News Article | 5/12/2010

Hillwood may prove testy


City Council took its first official look Tuesday night at the multiyear, multimillion-dollar deal that would allow Hillwood to serve as the master developer of Cecil Commerce Center.


However, the debate over the deal may have started in earnest Tuesday afternoon at a meeting of the Northside Business Leaders Club.


The 113-member club invited Hillwood Vice President Preston Harrell and Patillo President Peter Anderson to give their views on the contract that has sparked plenty of debate already. The club also asked City Council member Ray Holt and his Council predecessor, Warren Alvarez, to provide a legislative perspective.


While most everyone seemed to agree that Dallas-based Hillwood would do a fine job developing the 4,000 acres of City-owned land, it’s the asking price per acre that’s at the center of controversy.


Under the agreement, Hillwood will buy the land on a sliding scale: $24,000 an acre for land that’s essentially ready for development, $8,000 an acre for land that needs mitigation and $1,100 an acre for wetlands. Hillwood will only pay taxes on the property it buys, not on the property it retains the rights to buy and development.


Those two points serve as the focus of the organization’s opposition.


“We just want it so the City retains some earnings while it’s waiting (for the property to be sold),” said Paul Forte, past president of the club and owner of Turbo Action, which manufactures parts for race cars. “It’s a beautiful property. It’s amazing what they (the City) have done. It’s a pristine location, but other parts of Jacksonville want to be part of that growth.”


Forte said he would prefer Hillwood pay a flat $50,000 an acre for project-ready land, a figure he estimates is at least half the actual worth.


“The average in Jacksonville for industrial property is $100,000 an acre,” he said. “I’d say it’s worth more than that because of the infrastructure.”


The City has spent millions on roads, sewers, water and electrical lines at the former Navy base. However, Harrell contends the price Hillwood will pay per acre is a fraction of the actual cost the company will have in the individual projects.


“You can’t just look at the purchase price. You have to look at the development costs,” said Harrell, adding the City will profit from the sale and development of the land and benefit from the association with Hillwood. The property is not currently on the tax rolls, but when sold, will contribute to the tax base.


“We will place the Alliance brand and Hillwood’s reputation on-site. We are committed to aggressively marketing and will spend $150,000 annually,” said Harrell.


“The deal is about off-loading the tax burden to the private sector and creating jobs.”


Anderson isn’t sold. He’s convinced the Jacksonville Economic Development Commission, and ultimately Council, is making a decision that may help the City, but could cripple other area commercial developers.


“The devil is in the details. We are not against Hillwood. We do what Hillwood does. Hillwood does what we do,” said Anderson, speaking on behalf of 29 commercial property developers in the area.


“Hillwood should come in and negotiate the best deal possible and shouldn’t come if they can’t get a good deal,” he said.


Anderson said the deal, which is good for 25 years, reminds the developers of previous JEDC projects that failed.


“Our concern is with the JEDC and the structure of the deal,” he said. “We’ve been given promises and shown pretty pictures of LaVilla and the Shipyards and $40 million later we don’t even have a sidewalk at the Shipyards. I don’t think they are incompetent. They might be in over their head,” he said.


“All we are advocating is the City of Jacksonville sell the land at fair market value as established by a third-party appraiser,” he said. “Cecil Commerce Center is a jewel. It should be developed by a private company and Hillwood is a fine company. We are just asking the City to enter into a fair deal.”


Holt said the legislative process began last night and it will take at least six weeks for the Council committees to examine the contract.


“This is a legislative process that’s not done,” said Holt. “We all want to see a deal that will not see local property values go down. We have failed pretty miserably at that (the City serving as a developer). What we are doing is a step in the right direction. I am sure there will be some tweaks and changes along the way.”


Alvarez said he was the lone Council member at the time to vote against allowing TriLegacy to develop the Shipyards because he didn’t like the deal. He feels similarly about the proposed deal with Hillwood and would like to see more time spent by the Council Auditor’s Office looking at the contract.


“There is one thing I think would make everyone happy: give it five years and then go to the appraiser’s value (for the price of the land),” he said. “They (Hillwood) will know in five years if they are going to stay in Jacksonville.”


[email protected], 356-2466