Increased costs bring more proposed changes for Shipyards project

Jaguars owner Shad Khan now wants to own — not lease — land for office building

JACKSONVILLE, Fla. – Some work is underway on the Shipyards project, which involves a new hotel and office building on Jacksonville’s Northbank, but costs have gone up, and all indications are the deal that the Jaguars have with the city is about to change again.

Construction costs and other financing have increased, so Jaguars owner Shad Khan and his investment team are proposing changes to the city deal, which was approved earlier. Now, Khan wants to actually buy all of the property for the luxury hotel and office site instead of leasing it from the city.

“They already own the land that the hotel is on. They already bought that. They closed on it,” said Downtown Investment Authority CEO Lori Boyer. “So now they’re also going to own the property that the office building is going on.”

Boyer says this is a good deal for the city.

“First of all, we get the cash price at closing for the land that we were not getting before,” she said.

That’s $3.2 million to buy the land that the office complex will sit on. Khan’s total investment will be over $387 million.

“The Jags are building for us. They’re hiring the contractor that is building the marina, that is doing the bulkhead replacement, that’s rebuilding the Riverwalk there. Those projects are things they’re going to execute on our behalf,” Boyer said. “And they get reimbursed with the city money that is in the city capital project.”

So while the Jaguars will be paying more in construction costs, the city is still offering incentives once the project is complete. As part of the new deal for the hotel, Khan’s company, Iguana Investments, will get $25 million from the city once the project is complete. Khan’s company will also get $50 million in tax incentives, over time.

And the city will be paying back some of the costs to Iguana Investments, including $13 million for a new marina, $8.7 million for a new marina pier, nearly $7 million for a new bulkhead, and nearly $10 for a new support building in the event lawn.

In the long run, Boyer says, all of this money will be coming back to the city in revenue.

The hotel and office are expected to be done by the end of 2025, but it might take a little longer.

“I do think it’s all going to happen,” Boyer said. “We have a design contract right now on the Shipyards West Park. That is well underway. Progress is continuing on that front. We have legislation next week on getting the pilings in for the [USS] Orleck’s relocation over to that area. We have MOSH (Museum of Science and History) moving forward with their plans to locate in the middle of that Shipyard stretch, and I absolutely believe they’re going to get this hotel constructed,” Boyer told News4JAX on Wednesday.

So new legislation has been filed with the Jacksonville City Council spelling out the new deal, and a special City Council workshop will be held next month explaining to members what all is involved.

A spokesperson for Iguana Investments on Wednesday provided News4JAX the following statement on the Shipyards legislation:

“Iguana Investments’ vision for the Shipyards property remains fully intact and unchanged. Work, in fact, continues on the property today. The new legislation working its way through City Council reflects months of collaborative work between Iguana and the Downtown Investment Authority (DIA) to address various site-specific issues, the purchase of the office property at fair market value, and global supply issues affecting the overall project cost and schedule. The revised redevelopment agreement reflects Iguana Investments’ increased capital investment from $301M to a minimum of $387M and adds no more than six months to our original completion date guarantee. Collectively, the proposed changes to the redevelopment agreement will result in a greater return on investment for the City. We’re grateful to the DIA for their efforts in moving this project forward and look forward to answering any questions from City Council members in the coming weeks.”

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Jim Piggott is the reporter to count on when it comes to city government and how it will affect the community.