Jackson-Shaw Co. v. Jacksonville Aviation Auth.

Decision Date08 January 2007
Docket NumberNo. 3:06 CV 84 J 32MCR.,3:06 CV 84 J 32MCR.
Citation510 F.Supp.2d 691
PartiesJACKSON-SHAW COMPANY, Plaintiff, v. JACKSONVILLE AVIATION AUTHORITY, a body politic and corporate, Defendant.
CourtU.S. District Court — Middle District of Florida

Michael G. Tanner, Thomas Edward Bishop, Tanner Bishop, Jacksonville, FL, for Plaintiff.

Cindy A. Laquidara, Andres Rojas, General Counsel's Office, City of Jacksonville, Jacksonville, FL, for Defendant.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

CORRIGAN, District Judge.

In this case, plaintiff Jackson-Shaw Company ("Jackson-Shaw") challenges a long term lease between the Jacksonville Aviation Authority ("JAA" or "Authority") and a competing commercial developer for the developer's long-term use of 328 acres of JAA-owned vacant land adjacent to Jackson-Shaw's development near the Jacksonville International Airport in Jacksonville, Florida. Jackson-Shaw contends that JAA's agreement with developer Majestic Realty Company ("Majestic"),1 in which the Authority granted Majestic a five to 15-year Option — at no cost to Majestic — to use and commercially develop the JAA's property on terms favorable to Majestic, and with virtually no return to the JAA until Majestic's development turns a profit, is unlawful. First, Jackson-Shaw argues that the transaction, which was negotiated between JAA and Majestic without public bids or requests for proposals from other developers, is invalid under JAA's Charter, 2004 Fla. Law 464, and Section 315, Florida Statutes. (Doc. 65.) Further, Jackson-Shaw argues that the transaction violates the Florida Constitution's prohibition against a government entity becoming a "joint owner" with, or lending or giving credit to, any corporation. Fla. Const. art. VII, § 10.2 Jackson-Shaw seeks declaratory and injunctive relief. The Court has diversity jurisdiction under 28 U.S.C. § 1332.

The Court conducted a four-day bench trial in October 2006 (Docs. 89-92) and heard closing arguments on November 1, 2006. (Doc. 95.) Having reviewed the pleadings, examined the evidence, observed the witnesses, read the parties' proposed findings and conclusions (Does. 93, 94), and considered the arguments, the Court makes the following findings of fact and conclusions of law as required by Federal Rule of Civil Procedure 52(a).

I. The Pertinent Evidence3
A. The Parties
1. Jackson-Shaw

Jackson-Shaw is a large 35-year old development company headquartered in Dallas, Texas, with offices in Dallas, Las Vegas, Maryland, and Florida. It is involved in developments on a national scale, ranging from hotels to office buildings, warehouse and industrial properties. Implementing its business plan, the company came to Jacksonville in 2004 to research the market and find a commercial development project and entrepreneurial opportunity. In late summer 2005, Jackson-Shaw made an offer on a privately-owned parcel of commercially developed property known as the Jacksonville International Trade-port ("Tradeport"), which is located near the Jacksonville International Airport. (Tr. I at 56-60; Tr. II at 216-18, 222; Ex. 9.)4 Jackson-Shaw entered into a contract to purchase the Tradeport property in October 2005, and the sale closed in February, 2006. Jackson-Shaw paid $109,000 an acre, or a total of $58,215,000. (Tr. I at 83; Tr. II at 220-22; Tr. IV at 42, 50; Ex. 91; Doe. 94-2 at 12.)

Tradeport is bounded on the west by International Airport Boulevard, on the north by Airport Road, and on the east by Duval Road. The southern boundary of Tradeport is adjacent to JAA's property known as Woodwings East, which is the subject of this lawsuit; Tradeport is located immediately to the north of Woodwings East. When acquired by Jackson-Shaw, Tradeport consisted of nine multi-tenant distributional-type light industrial warehouse and office facilities, totaling 994,000 square feet which was 89% leased,5 plus seven tracts of vacant development parcels totaling 85 acres. (Tr. I at 60-61; Tr. II at 220, 222, 224, 264; Tr. IV at 50-51; see Exs. 42, 209.) Jackson-Shaw is currently attempting to expand the existing Tradeport portfolio of 994,000 square feet of buildings by adding a hotel, restaurants and commercial frontage on Airport Road, a multi-tenant office building, and 500,000 square feet of additional warehouse space. (Tr. I at 63-64; Ex. 189.) Jackson-Shaw's planned first phase of development is a 400,000 square foot warehouse to be commenced by January 2007; the remaining 600,000 square feet of planned build-out will span a five year period. (Tr. IV at 52-53.)6

