University Corners developers submit revised incentives application
Published: Monday, July 29, 2013 at 12:20 p.m.
Last Modified: Monday, July 29, 2013 at 12:20 p.m.
University Corners developers have revised their request for incentives from the city and now are seeking a larger rebate of their annual property taxes over fewer years.
The partnership behind the 10-story, mixed-use development planned for north of the University of Florida campus previously sought to receive back 80 percent of the property tax revenues the project would generate for the city's Community Redevelopment Agency for 30 years.
Dated July 10, the revised request seeks a 90 percent annual rebate for 20 years.
Under the revised application, the total projected incentive payments from the city would decline from nearly $69 million to about $48.8 million.
In June, the City Commission, in a 5-2 vote, approved a request to increase the allowable level of development for the long-planned but unbuilt project off University Avenue and 13th Street. Among other things, that approval pushed the height of the building from eight stories and 95 feet to 10 stories and 110 feet.
At that time, developers said they felt University Corners would not be financially feasible without incentives from the city's Community Redevelopment Agency, which has a program offering tax rebates for “transformational” projects.
Mayor Ed Braddy, who voted against the development changes in June, said he'd oppose the incentives as well.
“I believe a project that requires such a subsidy is too big in scope,” Braddy said. “It has to be redrawn to a more modest scope.”
Braddy said he does not have across-the-board opposition to incentives, but “I cannot support them at this level.”
During his prior two-term stint as a city commissioner, Braddy did vote in 2005 to approve incentives for an earlier version of the project. When those incentives came back for a subsequent vote in 2007, he voted against them. That package would have totaled a tax rebate of as much as $98 million over 30 years.
Commissioner Lauren Poe said his review of the incentives request for “the biggest project we will see in a while” will focus on whether the developers have made a convincing case that a financial gap exists that requires incentives to make the project doable.
“What's causing the gap? And are there other options on how to fill it?” Poe said.
Poe said he'd also look at what the city could get in return for incentives — such as the use of certain building materials or improvements to public transportation and infrastructure improvements.
The application from the development group, which is now called University Partners of Gainesville, projects that the development will have a $24.2 million loss at net present value, a measure that looks at the projected future costs and revenues while taking into account that the dollar will be worth less over time because of inflation.
David Coffey, the local land-use attorney for the developers, said costs associated with the purchase of the land, the prior demolition of the buildings previously on the site and the “vertical infrastructure” of a 110-foot, more-than-1,100-space parking garage led to the financial gap. He said the City Commission's approval of the request for increased development — including the two extra floors — did make the project more financially “feasible” and lowered the amount of the incentives request.
To meet the current request of a 90 percent annual tax rebate, the commission would have to change the rules for the CRA's transformational project incentive. Currently, the allowable amount of a tax rebate is capped at 80 percent.
The number of years the incentives are sought declined from 30 years to 20 years because the city's College Park University Heights CRA district, the area the property is in, is slated to expire in 20 years.
Under state law, local governments may establish a CRA to address “slum” and “blight” in an area. During the existence of the CRA, tax revenues generated by increased property values flow to the CRA instead of the city or county general fund. In the city of Gainesville, the school district and library district still receive full property tax payments.
At prior meetings in which the original role of a CRA was discussed, City Commissioner Todd Chase has questioned if a prime corner across the street from the UF campus could be deemed an area of slum or blight.
The revised application for incentives does include more details on the current partnership behind the project.
New York-based Oaktree Capital Management would be the main equity investor and own a 90 percent stake. The Miami-Dade-based Swerdlow Group, which is overseeing development activities; Gainesville student housing firm the Collier Companies; and the Key West- based hospitality firm the Spottswood Companies also have ownership stakes. Swerdlow would manage the retail; Spottswood would manage the restaurants; and Collier would manage the residential piece, which has approval for as many as 500 apartments.
The rules of the city's tax incentive program require the developers to pay for an independent consultant's review.
So far, that reviewer has not received all financial information sought. Among other things, the developers have declined requests to provide financial statements for their companies and personal financial statements for “key” owners.
In response, they have said their firms were private companies owned by private individuals who were “concerned about the ramifications of their personal financial statements being made public.”
Citing confidentiality, they also declined a request to provide details on the option contract to purchase the property.