JACKSONVILLE, Fla. — The Jacksonville Shipyards is a $321 million proposed project on the banks of the St. Johns River that Jaguars owner Shad Khan has been targeting for years -- but now there’s an opportunity of a lifetime to potentially save millions, called an opportunity zone.
“Are you really serving the community that zone was created for?” asks Kristi Sweeney, who is the director of the Sports Management program at the University of North Florida.
The Shipyards -- planned by Khan’s development company Iguana Investments -- includes a Four Seasons hotel and office building.
Opportunity zones were created as part of the Tax Cuts and Jobs Act of 2017, signed by then-President Donald Trump.
There are nearly 9,000 opportunity zones in the United States -- 34 are in Northeast Florida, including 19 in Duval County.
The goal? To spur economic development by revitalizing low-income areas by creating new housing, jobs and businesses. But is that happening with the Shipyards?
“Zones are not for luxury hotels, they are for affordable housing,” Sweeney said.
“Do you think it’s an accident a lot of these opportunity zones are designated around stadiums and arenas?” asked Becker.
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“I do not,” Sweeney said.
According to the Sports Business Journal, 63 of 90 NFL, NBA, MLB or NHL venues are in or adjacent to opportunity zones.
Here’s how a company, individual or team owner like Khan can benefit:
Normally you pay a capital-gains tax of either 15% or 20% on a profit from an investment.
But if cash is reinvested into an opportunity zone, your tax bill is reduced for at least 5 years, and after 10 years, any profits may be completely tax-free.
That could save Khan tens of millions of dollars.
“For 30 years, everybody talking about Jacksonville and what are you doing downtown,” said Councilman Reggie Gaffney, whose district includes the Shipyards.
Gaffney told Action News Jax the Four Seasons and other projects will thrive and benefit downtown Jacksonville.
“I believe given what Mr. Khan has done over the years to prove himself to know how to make money,” Gaffney said. “He believes in a Four Seasons. So I have no doubt it’s going to go.”
Becker emailed the Jaguars, and a spokesperson for Iguana Investments said, “The Jaguars expressed interest in developing the Shipyards as early as 2014, well before the Tax Cuts and Jobs Act of 2017 created opportunity zones. Our interest in developing the property is not connected to this program.”
The Downtown Investment Authority already approved a $114 million subsidy for the Shipyards in July 2021 and city council followed in November 2021.
Sweeney said the focus should not be on developing the Shipyards, but the taxpayer price tag for a renovated stadium.
“What happens Ben, in at least my opinion, you have built everything on the outside,” Sweeney said. “How does the taxpayer say, ‘Oh no, we can’t give you any more money to renovate a stadium.’ The stadium is the last piece of it.”
The tax law does not require public disclosure of who is using opportunity zones and how their funds are being used.
The Jaguars have not announced a formal agreement regarding a Four Seasons at the Shipyards.