By Christopher Curry | The Gainesville Sun
The University Corners developers' request for nearly $49 million in tax incentives will go to the City Commission without the support of staff or an advisory board.
Gainesville Community Redevelopment Agency staff and two outside analysts have recommended the city reject the application for incentives. They say the developer did not provide sufficient financial information to complete an analysis, failed to show that the project could not be built without incentives and also requested incentives in excess of the current maximum allowable threshold in the CRA program's guidelines.
In a written report, CRA staff said they could have declined even consideration of the application because it lacked required information — a move that would have been subject to appeal to the City Commission — but decided to review it because of the "strong public interest in the outcome of the decision regarding incentives for this project."
On Wednesday evening, the advisory board for the College Park/University Heights CRA district deadlocked 4-4 in a vote to go along with staff's recommendation to deny the developers' request. That means the application for incentives will go to the City Commission without a recommendation up or down from the advisory board.
The City Commission's next CRA meeting is Oct. 21 and it remains to be seen if University Corners will be on the agenda.
For the most part on Wednesday night, advisory board members spoke in support of the current development mix and design for University Corners.
A mixed-use project has been planned for more than eight years at the corner of West University Avenue and 13th Street, across the street from the University of Florida campus.
A prior project proposed by different developers received approval for incentives. But the economy tanked after the retail shops once on the site had been razed to make way for the development and the corner has stood as a grass field for years.
Advisory board member Well The Losen said the property has been empty too long.
"I think this project needs to be built," he said.
Chairman Brad Pollitt said he liked the project but could not get past the fact that staff and outside analysts said there was not enough evidence given to show that the project would not happen "but for" incentives.
"I don't think that staff is making up that argument about the 'but for' and we are not here just to hand out money," Pollitt said.
Advisory board member Billy Beltz said the College Park/University Heights district had made significant strides since University Corners was first proposed and may have moved beyond the need for "subsidizing projects" to make them happen.
In a June vote, the City Commission, with Mayor Ed Braddy and Commissioner Todd Chase in dissent, increased prior development thresholds for University Corners. The project is now planned to reach a height of 10 stories and 110 feet, with a parking garage structure of more than 1,100 spaces. Allowable residential development includes 500 apartments or condominiums. There's a 250-room hotel, ground floor retail, restaurants and courtyards and 1.33 million square feet of total building area.
The current partnership behind the project includes New York-based Oaktree Capital Management, the main equity investor, the Miami-Dade-based Swerdlow Group as developer; Gainesville student housing firm the Collier Companies; and the Key West-based hospitality firm the Spottswood Companies.
Through the Community Redevelopment Agency's tax incentive program for "transformational" projects, the developers seek an annual rebate of 90 percent of the property tax revenues that the project would generate for the city's CRA for a period of 20 years.
The total rebate to be paid over 20 years is projected to be about $48.8 million.
The fact that the requested incentive exceeds the program guidelines' maximum threshold of an 80 percent rebate was among a number of reasons that CRA staff and two outside groups, Gainesville accounting firm James Moore & Co and the nonprofit National Development Council, cited in recommending denial.
The City Commission has the ability to increase the allowable level of the tax rebate from 80 percent to 90 percent and once did with the prior plans for University Corners.
Given projects like the Stadium Club and the plans for Innovation Square, University Corners is no longer "transformational" for the district, city staff said.
Staff and the outside analysts said the requested information the developers did not provide included detailed construction costs, property deeds, tenant leases or letters of interest and financial statements, including personal financial statements of the developers.
Local land-use attorney David Coffey, who is representing the developer, said the requests showed an "unprecedented level of scrutiny."
"If you look closely at what they are asking for, no developer is going to give you that," Coffey said. "They are asking for personal financial statements from all the developers involved."
Coffey said the amount of residential and retail in a single mixed-use development intended to promote walkable urban living continues to make the project transformational for Gainesville.
At one point, an advisory board member questioned why a project at likely the most visible corner in the city would need incentives in the form of a property tax rebate to make it.
Swerdlow Group President Brett Dill said that if he built the residential portion of University Corners above first-floor bars, the project might stand on its own. But features like the hotel, the retail and a grocery store were added to meet what he saw as the will of the community and the redevelopment plans of the CRA district. They made the project's economic situation less "optimal," Dill said.
Community redevelopment agencies are funded through tax-increment financing. Once a local government establishes a CRA district, 95 percent of the property tax revenues generated by increased property values flow into the district instead of to the city or county's general fund. Locally, school, library and water management district taxes are not affected.