District developers discuss risks involved with developing in Jacksonville

District developers discuss risks involved with developing in Jacksonville
The District—Life Well Lived, Jacksonville Developers Michael Munz and Peter Rummell

Future development in Jacksonville’s downtown urban core hinges on the successful development of The District – Life Well Lived – Jacksonville, according to co-developers of the 30-acre riverfront property on the Southbank.

“The best thing that could happen to Jacksonville is if Michael and I make an obscene amount of money because that means we’ve done something unique, something special and something suc-
cessful,” said District co-developer Peter Rummell in a forum about their project and its influence on development within Jacksonville’s urban core. 

The Nov. 16 interview with Elements Development of Jacksonville LLC co-owners Rummell and his partner Michael Munz, president of public relations at the Dalton Agency, was sponsored by One Voice Jax and held at the Museum of Contemporary Art.  Moderated by City Year Development Manager Nyah Vanterpool of Riverside, it provided a frank and candid discussion on the risks inherent in producing an innovative multi-use development on 30 acres of prime riverfront land in Jacksonville’s urban core.

A self-described advocate for the nonprofit point of view, Vanterpool said he is “99 percent excited” about the pending construction of The District. During the discussion he often played devil’s advocate in his attempts to get the developers to think about how their “$500 million catalytic investment” could help the city develop a vibrant, more equitable and inclusive urban core for all its citizens, not only those who have means.

“The best thing that could happen to Jacksonville is if Michael and I make an obscene amount of money.”

– Peter Rummell, Developer, The District – Life Well Lived – Jacksonville

“A fully realized and vibrant Downtown means families will experience new levels of convenience, comfort and recreation in a city that is about optimizing a healthy, natural and connected life,” he said. “We’re defining equitable and sustainable development as development activity with a triple byline: impact on people, the planet and profits.” Vanterpool added that many young professionals believe The District will be “overpriced” and “not a place where they can live.”

“Equitable outcomes come about when smart intentional strategies are implemented, ones where everyone can participate and benefit from the decisions that shape their neighborhoods, city and region. We want to apply this thinking to The District,” he said.

After several years of devastating recession, downtown Jacksonville is beginning to show signs of growth unparalleled within the last decade, thanks in large part to Rummell’s plan to construct a multigenerational urban resort based on healthy living, which, if successful, he and Munz intend to market throughout the United States and worldwide.

Expected to be a gamechanger for the city, many city officials have indicated a belief that The District can inspire a Downtown renaissance from development which is already seen sprouting on the Southbank.

Already the Alliance Residential Company, based in Phoenix, Arizona, has begun building a $26.6 million housing project on three acres next to the School Board Building, where Crawdaddy’s used to be. Within the investor brochure for Broadstone River House, a six-story, 263-unit apartment complex, Alliance mentions the project’s close proximity to The District, said Rummell, noting he has not read the brochure himself. Also in the works are “a couple of apartment complexes along Prudential Drive,” he said.

Ventures Development Group has put forth plans before the city’s Development Design Review Board for a residential high rise next to the Aetna Building, and San Marco Professional Building LLC, a com-
pany owned by Dr. Robert Bass, plans to develop property at 1444 Home Street into a residential complex. Also in the mix is the Baptist Convention Center’s property on Hendricks Avenue in San Marco, which may also be turned into a multi-use structure. The new Baptist MD Anderson Cancer Center is being constructed in north San Marco, as well as a refurbishment of the Lexington Hotel Building. The city’s “Road Diet” plan is to narrow Riverplace Boulevard to three lanes and construct bike lanes to slow traffic and build a more attractive walking environment.   

An urban “resort” planned to comprise 1,170 residential units, 200 hotel rooms, 125 marina slips, as well as 288,500 square feet of commercial/retail and 200,000 square feet of office space, The District will sit on land where the Jacksonville Energy Authority once housed its Southside Generating Plant. Rummell and Munz are set to purchase property from JEA sometime within the next year, after receiving a year-long extension on the closing date from the  JEA Board of Directors Oct. 18, 2016. The price of the land is more than $17 million.

When Vanterpool expressed his fear that The District, and other developments it may spawn, will cause “disadvantaged communities to feel disempowered and maybe even ignored,” Rummell agreed with him.

“I think you are right, and it’s frustrating,” the San Marco developer said. “In all my time doing this, I haven’t figured out a way to pay for sustainable development that will help build Downtown and inspire generations to live together, be healthy together and also address the societal issues that are much bigger and more important.” He said his development incorporates two big ideas: “healthy living beyond planting a tomato garden where there used to be a parking lot” and the creation of a multigenerational community.

