Officials debate University Corners tax incentives
Published: Monday, November 18, 2013 at 11:52 p.m.
Last Modified: Monday, November 18, 2013 at 11:52 p.m.
Gainesville's Community Redevelopment Agency staff and the developers behind University Corners have not seen eye to eye on tax incentives.
They will now have more time to continue to disagree or possibly reach an accord.
At the end of a six-hour meeting Monday, the City Commission, seated as the CRA board, unanimously voted to have staff continue working with the current team behind the long-planned, unbuilt mixed-use project at the corner of West University Avenue and Northwest 13th Street in an effort to get more detailed construction costs that demonstrate the project is not financially feasible without the incentives sought. Staff is also to identify the specific public benefits added to the project because of those incentives.
"I want them to come to us with the information that we need so that the public has a high degree of confidence that we are getting the return on the investment that we asked for," Commissioner Lauren Poe said.
The developers have asked to receive back up to 90 percent of the property tax monies that University Corners would generate for the city's College Park/University Heights CRA district for a period of 20 years — a projected total of almost $48.8 million.
The tax rebate is sought through a CRA incentive program for "transformational," large-scale redevelopment projects that "can literally transform the districts in which they develop, changing the face of the community."
To approve the request, the City Commission would have to change the policy for that program and increase the allowable amount of a tax refund above the current 80 percent cap.
CRA staff and outside consultants have recommended denial of the application. They said that other projects in the district — including high-end student housing, the Stadium Club and the ongoing development of the Innovation Hub — no longer make University Corners transformational for the area. They also said the developer had not met a series of requests to provide more details on construction costs and financing or potential retail tenants to confirm that "but for" the incentives, the project could not be built.
"We don't have sufficient information to do the analysis. It has been frustrating for us," CRA Finance Manager Lynn Janoski said.
University Corners' representatives responded that some information the CRA sought, such as signed leases and letters of intent from prospective tenants, is not available at this early stage. The developers' local land-use attorney, David Coffey, said the CRA also sought an "extensive amount of personal financial data" from the developers involved and were subjecting the project to an unprecedented level of scrutiny.
Brett Dill, president of the Miami-Dade-based Swerdlow Group, the lead developer on the project, expressed frustration at the lack of personal interaction with CRA staff. He said communication from the city or its consultants on the application primarily came by way of a letter that was a "regurgitation" of the previous letter.
The current development team includes New York-based Oaktree Capital Management, the main equity investor; Swerdlow; Gainesville student housing firm the Collier Companies; and the Key West-based hospitality firm the Spottswood Companies.
The project has approvals to be a 10-story, 110-foot-high building with 500 residential units; a 250-room hotel; a 1,131-space parking garage and 78,330 square feet of retail space.
Current plans for the hotel, at 142 rooms, and the parking garage, at 952 spaces, would not hit those maximum thresholds.
Coffey and Dill have both said the incentives are needed because of additions to the project to meet the city's redevelopment plan, including the parking garage and more expensive building facade materials.
Poe made the motion to continue to try to gather more information. It passed 6-0, with Randy Wells absent for the meeting. As part of the vote, the commission plans to tie any incentives to a series of requirements that include a grocery store as a tenant and LEED certification for the building. Construction workers would have to be paid wages that meet the criteria of the federal Davis-Bacon Act. If it proves to be legal, at least 20 percent of the construction workers would have to be minorities.
Poe's motion passed after Mayor Ed Braddy's motion to deny the application for incentives failed and Commissioner Thomas Hawkins withdrew a motion to approve the incentives, with many of the same conditions eventually included in what Poe put on the floor. For final approval, the incentives and conditions would have had to come back for a vote in a formal written agreement.
The motion to deny the incentives failed 4-2, with Commissioner Todd Chase and Braddy in the minority.
Braddy said the city needed to get more financial and construction cost information upfront instead of approving incentives with conditions attached down the road.
During public comment, both support and opposition were expressed. Those in favor of the incentives said the prime piece of real estate had sat vacant for too long and spoke of the hundreds of jobs that would be created during construction and after completion.
Those in opposition questioned why a development on a prime piece of real estate at a well-traveled intersection would need incentives to be profitable.