JACKSONVILLE, Fla. — In downtown Nashville, Tenn., construction is in the final stretch for a 40-story tower that will be a Four Seasons Hotel and Private Residences when it opens in early 2022 near the Cumberland River.
The view from the top of the tower will overlook a bustling downtown where 15,000 people live in the heart of "Music City," an entertainment and restaurant scene that helped Nashville land a regional headquarters for Amazon and a planned campus for Oracle.
Jacksonville, which often compares itself to Nashville as a peer city, might become a Four Seasons city as well. The City Council will vote Tuesday on an economic development agreement with Jaguars owner Shad Khan that would build a five-star luxury hotel on the St. Johns River near the sports complex.
But unlike Nashville — where private financing is footing the entire bill — a Four Seasons Hotel and Residences in Jacksonville would require about $114 million from city taxpayers for economic incentives and upgrades to public facilities.
That makes Jacksonville different from other cities that have attracted the high-end hotel operator. The large incentive package in the legislation (2021-673) shows that while Jacksonville has been trying for decades to get downtown development on a roll, it still requires taxpayer support to have a shot at a brand like the Four Seasons.
City Council members say the city's investment will propel downtown by giving it a five-star hotel destination that fuels other development.
“I look forward to supporting this, voting yes and seeing this project fill a big void in our downtown and being an inspiration for other supporting development that will feed off of this," City Council member Danny Becton said at a council Finance Committee meeting.
Becton was among the "no" votes when the City Council rejected a different proposal from Khan in January for building an entertainment complex with apartments and hotels on Lot J near the football stadium.
Becton said the Four Seasons project used a more traditional financing approach than Lot J for taxpayer incentives and had been vetted by going through the Downtown Investment Authority.
“This is a great moment for the city and hopefully Tuesday night we get this through," Finance Committee chairman Ron Salem said, referring to the upcoming meeting when the full council will vote.
Based on the unanimous support in the Finance Committee, Rules Committee and Neighborhoods Committee, the legislation will have no trouble passing the full council.
Khan makes case for Four Seasons
Khan, who bought the Four Seasons Hotel Toronto in 2016, has been in high-level talks with the luxury hotel chain's leadership about adding Jacksonville to its roster of cities. Four Seasons operates 121 hotels and resorts plus 46 residential properties worldwide. The company's website says it has more than 50 projects in the pipeline, but it hasn't said publicly whether Jacksonville is on that list.
The proposed economic development agreement with the city namechecks Four Seasons by stipulating Iguana Investments, the corporation owned by Khan, constructs "a luxury Four Seasons hotel" with about 176 rooms and also 25 "Class A" condominiums. The development agreement also covers a six-story office building.
Four Seasons Hotels and Resorts is primarily owned by Cascade Investment LLC, which is an investment vehicle of Microsoft co-founder Bill Gates and Saudi Arabian Prince Alwaleed bin Talal. Cascade Investment bought half of Talal's stake in September to give Cascade a controlling interest in Four Seasons.
Four Seasons, headquartered in Toronto, did not respond to an email for comment about Jacksonville. Iguana Investments said in a statement that Four Seasons is a privately held company and "doesn't comment on speculative projects."
"However, given Shad’s existing relationship with the Four Seasons, which includes ownership of the brand’s flagship hotel in Toronto, and our ongoing conversations with Four Seasons senior management over the past many months, we are confident that if this project moves forward they’ll be a part of our vision for the Shipyards," Iguana's statement said.
Four Seasons has been in growth mode globally and in the United States. The Nashville development is among a handful of projects that have recently opened or will be finished in 2022 in Nashville, Minneapolis, the Napa Valley of California, New Orleans, San Francisco and Fort Lauderdale.
The opening of the hotel and private residences in Fort Lauderdale will add it to a Florida portfolio that already has Four Seasons in Miami, Miami Beach, Palm Beach and Orlando.
For Nashville, the announcement of the Four Seasons development in 2019 came after a decade of growth in downtown combined with business expansion for the metropolitan area, said Tamara Dickson, vice president of economic development at the Nashville Downtown Partnership
“I really think a city must reach a certain pinnacle to be of interest to the Four Seasons," Dickson said.
The 40-story tower in Nashville will have 231 hotel rooms and 143 private residences. The Congress Group and AECOM Capital are the private companies building the tower in the SoBro district of downtown.
Nashville's roots in the county-music industry have long drawn tourists, but it also has 15,000 residents in a 1.8-square-mile area of downtown, according to the Nashville Downtown Partnership.
“A lot of people say it’s an overnight success, but it’s really been public and private working together for a 10-year plus overnight success," Dickson said.
In contrast to Nashville, downtown Jacksonville has nearly 7,000 residents spread across a 3.9-square-mile area. The denser population in downtown Nashville has helped bring the kind of foot traffic that supports entertainment spots and restaurants, which in turn makes it an attractive location for the Four Seasons.
“It’s not just due to the tourism, although the tourism is huge for downtown Nashville," Dickson said.
Details of the proposed deal
Downtown Jacksonville is not at a point where a hotel like the Four Seasons can charge room rates high enough to make it financially viable without taxpayer incentives filling the gap, according to the Downtown Investment Authority's analysis.
The deal with Iguana Investments would convey about 4.8 acres of city-owned riverfront land valued at $12.45 million to Iguana for $100. That land would be the site of the hotel development.
After the Four Seasons hotel and residences along with the separate office building are finished, the city would pay $25.8 million to Iguana as a completion grant.
The city also would rebate 75 percent of city property taxes generated by the value of the new development for a 20-year period. That would be an incentive worth up to $47.7 million.
Other highlights of the development agreement involve spending up to $17.2 million for improving Metropolitan Park Marina, which would remain open to the public, along with a marina support building and improved riverwalk along the development site. The city also would spend $8 million relocating buildings for the fire museum, fire station and fire dock to make way for the development on what used to the Kids Kampus park.
Iguana Investment would have to spend at least $301 million of its own money on the Four Seasons Hotel and Residences and the office building in order to get the full incentive package.
The proposed deal says that if the hotel is not a Four Seasons flag, the property tax rebates will end immediately unless the Downtown Investment Authority approves a switch to a different luxury hotel brand.
Iguana would have to start construction by June and finish by the end of 2025.
A market analysis done by CBRE determined the 25 "uber-luxury" residences should be able to find buyers. The biggest condominium would be a 19,000-square-foot penthouse whose sales value would equate to $16.5 million, according to a Downtown Investment Authority staff review of the CBRE analysis.
The other residences would have an average size of about 3,600 square feet and a cost of around $3.1 million apiece.
For the Four Seasons hotel rooms, the CBRE report determined average daily room rates could start at about $411 in 2025 and rise to $462 by 2029.
Northeast Florida already has some high-priced hotels but those are on the coast such as the Ponte Vedra Inn & Club in St. Johns County, the Ritz Carlton on Amelia Island and One Ocean in Atlantic Beach.
The Four Season would bring that luxury to a hotel on the downtown riverfront for the first time.
“I think it can be a huge plus," said Michael Corrigan, president and CEO of Visit Jacksonville. "They’re going to attract a customer base that’s not looking to stay downtown now."
He said it's the kind of development that will attract the attention of other investors who will give downtown a fresh look.
“It’s very similar to when we got the NFL," he said. "Being an NFL city is an economic development tool. It’s ‘Oh, you have one of those.’”