JACKSONVILLE, Fla. \u2014 A proposed Publix-anchored development in downtown Jacksonville is facing new questions over its price tag, projected property values, and whether taxpayers will see a sufficient return on the city\u2019s investment.<\/p>\n
Action News Jax has been reporting on this phase<\/b><\/a> of Gateway Jax\u2019s Pearl Square since last year. <\/p>\n >>> STREAM ACTION NEWS JAX LIVE <<<<\/b><\/a><\/p>\n The developer is seeking $49 million from the city, including a $28 million completion grant that is under scrutiny by the Jacksonville City Council tied to the mixed-use 15 story tower. <\/p>\n It\u2019s for the Block N7 portion of the project that would replace the former First Baptist Church auditorium with up to 500 apartments, parking and a 32,000-square-foot Publix. It\u2019s part of the larger $1 billion nine-block development.<\/p>\n Inside the numbers<\/b><\/p>\n Action News Jax\u2019s Ben Becker obtained the Downtown Investment Authority\u2019s financial projections for the Publix portion of the project. <\/p>\n Those numbers show that, even with the subsidy, the DIA is projecting property values to increase by a modest 2% annually. Gateway Jax is assuming a rosier 4.25% annual increase.<\/p>\n Gateway JAX CEO Bryan Moll said the increase could reach as much as 7% when looking at properties within the surrounding half-mile area.<\/p>\n RELATED: <\/b>Pushback on $28M incentive package to Gateway Jax<\/b><\/a><\/p>\n But Sheila Weinberg, CEO of Truth in Accounting, a nonpartisan financial organization, said an increase in property values does not automatically translate into an equivalent increase in city tax revenue or guarantee that taxpayers will recoup the city\u2019s investment.<\/p>\n Property taxes are based on assessed value and the applicable tax rate, and the city receives only a portion of overall property tax collections.<\/p>\n In addition, Weinberg said the money and incentives put forth by the city today is worth more than any benefit in the future because of the time-value of money. And that raises questions about whether the return on investment for the City is worth the risk. She said the margin for error in the projections appears narrow.<\/p>\n \u201cIt\u2019s razor thin, there\u2019s a lot of assumptions they are using,\u201d Weinberg said.<\/p>\n RELATED: <\/b>\u2018So much hinges on it\u2019: Jax leaders question whether city can afford grant for downtown Publix<\/b><\/a><\/p>\n Weinberg said development incentives are generally intended to provide a financial cushion for developers facing risks such as higher construction costs, more vacant apartments, lower rents, or a weaker real estate market.<\/p>\n She said she becomes concerned when a developer says a project cannot happen without a city\u2019s financial support.<\/p>\n \u201cI get nervous when developers say they can\u2019t do the deal without the city\u2019s investment that\u2019s a red flag to me,\u201d she said.<\/p>\n Weinberg also said the city needs to account for what would have happened to those properties without the grocery store.<\/p>\n \u201cIf surrounding properties would have increased 5% anyway because of Pearl Square, downtown investment, population growth, etc., then the relevant question is whether the grocery adds another 1% or whatever the studies actually attribute to it,\u201d she said.<\/p>\n What do studies say<\/b><\/p>\n Moll sent Becker multiple studies to back his argument of grocery stores acting a catalyst. One targeted inner city property values<\/b><\/a> in Worcester, Massachusetts from 1988-2011 when 12 grocery stores were added. Another was a food desert<\/b><\/a> in Memphis, Tennessee six years ago and a third was from Washington, DC.<\/p>\n Moll believes that higher rental values should eventually translate into higher property values and, therefore, higher property taxes.<\/p>\n [SIGN UP: <\/b>Action News Jax Daily Headlines Newsletter<\/b><\/a>] <\/b><\/p>\n \u201cI would argue that any increase in rental value flows through to the bottom line (or most of it – doesn\u2019t cost any more to operate it), and commercial property taxes would increase based on the income approach. So, I would argue an increase in rental value flows down to property taxes. i.e. value to the city,\u201d Moll said. <\/p>\n Moll maintains the tower with the Publix project cannot go forward without incentives.<\/p>\n \u201cThis is not a handout purely an investment as part of a public private partnership it\u2019s the definition of a transformative project,\u201d he said.<\/p>\n DIA errors<\/b><\/p>\n The DIA financial report revealed an important error in its projections.<\/p>\n First-year income for the project was adjusted from $5.7 million to $4.36 million.<\/p>\n [DOWNLOAD: <\/b>Free Action News Jax app for alerts as news breaks<\/b><\/a>]<\/b><\/p>\n That matters because the revised figure is only about $170,000 higher than the project\u2019s expected annual loan payments.<\/p>\n DIA CEO Colin Tarbert issued the following statement:<\/p>\n \u201cGateway Jax\u2019s Pearl Square represents one of the most exciting urban transformations underway in the country. The DIA is working closely with its Board, the developer, City Council and the administration to advance the project with an incentive package that demonstrates a sound return on investment while balancing the needs of the project with the City\u2019s budget priorities.\u201d<\/p>\n What\u2019s next<\/b><\/p>\n City council members are expected to meet with DIA and the developer in late August and September to reevaluate the terms of the completion grant<\/b><\/a>.<\/p>\n Click here<\/b><\/a> to download the free Action News Jax news and weather apps, <\/b>click here<\/b><\/a> to download the Action News Jax Now app for your smart TV and <\/b>click here<\/b><\/a> to stream Action News Jax live.<\/b><\/p>\n Action News Jax Top Stories<\/p>\n","protected":false},"excerpt":{"rendered":"JACKSONVILLE, Fla. \u2014 A proposed Publix-anchored development in downtown Jacksonville is facing new questions over its price tag,…\n","protected":false},"author":3,"featured_media":1017498,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[5136],"tags":[407219,407220,15619,5229,407221,14336,15533,407225,58745,209735,3188,723,384378,269017,11561,7310,425,127918,209737,407222,407227,68315,407226,407223,407224,67,586,132,5230,68,2969,209738],"class_list":["post-1017497","post","type-post","status-publish","format-standard","has-post-thumbnail","category-jacksonville","tag-action_newhacks","tag-action_newjacks","tag-action_news_jack","tag-america","tag-brian_mole","tag-ceo","tag-cia","tag-colin_tarbert","tag-dia","tag-downtown_investment_authority","tag-fl","tag-florida","tag-gateway_jack","tag-gateway_jacks","tag-jack","tag-jacksonville","tag-local","tag-mole","tag-pearl_square","tag-peg","tag-planned_culinary_institute_of_america","tag-publix","tag-publixx","tag-sheila_weinberg","tag-truth_in_accounting","tag-united-states","tag-united-states-of-america","tag-unitedstates","tag-unitedstatesofamerica","tag-us","tag-usa","tag-west_beaver_street"],"share_on_mastodon":{"url":"","error":"Validation failed: Text character limit of 500 exceeded"},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/1017497","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/comments?post=1017497"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/1017497\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media\/1017498"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media?parent=1017497"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/categories?post=1017497"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/tags?post=1017497"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}