The cost of building a planned Four Seasons hotel development on the Jacksonville riverfront has jumped to $370 million from last year’s estimate of $301 million and could take six months longer than originally planned before the hotel is open for guests.
But Jaguars owner Shad Khan isn’t asking the city for any changes to the financial framework of the deal, and his development team remains confident the Four Seasons Hotel and Resorts will enter into an operating agreement for that globally recognized brand to be on the downtown hotel when it opens.
“There may be some things about this project we’re losing sleep over, which is scheduling and cost,” Jaguars President Mark Lamping said. “The Four Seasons agreement is not one of those things.”
Four Seasons Hotel Jacksonville:What we know about the project from Jaguars owner Shad Khan
The main change in taxpayer incentives would involve rebates of property taxes over a 20-year period. The current deal caps the total payout of those rebates at $47.7 million, but with a higher construction cost, the development would likely generate more property taxes so Khan will seek to likewise lift the cap on the maximum amount of potential rebates of those taxes.
Lamping said Khan will proceed to close June 10 on acquiring a parcel of city-owned land for the Four Seasons development, and site work should start by the end of the year.
Lamping said Khan did not consider reducing the size of the Four Seasons Hotel Jacksonville in light of the higher cost that’s driven by overall inflation in the economy and the demand for construction services in the Jacksonville area.
“We committed to a five-star hotel,” he said. “We committed to 179 rooms. We committed to best in class for Jacksonville. We committed to bringing a residential product that does not exist, and Shad was not going to compromise on any of those commitments.”
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The city’s agreement with Khan’s real estate development firm Iguana Investments sets a deadline of the end of 2025 to complete construction of the hotel and accompanying luxury residences. Lamping said while it’s still possible to make that target, Iguana will ask the city to add another six months, pushing it to June 2026.
He said the request for additional time stems from work that will have to be done on the bulkheads, the marina, relocation of underground utilities and removal of gantry structures left behind by the era of ship repairs at the site.
He said the development plans had looked at building around the gantry structures but at least some of them will have to be taken out.
The Jaguars and Khan’s real estate development firm Iguana Investments announced last Friday they have assembled a construction team for the Four Seasons Hotel Jacksonville and a neighboring office building on the riverfront tract that once was the Kids Kampus portion of Metropolitan Park.
Luxury hotel builder PCL Construction, which has been involved in a handful of Four Seasons projects in other cities, will manage the construction, according to the Jaguars and Iguana Investments.
“We’re really transitioning from planning to execution,” Lamping said.
Four Seasons Hotel and Resorts has not made any corporate announcements that it will have a hotel in Jacksonville.
“I would be lying if I told you we had a binding agreement today,” Lamping said. “We don’t have it, nor are we pushing for it right now. We don’t need it right now. When we need it is when they get into the pre-opening.”
He said Four Seasons Hotel and Resorts has assigned employees to meet with Iguana’s development team about operational details like where service elevators will go.
“They are actively engaged and involved,” he said.
Khan, who owns the Four Season Hotel Toronto in Canada, has been on a quest since at least 2017 to bring a Four Seasons Hotel to downtown Jacksonville. He won unanimous support last October from City Council for $114 million in taxpayer support for the deal.
Khan and his Iguana Investments must spend at least $301 million in private financing for the five-star development that would contain about 176 hotel rooms, 25 luxury condominiums and a six-story Class A office building, according to terms of the development agreement that was approved last year.
That figure would be replaced by the higher amount of $370 million in private investment.
Lamping said the request for additional time to complete the construction stems from work that will have to be done on the riverfront bulkheads, the marina, relocation of underground utilities and removal of gantry rails left behind by the era of ship repairs at the site.
He said the development plans had looked at building around the gantry structures but at least some of them will have to be taken out.
In terms of financial incentives, the biggest dollar amount in the current deal is for property tax rebates. The city will rebate 75% of the property taxes it collects over a 20-year period after the hotel and office building are finished and on the tax rolls.
With the hotel construction cost higher, that also could generate more property taxes for the city, so Iguana will seek a higher cap than the current maximum amount of $47.7 million. The actual amount of rebates would hinge on how much the city collects each year from the new development.
Lamping said that while the construction market has heated up the cost of building, the hotel industry also has raised room rates. The housing market also has seen rapid growth in sales prices, but Lamping said it’s too early to tell what the sales price will be for the Four Seasons condominiums because that will depend on the future market.
“Shad is taking very, very low returns and taking on a lot of risk, and the reason he’s doing that is he believes it can be catalyzing for downtown to Jacksonville, and he has a lot of confidence in it,” he said.
Khan is not seeking any changes to other taxpayer incentives in the current deal. The city still will pay a $25.8 million “completion grant” to Iguana after the hotel, residences and office building are constructed.
In a non-cash incentive, the city will convey a $12.45 million parcel of land to Iguana for the hotel portion of the development for a nominal cost of $100.
In addition to direct incentives to Iguana, the development agreement details smaller amounts to make the development possible such as relocating a fire station and dock, moving a historic fire museum building, and making improvements to the public marina.