Newspaper article The Florida Times Union

Majestic 'Got Their Land for Free'; That's What a Tradeport Boss Said, Adding the Deal Devalues the Company's Site by Millions

Newspaper article The Florida Times Union

Majestic 'Got Their Land for Free'; That's What a Tradeport Boss Said, Adding the Deal Devalues the Company's Site by Millions

Article excerpt

Byline: TIMOTHY J. GIBBONS

The Jacksonville Aviation Authority's deal with a company to develop the Woodwings East property caused the value of the adjacent Tradeport development to drop by $18.5 million, an executive of the company that owns the Tradeport testified in court Wednesday.

The deal, under which California-based Majestic Realty Co. would develop the 328-acre site and then split its profits with the authority, amounts to the authority giving away the land, because the monthly rent is far below market value, the executive said.

"I'm going to be competing with someone who doesn't have the same costs," said Michele Wheeler, chief financial officer of Dallas-based Jackson-Shaw Co, which bought the Tradeport in February. "They got their land for free."

To compete, Jackson-Shaw will have to drop its rents by about 75 cents per square foot, Wheeler said, reducing the income it receives from the property. In turn, this drops the value of the land by $9.5 million and the buildings by $9 million.

Jackson-Shaw filed suit against the authority in February, two months after the Woodwings deal was brought to the authority's board, charging that the Aviation Authority violated the state constitution by not putting the site near Interstate 295 and Jacksonville International Airport out for bids.

The lease, signed last month, has the company pay the authority monthly rent of $1,380 per acre per year for the property or paying half the profits, whichever is higher.

Whether that amount of payment is the best deal the authority could get was a key issue during Wednesday's hearing in the trial in U.S. District Court for the Middle District of Florida. According to the testimony of real estate expert Heyward Cantrell, the deal favors Majestic because it gets various fees - such as for property management services - off the top, as well as getting reimbursed for items like predevelopment costs, while its risk is reduced because the authority acts like a free land bank for it.

The authority could have gotten a better deal if it had attracted the interest of more developers, said Cantrell. …

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