City, University Corners talk scaled-back incentives

Published: Wednesday, March 19, 2014 at 4:48 p.m.
Last Modified: Wednesday, March 19, 2014 at 4:48 p.m.

Gainesville and the University Corners developers are negotiating a scaled-back incentive and public assistance package that does not include a $49 million tax rebate for the partnership behind the long-planned development at University Avenue and Northwest 13th Street.

The current proposal instead would commit as much as $3.5 million from the city for infrastructure improvements intended to benefit the project and potentially the public at large. Those improvements could include sidewalks, lighting, road resurfacing, stormwater upgrades, landscaping, a public plaza at the development or utilities.

Seated as the Community Redevelopment Agency board, the City Commission gave initial conceptual approval to the revised proposal in a pair of 6-1 votes Monday. Before it is final, the plan must come back for a vote, possibly in April, as part of a legal agreement with the developer.

The plans for University Corners include a 10-story, 110-foot-high building; 500 residential units; an approximately 140-room hotel; and ground floor retail space that might include a grocery store.

The plan also scales back the parking garage from 10 stories and 1,131 spaces to eight stories and about 875 spaces.

That change came after CRA staff and a contracted consultant, Nelson/Nygaard Consulting Associates, said the garage was oversized, leading to increased construction costs and the request for a larger incentives package.

The city plans to have an outside nonprofit group borrow money through tax-exempt bonds to finance a portion of the parking lot construction costs. That group then would own half of the spaces in the garage and make them available for paid public parking.

The city’s selected nonprofit is likely the National Development Council, which works with local governments across the country on community development projects and was one of the consultants that reviewed the initial incentive request from University Corners’ developers.

The National Development Council also is expected to work with the University Corners developers on obtaining federal tax breaks on costs that go toward a grocery store, something long sought for the area within walking distance of campus.

The University Corners development team, which is headed by the Miami-Dade based Swerdlow Group and includes Gainesville student housing firm Collier Companies among the other partners, previously sought a 20-year, 90 percent rebate of the property tax revenues the development would generate for the city’s CRA. Over two decades, the projected rebate totaled almost $49 million.

In November, the City Commission, seated as the CRA board, delayed a vote on the rebate after staff said the construction cost estimates and financial information submitted by the developer did not sufficiently demonstrate the project was unfeasible without the incentives.

The rebate was sought through a city program offering incentives for projects that are “transformational” for a CRA district.

CRA staff questioned whether a project including apartments and retail on one of the most visible corners in Gainesville was transformational given the development that either has occurred or is coming in the College Park/University Heights CRA district. That district includes the student apartment complexes between the campus and downtown as well as Innovation Square.

The CRA staff’s preference was to put public money instead toward infrastructure improvements in an approach similar to Innovation Square.

At Monday’s CRA meeting, Mayor Ed Braddy cast the dissenting vote against public infrastructure funding. Braddy said he needed to see a more detailed plan for the infrastructure improvements before he could support funding.

Still, he said that, compared to the tax rebate request, the package now proposed was a “great advancement forward.”

Commissioner Thomas Hawkins cast the dissenting vote against the city facilitating talks between the National Development Council and the developer on the nonprofit community development group financing and owning roughly half the spaces in the parking garage. Hawkins said he felt that was a conflict of interest because the organization had, as a consultant, recommended against the incentives request from University Corners.

At Monday’s meeting, Hawkins said he felt that, after that recommendation, the National Development Council said “they’d love to be investors in the project if we give $3.5 million up front.”

“Well, that’s not at all the case,” CRA director Anthony Lyons said.

Lyons said that, as the proposal involving the parking garage was taking shape, he approached the National Development Council, which has financed nearly 8,000 parking spaces in other projects, to see if they would have an interest in this garage. The intent, he said, was to obtain lower financing costs because the group is able to float tax-exempt bonds and reduce the developer’s costs for constructing the garage.

“Any suggestion that this is a windfall for them is missing the point of what we are trying to do,” Lyons said.

At the meeting, Lyons said the item was placed on the agenda late last week because he felt CRA staff and the University Corners developers had a standing agreement about the new incentives and assistance package. But University Corners representatives then began to express misgivings and concerns.

Swerdlow Group President Brett Dill said, with a projected $170 million investment on the line, his team had concerns about negotiating with the National Development Council instead of the city and over the potential competition for parking garage revenues.

“If I know I’m working with you all directly and your intention is not to be parking barons, I’m happy,” Dill said.

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