INSIGHTREALTY GROUP, Inc.

Port officials stow away funds for riverfront expansion

 

Jacksonville Business Journal - March 9, 2007

by Tony Quesada

Staff Writer

JACKSONVILLE -- Jacksonville Port Authority officials are hopeful the authority will reach agreements to buy hundreds of acres of riverfront property for millions of dollars. With that could come opportunities to build multimillion-dollar terminals for new port tenants that could add thousands of jobs to Northeast Florida.

And when it comes time to pay for it, the authority looks to Chief Financial Officer Ron Baker to make sure it can afford everything on its shopping list.

"Ron's role is to find the money," authority Executive Director Rick Ferrin said. "He keeps me appraised of what we can afford."

In recent years, what the authority can afford has grown considerably. Baker estimated the authority's total bonding capacity at $140 million. That figure represents a mix of revenue from port authority tenants and money from the city.

"We have enough capacity to do the property acquisitions we're contemplating as well as any contracts we've consummated," Baker said.

Ferrin expects the authority to make two large land purchases in 2007.

The authority offered $52 million to the Zion Jacksonville Limited Partnership last year for a parcel that includes 165 acres of uplands, 32 acres of submerged lands and an undetermined amount -- up to 150 acres -- of wetlands. The property is along Heckscher Drive, less than a mile west of the Jaxport Cruise Terminal.

Ferrin said the authority and Zion are working out details related to right of way and responsibility for building a road.

Meanwhile, the authority must wait until May to learn what the price will be for about 65 acres of the former Jefferson Smurfit Paperboard plant property about a mile north of the authority's Talleyrand Marine Terminal. That's when the authority is scheduled to have a valuation trial against property owner Keystone Coal Co. to determine what the authority must pay to take the land by eminent domain. In late 2005, a circuit judge, following a nonjury trial, ruled the authority had met its obligations to take the property.

The authority in late 2006 bought about 30 acres of the paperboard plant property for $4 million from Jax Maritime Partners LLC, which had sold the other portion to Keystone.

Because the authority is pursuing a so-called slow take on Keystone's portion, it can decline to take the property if the price determined by a 12-person jury is deemed too high. Based on the authority's initial per-square-foot offer to Jax Maritime Partners when that group owned the entire parcel, the price will be at least $8.5 million.

The authority has been "squirreling away" bonding capacity, Baker recently told board members. It also has a $15 million line of credit, which it used for the parcel it bought from Jax Maritime. The authority plans to pay off its line of credit soon by issuing bonds secured by revenue from excise taxes that flow to the authority and revenue from the future container terminal at Dames Point.

Although the authority can afford what's on its shopping list, Baker said he will try whenever possible to fashion agreements with potential tenants that will have them partner with the authority to finance land purchases.

Ferrin credited Baker with encouraging the authority to require prospective tenants for land needing infrastructure to invest in developing such facilities. ICS Logistics Inc., for example, added $24 million to the authority's $6 million to build a 530,000-square-foot warehouse the company now leases at Talleyrand Marine Terminal.

Mitsui O.S.K. Lines Ltd., parent company of terminal operating company TraPac, has agreed to pay $200 million to develop the 158-acre terminal at Dames Point. The authority will pay up to $20 million to cover cost overruns, and if the project exceeds $220 million, the parties will split the cost at a 10-to-1 ratio, with TraPac covering the larger share.

"Ron really was the architect of that deal with TraPac," Ferrin said.

Even without such deals, the authority can expect to do well when it goes to the bond market for financing, with strong ratings from Fitch Ratings and Moody's Investors Services, which have assigned A-stable and A2 grades, respectively.

tquesada@bizjournals.com | 265-2220

 

Webmaster:     webmaster@iric.com