“The goal here is to provide a place that will be affordable, but this is not subsidized housing. We are not in a position where we can do that. There will be everything from a 500-square-foot efficiency you can rent to a 3,000-square-foot penthouse you can buy as well as everything in between. We will be providing the ability for lots of different price ranges to buy into the experience. The goal is to make it an experience,” Rummell continued.

“We’re not solving the homeless problem here, but I would argue that we are, because if this is successful and brings in other varieties of investment, there will be a willingness to do the things we simply don’t have today,” he said.

Emphasizing that his company is “not a nonprofit,” Rummell said his plan for The District is “to do good by doing well.”

“We paid $600,000 an acre for the land so JEA didn’t exactly give it away,” he explained. “We think there in an opportunity by being smart, clever and thoughtful about what we are doing to differentiate this and find a market. This thing has a lot of notoriety, and in doing our cocktail party research, I’m amazed at the number of people of all ages that know about it and get it. They understand the idea of healthy, multigenerational living and they buy into it,” he continued. “Healthy living is the new golf course. This will be an urban resort, self-contained. You will bring your dry cleaning here, work here, walk to dinner and do exercise. It’s designed to be a place for people to live and spend the vast majority of their time. That doesn’t exist in Jacksonville.”

Luring people to Jacksonville who are willing to take a risk is tough, said Munz. “If we want to have the Jacksonville we want, we’ve got to have investors,” he said. “The most frustrating thing for the two of us is when we’ve brought in investors – people you would yearn for that come from Peter’s Rolodex – and they say, ‘Peter, you’ve done this for 45 years. You’ve built Disney Paris, Disney Hong Kong and Celebration. You’ve done things people said would never work, but this is Jacksonville. Are you kidding me?’ Now that shouldn’t be an answer, but it is. People have to accept the fact this is an investment. There is an economic situation with this.”

“We’re not solving the homeless problem here, but I would argue that we are because if this is successful and brings in other varieties of investment, there will be a willingness to do the things we simply don’t have today.”

– Peter Rummell, Developer, The District – Life Well Lived – Jacksonville

Attracting investors to the city will ultimately help Jacksonville’s philanthropic community, Munz said. “One of the things that frustrates me when I’m with friends from the philanthropic community who are also in the economic world where I live is that people tend to look at us as a ‘good ole boy network,’” he said, noting in addition to developing The District, he also serves on several nonprofit boards including the Jacksonville Humane Society and Sulzbacher Center. “The philanthropic nonprofit world relies heavily on us. In that capacity, I meet with successful people so they will support my nonprofit. I hope to God we’re economically through the roof, because that means more people will follow us. Philanthropic Jacksonville is going to rely on it.”

During the discussion, when Vanterpool compared Jacksonville to Miami, Rummell noted that Miami had “approximately 25,000 multifamily condominiums and rental starts in the last 12 months, while Jacksonville had only 700. “Miami has a momentum that is unbelievable, and we are just not there,” he said. “They are playing at a level we can only yearn for.”

Starting a development such as The District is the hardest part,” Rummell said. “You’ve heard all this stuff about the Shipyards, but there’s nothing else going on. Starting is hard. We are not looking for sympathy because we are doing this because we think this is a right business decision. I think it is so important that a) we start, and b) we be successful. If we come out of the gate running, number two and number three will be easier and better. Risk assessment is a big part of it.”

Vanterpool asked whether the developers had an obligation to solicit “community input” when deciding what the type of restaurants and retail establishments to include because once it is built, and its model is marketed elsewhere, residents will have a sense of pride that The District originated in Jacksonville. Rummell disagreed.

“You are not going to like my answer,” he said, noting creating a successful development is complicated and requires market understanding, market risk, and financial risk. “The last thing we need is a committee telling us who we should pick as retailers. That’s not how successful ventures happen. If we create something that’s economically successful, that’s because the market accepts it, which means we were right. Now did we serve every single soul in Duval County? No. But I would argue the most important thing for Jacksonville is to have this thing be successful because it will be a breeding ground for other opportunities. To try to solve the city’s problems on 30 acres is naïve,” he said, noting ideally he would like a mix of restaurants and to bring something in that is “new and different.”

