Why Jacksonville may revise incentives for a Downtown Publix project

As Jacksonville City Council members draw a hard line against cash grants for new real estate projects, the developer of a proposed Downtown Publix is renegotiating its pending $49.65 million incentives deal with the city.

At issue is the $28.25 million cash grant in the package previously advanced in December by the city’s Downtown Investment Authority.

Developer Gateway Jax Inc. intends to use the taxpayer-backed investment to partly finance a 14-story, $138 million mixed-use tower at 119 Beaver St. W. that will house a Publix Grocery store in the $1 billion Pearl Square District being built near City Hall.

Gateway CEO Bryan Moll and council Finance Committee Chair Will Lahnen both tell Jacksonville Today that the project is still moving forward. And the DIA and Gateway’s request to defer legislation that would approve the deal gives officials 30 days they say they need to find a different way to prove public financing.

“I want to see this project work. I want to find a way for it to work,” Lahnen told Jacksonville Today on Tuesday. “But it’s just a lot of money to be funded by taxpayers in 13 other (council) districts to pay for a grocery store Downtown.”

Council souring on cash incentives

An email obtained by Jacksonville Today shows that Gateway’s attorney asked DIA officials on July 18 to get city lawmakers to defer Ordinance 2026-0541 to allow the developer time to take a revamped redevelopment agreement back to the DIA board.

Moll says that after the DIA passed the existing agreement, council members began asking Gateway to consider alternative incentives structures that would make the project financially viable. According to Molls, Gateway has spent the last several months doing that.

Over the last several years, city officials had approved tens of millions of dollars in completion grants and forgivable loans for a string of Downtown development projects — some of which, Lahnen says, were not budgeted for before passage.

Coupled with the possibility that the city could soon lose up to $300 million per year in revenue, if Florida voters pass a referendum in November to reduce property taxes, city lawmakers started signaling to developers earlier this year that they may stop approving cash completion grants.

In June during an appearance on WJCT News 89.9’s First Coast Connect, incoming City Council President Nick Howland cited the Publix-anchored Gateway project specifically as a completion grant that may not get approval.

When council approved a $30 million completion grant in May for the Culinary Institute of America’s proposed Southeastern U.S. campus on the Downtown Riverfront, Lahnen said that would be the last completion grant he’d support.

Lahnen says his position on cash incentives is not because of the pending tax referendum.

“I made the point back then that we have $30 million cash set aside for Downtown development. If the council thinks that the highest and best use of that money is the Culinary Institute of America, which I think you can make the argument for, because it’s going to have a workforce and economic development impacts, then OK, let’s give our full support to this resolution,” Lahnen said. “But let’s not pretend we’re going to have the cash available for other Downtown projects as we roll into our second (council) term.”

This could affect how city development deals for other pending projects,like the redevelopment of the historic Laura Street Trio are drafted in the coming years.

One option being discussed for the Gateway Publix is increasing the $21.4 million property tax rebate under the current agreement — a rebate known as a Recapture Enhanced Value Grant. Moll says that could take the form or a higher percentage of the property tax refunded or extending it out for a longer term.

The deal in the pending bill refunds 75% of new property tax that will be generated from the Publix project over 17 years.

“There are some levers that we can pull that make that replace some of the cash grant,” Moll said.

Gateway’s billion-dollar bet in Downtown Jacksonville’s NorthCore neighborhood officially broke ground in October 2024, and the city had already committed $38.95 million in completion grants and $59.63 million in property tax rebates to the project.

When it’s complete, Gateway says, Pearl Square will have 2 million square feet of total development with 1,250 residential units, 200,000 square feet of retail, 100,000 square feet of office space, a hotel, parking and a public park.

The 14-story Publix tower alone will have 259 apartments and a total of 37,000 square feet of retail including the 30,000-square-foot grocery store.

Lahnen said he’d be willing to consider a deal that, in addition to a bigger tax rebate, gets Gateway the cash incentives already approved more quickly. Moll says that’s something Gateway’s team has discussed with DIA officials.

“If you need this first completion grant plus part of the second ahead of time to where that would allow you to create something that works on your business case to start the Publix development, I’d be open to that,” Lahnen said. “But again, let’s not expand our cash completion grant commitment any higher right now.”

According to the Gateway CEO, talks with council members and DIA officials have been productive.

“Our message to the City Council and to the DIA and the administration, we’re willing to be flexible in how we can fill that capital stack,” he said.

Historically, projects Downtown that cost this much money rely on city incentive agreements to give investors, banks and lenders who provide the remaining capital to get it built a level of certainty. Whatever a revamped deal looks like, Moll says that the tower and Publix grocery store won’t happen without city investment.

“There’s no question on a project of this size, this scale, the cost of this project, our equity investors and the number of different debt providers we’re talking to — this deal hinges on some type of a deal with incentives,” Moll said. “It’s not going to happen unless we get something approved with the city.”

Jacksonville Mayor Donna Deegan has been a supporter and promoter of the Pearl Square project since it was first announced in 2023. In a written statement Tuesday, she told Jacksonville Today that she supports any changes that can improve on the deal.

“Phase 2 of Pearl Square will bring in the residential, retail, grocer, and pharmacy that are critical for continuing Downtown Jacksonville’s forward momentum,” Deegan said. “Any discussions about improvements to the development agreement are positive and welcome steps forward. We remain committed to this vital project and will work with all involved parties to keep it moving forward.”

Moll: No construction delay

As Gateway continues to build out Pearl Square, the developer perviously said it intends to seek $10 million in city incentives for its $50 million renovation of the Historic Ambassador Hotel, renamed Hotel Merrydelle.

Molls hopes the city will consider replacing cash completion grants with low interest development loans to keep development momentum Downtown moving.

As for the Publix-anchored high-rise, Molls said a 30-day delay in the incentives deal will not cause a delay in Gateway’s construction timeline.

Molls says crews have about 3½ months left of demolition work on the site to tear down the former First Baptist Church auditorium that sits on the site.

“We’re good on our timing,” he said “It’s not going to impact it.”