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Port deals move ahead

NORTHSIDE -- The owner of hundreds of acres of industrial land sought by the Jacksonville Port Authority for containerized cargo operations has agreed to sell it for several million dollars more than the authority wants to pay.

Abraham Zion, principal of Zion Jacksonville Limited Partnership, sent the authority a signed sale contract in December to sell 167 acres along Heckscher Drive and Eastport Road for more than $70 million. While the authority, which had offered $56 million for a different tract from the one it wants now, intends to make a counteroffer, it also may consider using eminent domain to acquire the land, Executive Director Rick Ferrin said.

Meanwhile, the authority has reached a memorandum of understanding with Smurfit-Stone Container Enterprises Inc. to buy about 145 adjoining acres for a yet-to-be-determined price -- a deal that has altered the parameters of the Zion negotiations. The Smurfit property, which contains aeration ponds that would have to be relocated, is between two Zion parcels the authority wants.

The footprint of Zion's land sought by the authority -- of the roughly 880 acres he owns in that area -- has changed in light of the potential deal with Smurfit-Stone. The authority previously offered to buy about 185 acres of uplands and an unspecified amount of wetlands. That would provide enough usable land for a proposed 170-acre container terminal, but in a less-than-ideal hourglass shape that could create a choke point for on-terminal movement.

Korea-based ocean carrier Hanjin Shipping Company Ltd. and the authority signed a memorandum of understanding in October 2007 to build a terminal in Jacksonville. The memorandum of understanding calls for a terminal to be operating in 2011 with capacity to handle 1 million 20-foot-equivalent units of containerized cargo.

The authority doesn't own any land with room for such a project since it signed an agreement in 2005 to lease land at Dames Point to Mitsui O.S.K. Lines Ltd. for a terminal. That terminal is expected to open in late 2008 or early 2009 and move 800,000 TEUs annually within a few years.

The Smurfit-Stone and Zion parcels, including a nearly 10-acre sliver of Zion land fronting Eastport Road, would be more than enough to develop a Hanjin terminal. The Smurfit-Stone property would widen the site, eliminating bottlenecks and the need to buy the "top of the hourglass" from Zion, Ferrin said.

The authority has also identified the Zion/Smurfit-Stone tract as the best site for an intermodal container transfer facility to shift rail-bound cargo to track. Without an ICTF, containers heading for rail will have to be towed by truck, or drayed, to rail yards on the Westside, stressing the roads' capacity.

"A lot of our future hinges on the acquisition of this property," Ferrin said.

Zion, who lives in the Bronx, N.Y., has been described as colorful and likable. But to the authority, he's also been frustrating to negotiate with. Long stretches have passed between meaningful exchanges at times, new demands have been raised after it was thought a deal was reached, and getting a signed proposal has been elusive, officials said.

So receiving a signed sale agreement is progress, Ferrin said. "But we need to refine the direction of that movement."

While Ferrin believes Zion wants to sell the property, "his expectations and perceptions of price are a little skewed the wrong way. If he had made a reasonable offer, we would have taken it."

Zion, however, has indicated that his price is firm and that a lower counter offer would likely be rejected, said David Edwards, one of a few Jacksonville lawyers representing Zion. "He's aware of what's happening in the marketplace for this type of land."

Edwards said that while his client wants to sell the land, he doesn't have a time frame. "He'd like to be done with the negotiation, but I don't think there's a lot of urgency on his part."

The authority has a great sense of urgency to get land soon enough to meet Hanjin's goal of operating by 2011. The Mitsui terminal will open nearly three and a half years after that deal was signed with land already in the authority's possession.

Besides the magnitude of building a container terminal, the authority is also facing a long process to develop an ICTF.

The authority, which has talked to several companies with experience designing, financing and operating ICTFs, is preparing to publish a request for qualifications in the next 30 days, Ferrin said. After evaluating the responses, the authority intends to send a request for proposals in the next 60 days to those deemed qualified to bid.

"We want to let [the winning bidder] get started on an ICTF as soon as we acquire the property," Ferrin said.

If negotiations with Zion don't move toward an acceptable price, Ferrin said, he expects the authority will begin steps in the next one to two months for taking the property by eminent domain.

That would start with asking the board to adopt a resolution authorizing staff to file a lawsuit seeking condemnation. A request could come as early as the board's Jan. 28 meeting, Ferrin said.

Even if the board adopts a condemnation resolution, Ferrin said, David Kaufman, the authority's senior director of planning and properties, would continue to negotiate with Zion.

Consideration of eminent domain comes as the authority is awaiting a trial in April to determine the price to take about 70 acres from Keystone Coal Co., the culmination of an eminent domain action begun in November 2005.

For Zion, submitting a signed sale agreement was to some degree informed by an awareness that the authority is giving greater thought to condemnation.

"By putting an offer in writing, [authority officials] would know what the seller agreed to and that there's a commitment to sell," Edwards said. A signed offer gives the authority "something to evaluate before considering condemnation."


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Revised: February 10, 2010 .

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