City Council asked to choose land swap over purchasing building for UF campus in LaVilla

City Council Finance Committee Chair Ron Salem says he’s “ready to move forward” with buying the former Interline Brands building on Bay Street to gift the University of Florida for its new Jacksonville graduate campus.

But the owner of the building, the developer Gateway Jax, is asking city lawmakers to fully consider a land-swap before deciding whether to buy the property outright.

Gateway Jax representatives told the City Council Finance Committee on Tuesday that they would provide full details in May of their proposal to trade the Interline site at 801 W. Bay St. for a city-owned 1-acre parcel at Riverfront Plaza, the former site of the Jacksonville Landing mall.

The meeting came one day after the Downtown Investment Authority released the results of a third appraisal that valued the Interline property at $6.75 million. 

That’s $1.25 million lower than the $8 million by commercial real estate firm CBRE and about $1.2 million more than a previous appraisal done for the DIA, which was for the building and not for the entire property, according to a report by Jacksonville Daily Record, a Jacksonville Today news partner. Gateway Jax CEO Bryan Moll asked the DIA to connect their appraiser with CBRE to work out the discrepancy in the two appraisals before a potential sale.

Moll and the city have agreed they want UF to be able to use the building to launch its Downtown Jacksonville graduate campus — what it’s dubbed the Florida Semiconductor Institute — in August.

Council approved legislation March 25 to set aside up to $8 million from reserves to buy the property. 

Salem said Moll has agreed to meet with him to discuss the price, but Gateway is still pushing for the land swap, which has been endorsed by the DIA board and Mayor Donna Deegan.

“We believe that the swap is still the best outcome for the city, but we are, of course, at the end of the day, willing to sell the property if that’s what council would rather do,” Moll told the committee on Tuesday. “But we would ask, as we have the opportunity to meet with as many of you as you want on the appraisal and discuss the merits of the appraisal, we have the opportunity to have the swap heard in from of council as well,” Moll said.

What’s the better ROI?

Gateway wants to redevelop the riverfront land it would obtain in the swap and build a 17-story tower with condos and a hotel. The design would integrate into the Riverfront Plaza park, and it was part of the park’s original design developed by Perkins & Will Inc.

The developer argues the land swap would be the best overall deal for the city, while some council members say what could be a $20 million city incentive request by Gateway to redevelop the 1-acre riverfront parcel adjacent to the Main Street Bridge bends the agreement more in the company’s direction.

Committee member Joe Carlucci says, if Gateway accept the purchase offer, it would be making a healthy return on investment — 68.75%. Gateway purchased the Interline property through 801 Bay Street LLC in October for $4 million. 

Carlucci thinks Gateway would have an even higher ROI in the land swap.

Cydny Trimmer, an attorney representing Gateway, told the committee that legislation with the full proposed swap deal would be introduced to council in May.

The DIA was required to put out a 30-day notice of disposition on the riverfront property, which prohibits Gateway and their reps from talking about the full details of their offer.

Trimmer asked city lawmakers to compare both options before making a decision.

“We’re still under the cone of silence with DIA, so we haven’t been able to make all of the rounds and go through all of the underwriting that we’ve done that we believe will be able to show you it is a better holistic option, but we just can’t do this right now,” Trimmer said. 

The city agreed in 2023 to contribute $50 million to the development of the UF graduate campus. At the meeting Tuesday, council member Will Lahnen said the $8 million for the Interline building bumped that investment to $58 million and urged his fellow council members to be cautious on more expenditures for the project. 

“We need to keep on wondering what this total cost is because we do not have a lot of capacity for much else in the budget in future years,” Lahnen said.

Eventually, UF plans to use 22 acres of land near the Prime Osborn Convention Center for campus housing and facilities.

Salem said Council President Randy White would release a development schedule for the full UF campus within the next 60 days.

Council member Matt Carlucci said he prefers the DIA to negotiate any deal, buy or swap, with Gateway.

“If we go the route of buying the property, that takes DIA out of the equation, and that is a huge, huge concern for me,” Carlucci said. “Because nobody is better and better equipped to work on a development deal like this than the DIA.”

“I think it would be extraordinary on something of this size in our Downtown to not involve the Downtown Investment Authority in the actual swap or purchase,” he said.