A year ago, he and Rummell sought input from 15 to 20 local restauranteurs, said Munz. “How they responded included their own economic decisions,” he said, noting the question reaches beyond The District. “If we aren’t successful, I’m afraid the best restaurant in downtown Jacksonville is going to be a Hooter’s,” he said. “If we are going to have Matthew Medure or bring Biscotti’s or bb’s or a great national chain to invest in Downtown, the economics should work for either the North(bank) or the Southbank. We’ve got to think not only of what this does mean for our 30 acres on the Southbank, which is actually being drawn more into being part of San Marco, but also how it is going to affect what goes on across the river.”

Munz said there are two elements of city government, which is making development easier these days in Jacksonville: The Mayor, who has appointed pro-business people to city development boards, and the Downtown Investment Authority, because it is a “one-stop shop.”

“We just spent quite a bit of time, energy, and hard-earned money getting a master guide book that approaches 30 acres with one approval process,” Munz explained. “Before, you could not do it in Jacksonville. That took courage. It took a lot of hard work, investment, and time on our part, but it also took a board that was appointed by the Mayor that heard the Mayor say, ‘Jacksonville needs you to move forward.’ We’re in a really cool point in our history where we’ve got an administration, and we’ve got Council President Lori Boyer, who is very bullish on making this happen. It also helps to have some really smart people on the review boards that give their time and their talent.”

At the end of the discussion, Rummell re-emphasized the necessity of building and keeping momentum with development projects. “If there’s anything I’ve learned in 45 years of real estate development it is this: the hardest thing in the world to get and the easiest thing to lose is momentum. There are more green shoots here than I’ve seen in 17 years, and we can’t waste that. It’s so incredibly hard to get. My theory is that 20 years from now we are going to look back, not because of The District, but because of all the things going on, and we’re going to see these three or four years as a turning point. It’s exciting, but it’s going to take all of us working together if we are going to be a part of it.”

More answers from District developers

What do you see as a solution for transit in downtown Jacksonville? Would you like to see the Skyway expanded into The District as has been discussed by the JTA?

Munz: I think if they were to force us to bring the Skyway into the District, it would be a huge mistake. I don’t think that solves anything. I think JTA has enough on its plate right now to deal with the Skyway in its current existence. I do think there is a lot of opportunity to think about how to move people and for transit-oriented development to occur with us and around us. But to look at the Skyway and to say it ought to be extended into us, I personally believe that there never will be any federal money to do anything else with it. I think it would be a huge mistake for us to have to tackle that.

Rummell: Because of some other things I’m doing in my life, I’m involved with autonomous vehicles. I think they are going to be here faster than a lot of people think and within 10 years or less they are going to be a fact of life, and that’s going to change everything. It’s a variable nobody knows how to figure out. The only thing I know is life’s going to be different 10 years from now, and a significant number of people won’t own a car in 10 years. The whole mindset of how we’ll move around is going to change. It’s an interesting time, but for the (urban) planner, it’s a frustrating time.

Wellness is health. Your development is in close proximity with the new Baptist MD Anderson Cancer Center and the Mayo Clinic. Is your desire to build a development based on healthy living tied in with medical tourism?

Rummell: That’s important, but that is all about being sick. This is about being well. There is a big difference. I know this is not popular to say, but this town needs a win. It desperately needs something big to happen to it. (Baptist) MD Anderson is a win, and there are all kinds of other things around here that are wins. I’m not suggesting that we’re the only one, but in the world of real estate development (Jacksonville) is not on the map. A couple of successes make a big difference, and that means you can then do all kinds of other things (that those looking to solve society’s problems are interested in).

What about the schools in relation to The District?

Munz: We have discussed how we can add a school component into our retail area. The question comes up a lot, and unfortunately, we are not the School Board. We are trying to figure out how we can work it into the Master Plan, but we can only do so much.

Did you consider redeveloping any of the built-up areas of Downtown?

Rummell: Yeah, but that’s boring. I just think this (The District) is really interesting. Michael’s now a two-year real estate dev-
eloper and his political knowledge has made this possible. These things are complicated, and I knew that going in. But I’m really excited about it, because I think we are doing something special and that’s fun.

How can people get involved in making Jacksonville a great city?

Munz: Pay attention to what Council people are doing. Read about what’s going on. Show up at City Council meetings. It’s important to be there. The Council meets the second and fourth Tuesday. Go to the Council’s committee meetings. What goes on in the committees is where the real work is done.

By Marcia Hodgson
Resident Community News

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