Hillwood’s bid to be Cecil Commerce Center’s master developer unanimously won the blessing Wednesday of the Jacksonville Economic Development Commission. One member said it’s time to break out the champagne.
Opponents of the proposed contract vowed to take their case to the City Council and were angered the JEDC didn’t invite them to offer public comments until after the commission had already voted.
One opponent — Noah Silver, chief financial officer for Transworld Investment Corp. — turned his back to the JEDC when he stood at the podium and addressed the audience, saying it was pointless to talk to the commission.
Hillwood, a Dallas company, and JEDC staff negotiated the contract over the past year after the city picked Hillwood as the top-ranked firm following a national call for applicants.
JEDC Executive Director Ron Barton said Hillwood will provide the expertise and private financing that’s needed to finally turn Cecil Commerce Center into a generator of jobs and property taxes.
“It’s a proactive way to claim our destiny,” he said.
Critics said the city would sell land to Hillwood at cut-rate prices, dragging down the value of other industrial property and hurting the city’s overall tax base.
“I’m embarrassed for Ron [Barton] to have such a one-side deal for Hillwood,” said Bill Spinner, vice president of Group 4 Properties.
JEDC meetings typically don’t attract opposition, but Wednesday’s meeting filled the seats.
After Barton gave an overview, JEDC member Christopher Corr hailed the proposed contract as a “miraculous” and “spectacular achievement.” He said Hillwood has shown it can deliver at big industrial parks such as Alliance Texas and Alliance California. Hillwood would bring its premier brand to Cecil Commerce Center by calling it Alliance Florida.
“My first question is, ‘Where is the champagne?’ ” Corr asked Barton.
Corr added he wanted to hear from the other side, referring to opponents. But after a Hillwood executive gave an upbeat presentation, JEDC Chairman Zimmerman Boulos called for a vote on the contract. After the item passed, Boulos took out cards submitted by people seeking to speak and invited them to the podium. Boulous said the JEDC’s vote was just a recommendation to the City Council and opponents would be able to speak at public hearings before the council.
Barton said after the meeting JEDC followed its usual process when it took public comments at the end of the meeting. He said the commission has no legal obligation to have a public hearing before taking a vote. He said he and Mayor John Peyton have met with opponents about their objections.
Preston Herold, vice president of Hillwood Investment Properties, said the company has been interested in Cecil Commerce Center since it met with Barton in mid-2007.
He said the location off Interstate 10 with a high-speed interchange connection, the plans for a future “outer beltway” running from I-10 to Interstate 95 in St. Johns County, and the port being “within acceptable range” are strong points.
“We think it’s a complete package,” he said. “The location is outstanding and the access is outstanding.”
He said the property’s disadvantage is it’s flat, low lying and covered with swaths of wetlands. But he said Jacksonville is well-positioned for growth, particularly if the port is deepened to handle larger cargo ships.
The city would sell land to Hillwood at three price levels. “High and dry” land would sell for $23,470 per acre; low-lying land served by major roads would sell for $8,819 per acre; and low, wet land lacking road access for nearby utility connections would sell for $1,003 per acre.
Depending on the condition of the property, Hillwood would spend around $36,000 to $113,000 per acre to make them level and ready for development.
Opponents said the land sale prices are far below the going rate in Jacksonville. Peter Anderson, vice president of Patillo, said the city will lose out on $70 million over the next 25 years at those prices. He said the federal government will spend $7,200 an acre for land in the Everglades, but the city would sell to Hillwood for a fraction of that amount, even though the commerce center is approved for industrial development and next to an interstate highway.
“This will set a brand-new, low benchmark,” he said.
He said the city should require appraisals as Hillwood buys parcels, and set prices that way.
In an interview after the meeting, Herold disputed that Hillwood would have an unfair advantage over existing industrial parks.
He said Hillwood’s negotiations with the city for land prices assumed the economy will recover and lease rates for industrial buildings will be at least $4.10 per square foot. He said currently, industrial buildings are being leased at rates hovering around $3.50 per square foot or lower, he said.
If rates were to stay at $3.50, Hillwood couldn’t make the numbers work for developing Cecil Commerce Center, even at the land prices negotiated with JEDC, he said.
THE SHOWDOWN OVER CECIL COMMERCE CENTER
The City Council will vote next on whether Hillwood will be master developer for Cecil Commerce Center. Here are the arguments in favor of the proposed contract and the response by opponents.
The federal government announced the closure of Cecil Field in 1993. The Navy conveyed the land to the city in 1999. It’s time to move forward.
Industrial property suffers a 12.5 percent vacancy rate in Jacksonville. The city should hold off until the market stabilizes.
The price tag
Hillwood will buy land from the city at a fair price and return it to the tax rolls, giving taxpayers a return on the investment made in roads, drainage and utilities at Cecil.
Taxpayers will leave money on the table because Hillwood will buy land at below-market values. Other industrial property owners will cite those sale prices to reduce their own taxable property values, cutting taxes they pay.
Cecil Commerce Center is riddled with wetlands and low-lying areas. The city needs the deep pockets of a private developer to make inferior land accessible for development.
Dealing with low-lying land is a fact of life on Florida’s coast. Rather than take a financial risk at Cecil, Hillwood would benefit from buying land on the cheap.
Hillwood brings the missing piece to Cecil — an experienced developer with a proven track record of attracting companies to Alliance Texas and Alliance California, two big industrial parks.
Hillwood is a solid developer, but not more capable than other developers operating in Jacksonville. Industrial businesses pick Jacksonville for their own strategic reasons, not because a developer recruited them.