Selection process: a flawed foundation
The original Vestcor town house concept.
The appearance of three strong bids required the DIA to head back to the drawing board to develop a process for rating them. The DIA board appointed a committee comprising DIA CEO Lori Boyer, board member Oliver Barakat, and Office of Economic Development Executive Director Kirk Wendland and tasked them with score each project 1-100 based on five criteria:
- 30 points: Consistency with the Downtown Northbank and LaVilla Redevelopment Strategy.
- 20 points: Previous development experience with bidded projects of similar scope.
- 20 points: The company’s financial resources.
- 15 points: The city’s estimated return on investment.
- 15 points: Relationship to Lift Ev’ry Voice and Sing Park.
The highest average score would receive the committee’s recommendation. Criteria 1, 4 and 5 tie back to the quality of the bid, and in these categories Johnson Commons was the top choice, as it included more units, more unique architecture, a retail component, and more money for Lift Ev’ry Voice and Sing Park than Vestcor’s bid. CEO Boyer acknowledged that Johnson Commons better fit the city’s LaVilla strategy, but noted “that is not the only criteria we were evaluating.”
The Johnson Commons concept was modern town house product taking design cues from the shotgun architecture that originally dominated LaVilla’s historic urban landscape.
Vestcor, being a larger company that had already won three bids in LaVilla, had an advantage in criteria 2 (previous experience) and 3 (financial resources). Based on their scores in those categories (all three committee members gave them the full 20 points for previous experience), Vestcor’s bid pulled ahead with a final score of 85.67 out of 100, compared to Johnson Commons’ 84.33 and Blackwater Capital’s 67.67. On August 7, 2019, the DIA board voted 5-2 to follow the committee’s recommendation and awarded the project to Vestcor.
The experience trap
After being awarded the project, the Vestcor plan was modified take on the historically influenced appearance of the Johnson Commons proposal.
The most obvious problem with the DIA’s emphasis on experience and financial resources is that it penalized a denser, better designed project because the selection committee was less familiar with the competition working in downtown, despite the group also being well financed. But other problems with the criteria soon became apparent. As Johnson Commons’ Alex Sifakis pointed out at the time, he and his partners actually had more experience building townhomes and for-sale units, developing around 2,000 townhouses and single-family homes between them from 2012 to 2019. While Vestcor had developed many rental units, it had not built townhouses or other for-sale projects since 2008.
While the DIA hoped Vestcor’s experience with rentals would translate to success, the project experienced repeated delays. It received two extensions in summer 2020, and in September Vestcor put the project on pause, citing instability in the for-sale market due to the COVID-19 pandemic. In March 2021, the DIA announced that Vestcor would drop the project to allow another developer to pursue it.
Boyer told the Jacksonville Daily Record that Vestcor does “mostly for-rent products and most of it is mixed-income or low-income projects. It’s not their expertise or their niche.” Despite it being known that this type of project was not their niche or expertise, they were still awarded the maximum amount of points for previous experience.
A developer specializing in for-sale units likely would not have had the same problems. Despite the pandemic, demand for for-sale housing has skyrocketed over the last several years, in large part due to a low inventory. Demand is especially high in Downtown Jacksonville, as the inventory is minimal; there have been almost no new for-sale units added since City Place converted from apartments to condos in 2009.
Consequences and the way forward
After the failure of the Vestcor project, the DIA returned to JWB and Corner Lot, who remain interested in proceeding with their original plans for Johnson Commons. This is good news, but given that development has been held up for nearly two years and the developers will be starting in the middle of a pandemic, the city should seriously reflect on what went wrong.
Fortunately, DIA appears to be doing just that. In a statement to The Jaxson, Boyer said:
The DIA Board members were clear in their comments when Vestcor was selected that Vescor’s proven track record in Downtown and financial capacity, as well as the tight construction timeline they proposed, were the factors that contributed to their selection over Johnson Commons. The sense of urgency to get projects moving is something we as staff support wholeheartedly.
Nevertheless, I can say that the Johnson Commons project was one both staff and the Board preferred as to deign and compatibility with our plan. As a result, in subsequent dispositions, you will see that DIA has given more weight to those criteria in allocating evaluation scoring. An example would be Ford on Bay where 50 points was assigned to Project Development and Design and Experience reduced to 15 points (to include financial strength at 7 and development experience at 8). See below. The point allocation is one we look at very carefully now in crafting notices of disposition and involve the Board in that process.
In their current criteria, experience and financial resources make up only 25% of the score, while project development and design make up 50%. The rest is determined by the city’s economic return on investment (15%) and the strength of the developers’ oral presentation (10%).
This is a much better balance and a simple, commonsense solution. In other words: simply don’t place too much weight on criteria like developer experience in bid selections, and make sure experience is directly tied to the housing product type. While the city needs to follow due diligence to ensure bidders can actually deliver their proposed project, it’s the quality of the project itself that should be the determining factor, not the developers behind it.
Editorial by the managing partners of The Jaxson. Contact the editors at email@example.com.