Jaguars owner Shad Khan will get a six-month extension for building a planned Four Seasons Hotel and Residences on the downtown riverfront as part of an amended contract that would claw back millions of dollars in future taxpayer incentives if the hotel switched from the Four Seasons to another brand during its first five years in business.
Khan’s development firm, Iguana Investments Florida, must complete construction of a hotel building with at least 170 rooms and a residential building with at least 23 luxury condominiums by June 30, 2026, according to the amended economic development agreement unanimously approved Tuesday by Jacksonville City Council.
Four Seasons Hotels and Resorts has not yet said it will put its globally known, high-end luxury brand on the Jacksonville hotel, but representatives of Khan and his Iguana Investments Florida have repeatedly said it will be a Four Seasons when it opens for guests.
“To the extent that there’s any doubt it’s going to be a Four Seasons, it’s going to be a Four Seasons,” Iguana Investments attorney Paul Harden told City Council members when they voted in committees last week.
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The development deal between Khan and the city will pay out a $25.8 million completion grant to Iguana after the hotel is built, provided there is a fully executed agreement for it to operate as a Four Seasons Hotel.
Will Jacksonville hotel be a Four Seasons?
Council members said they hear often from residents who are skeptical about whether the hotel actually will be a Four Seasons.
“This is a significant issue in the community,” City Council member Ron Salem said. “I have people come to me frequently (saying) it’s not going be a Four Seasons, you’re going to get bamboozled.”
“It’s the number one thing we hear about the development,” council member LeAnna Cumber said. “Is it really going to be Four Seasons, or are they going to get the (taxpayer) money and then change it?”
In the amended agreement, the city would be able to recover a portion of the completion grant if the hotel ceases to be a Four Seasons during its first five years.
The “clawback” would cover the entire $25.8 million grant if the hotel stops being a Four Seasons in its first year of operation. That clawback amount would drop to 80% in the second year, 60% in the third year, 40% in the fourth year, and 20% in the fifth year. The city uses a similar sliding scale for clawbacks it puts in other economic development agreements.
Cumber said the Four Seasons brand has a high reputation in the hotel industry and that “cache” will be good for Jacksonville. She said the clawback provision “just protects the taxpayers” and shouldn’t be a problem for the project.
“If that wasn’t in there, that would be a deal-breaker for me,” council member Al Ferraro said, adding he supports the development but wants to be “real clear so there’s no surprises.”
Iguana Investments agreed to the clawback provision. The only exception to it would be if the Four Seasons corporation changed the name of its brand to something else for all of its properties everywhere.
The amended agreement also adds six months to the schedule for Iguana to construct an office building for the development, giving it the same June 30, 2026, deadline as the hotel. Iguana will pay $3.2 million for the parcel for the office building, rather than leasing the land for 40 years at $36,000 annually.
The “vertical construction” of the office building, which is when it starts to rise up out of the ground, would have to begin by June 1, 2024. The vertical construction of the hotel would have to start by Sept. 1 of this year.
Iguana’s minimum private capital investment for the hotel, residences and office building will be a total of $387.6 million, up from $301 million in the original agreement.
The bigger investment would likely generate more property taxes for the city, and that in turn would boost the amount of property tax rebates Iguana would get as a taxpayer incentive.
The city will rebate 75% of the city taxes generated by the new development over a 20-year period. Based on the higher amount of capital investment, the projected property tax rebates would be $58.7 million over two decades, about $11 million more than the previous projections. The exact amount will depend on the appraised taxable property value of the new development.
If the hotel stopped being a Four Seasons brand over that 20-year period, the city would halt the property tax rebates unless the Downtown Investment Authority board approved a different flag for the hotel that still is a four-star or five-star brand.
The amended agreement also boost the amount of city spending on city-owned facilities that would be part of the development area. The city would pay up to $42.8 million for work on rebuilding the marina and improvements for the bulkhead, pier, marina support building and riverwalk. The original agreement put the city’s cost at $17.2 million for city-owned improvements.
The marina will be closed for up to three years during construction.