. Or really any other concession by the Jaguars that substantially reduces the direct cash investment taxpayers are putting in. It’s simply too high to justify.

Jack from Jacksonville, FL

Q: Who wins in a fight: Rory “5’4”” Diamond or Tommy “Angry Grandpa” Hazouri?

A: We all win.

Patrick from Savannah, GA

Q: Considering the state of the franchise and the city, is this really in Jacksonville’s best interest? I want the Jaguars to stay put and the city to prosper, but has this franchise done enough to earn such a stipend from the taxpayers?

A: Those are fair questions. The Jaguars and other supporters of this Lot J deal have talked about the team’s long drought as if it’s some sort of inconvenient ancillary issue: If the on-field performance was better, the deal would be less controversial. Well, yes! It probably would be because that’s really the point, isn’t it? Why fight so hard to keep an NFL franchise if, year after year, it’s not actually fun for anyone? All the alleged economic benefits an NFL franchise brings to a city are substantially smaller, or outright non-existent, when a team has been as bad as the Jaguars under Khan’s ownership.

It’s fair to hold Khan responsible for his shambolic mismanagement of the football operations, and in, say, the Premier League, he is held accountable. It is to the NFL’s great success at lobbying local officials that public subsidies for its various franchises have been totally divorced from the actual performance of the teams. It’s unheard of in the United States and would never fly with the NFL, but that doesn’t mean it doesn’t make sense to consider it on an ask like Lot J.

The simple fact of the matter is Lot J will fail if Khan can’t put together an on-filed product people are excited to watch (and be willing to pay money to watch). That is directly relevant to protecting the city’s investment.

Jackson from Jacksonville, FL

Q: What type of lease extension should the city of Jacksonville ask in exchange for approval of the Lot J deal? I’m thinking 10 years that way when they approve a new stadium deal we can ask for 30 more years or the life of the stadium. Also what’s to stop the Jaguars from buying out the lease and moving whenever they want?

A: Nothing stops the team from buying out the lease (assuming the NFL is on board with a re-location). The point of an extension is simply to make the proposition prohibitively expensive to do so.

I don’t see why the Lot J deal is not enough for at least a 10-year extension. Nearly $400 million in taxpayer support is more than some cities have paid for entire stadiums.

The team has said to expect a stadium ask to come in the next three years, and that should come with a longer-term extension attached, somewhere in the neighborhood of 20 to 30 years.

Travis from High Springs, FL

Q: For someone that doesn’t live in Jacksonville, what is Lot J supposed to be? Is it something similar to what the Jacksonville Landing used to be? I know it’s a very important project, but what actually is going to be built?

A: This is a good question, and you’re going to get an answer that is more than you bargained for because you’ve touched on a pet peeve of mine:

Lot J will have several components, anchored by a 75,000 square-foot entertainment center, which will have a mix of shops and restaurants. That is actually smaller than the Landing, which was about 126,000 square feet. There will also be two mid-rise apartment buildings, and one “boutique” hotel with about 120 rooms (think something like a Loews).

Beyond that, we don’t really know what, exactly, Lot J will look like in the end because the city agreed to commit subsidies to the project before requiring the Jaguars and its business partner to release any sort of detailed construction or architectural plans, or any sort of pro-forma financial projections.

To put a finer point on this, Shad Khan and his partner, Cordish Companies, claim they will spend about $230 million to match the city’s money — for a grand total project cost somewhere in the neighborhood of $450 million. But the vague plans they have so far released show a project that should actually cost far less than that — unless they’re building faucets in the apartments made out of solid gold.

In truth, the project has shrunk substantially over time: The Jaguars last year had plans for a high-rise with class-A office space, which has now been reduced to just 35,000 square feet mixed into other parts of the project that the Jaguars themselves will likely use (instead of recruiting a company to make Lot J its new headquarters, as originally envisioned). Similarly, the residential portion of the project was supposed to be a luxury high-rise. Now it’s going to be two mid-rise buildings, similar to what exists in the Brooklyn neighborhood or in droves on the Southside.

Despite this massive downsizing, the city’s contribution remains about the same, if not a tad worse, than it had been when Khan was planning actual high-rise buildings. That disconnect is one of the greatest flaws in the Lot J development agreement.

You can follow Nate Monroe on Twitter at @NateMonroeTU and read all his work at the Florida Times-Union here.