2. The Jacksonville Aviation Authority

The JAA is public body, established by Florida law to develop and administer public airports in Jacksonville, Florida. It is a political subdivision of the state of Florida, 2004 Fla. Laws 464, § 14, and it has responsibility for the planning, management and oversite of four airports located in Duval County, including the Jacksonville International Airport ("JIA") and three smaller air fields, as well as management of a considerable portfolio of undeveloped land. The JAA derives its power and authority from its Charter, which is a special act of the Legislature.7 2004 Fla. Laws 464. (See Tr. III at 18; Ct. Ex. 1 at 28.)8 The JAA was created to "operate, manage, and control all publically owned airports and ancillary facilities located within Duval County" as provided by statute. 2004 Fla. Laws 464, § 1(1). The JAA is governed by a seven-member board of directors, four appointed by the governor of Florida, and three appointed by the mayor of Jacksonville. (Tr. III at 103.) The JAA possesses no independent taxing authority, and receives its revenues from state and federal grants, landing fees, rentals, concession fees and facility lease fees.

The JAA has approximately 4,000 to 6,000 acres of land in its portfolio available for development, depending upon possible future runway configurations. Much of the land available is located in the vicinity of JIA including 328-acre Woodwings East, and its sister parcel of vacant land, 890-acre Woodwings West across International Airport Boulevard, though some is predominantly wetlands. (Tr. I at 89; Tr. III at 237; Ex. 62 at 00105.) In 2004, the JAA created the Enterprise Division to focus on maximizing the value of the Authority's undeveloped property, and to diversify the JAA's revenue sources. (Tr. I at 130.) Bingham Parkinson was named president of the Enterprise Division on October 1, 2004. (Tr. I at 124.) The Enterprise Division is comprised of the real estate division and the consultative services division. The real estate division is responsible for leasing non-aeronautical land at JAA's four airports to enable nonaeronautical development and generate revenue to the Authority. (Tr. I at 129-30.) Richard Rossi was hired as vice president for the real estate division on January 15, 2005.9 Board member Jack Demetree, a long-time Jacksonville developer, serves as the board's liaison with the JAA's staff in the Enterprise Division. (Tr. III at 269; Ct. Ex. 1 at 72; Ct. Ex. 6 at 7, 9-10.)

3. Majestic

Majestic is a private corporation created in 1948 and headquartered in Los Angeles County, California, with regional offices in Atlanta, Dallas, Denver and Las Vegas. Majestic specializes in planning and development of business parks, with its primary holdings being industrial. It has an office, retail and industrial portfolio totaling more than 69 million square feet. (Exs. 99 at 00049; 128.) According to JAA board member Demetree and otherwise undisputed, Majestic has a good reputation as a developer, and is the largest privately held commercial developer in the country in terms of amount of square feet of buildings it controls. (Ct. Ex. 6 at 47.)

In October 2005, while negotiating with JAA over the terms of the Woodwings East project, Majestic purchased 46.8 acres of vacant property at Tradeport, south of but not fronting on Airport Road. It paid $2.50 a square foot, or $108,900 an acre (or $5,096,520 for the entire parcel). (Tr. I at 85; Tr. II at 22-23.)

4. The Property

Woodwings East is owned by JAA and consists of approximately 328 unimproved acres of land lying southeast of JIA. It is located approximately one mile west of Interstate 95, south of Airport Road and to the north of and contiguous to Interstate 295. Ground access to Woodwings East is available via Duval Road, which bisects a corner of the property, or via the new International Airport Boulevard. A portion of the property was acquired by eminent domain. It is a part of the Jacksonville International Airport Development of Regional Impact ("DRI"), and, at the time of trial, was tax exempt. (Ct. Ex. 5, ¶ 4; Tr. I at 131; see Exs. 62 at 00075; 194; and 209.)

The Authority had attempted in the past to develop the Woodwings East parcel into an industrial and office park. (Ct. Ex. 5, ¶ 4.) In the late 1990's, JAA had discussions with large-scale developer The St. Joe Company ("St. Joe"), which had approached the Authority in 1998 concerning the development of Woodwings East. As talks with St. Joe progressed, the negotiations were challenged by another developer. In response, JAA issued a Request for Qualifications and Experience. (Ex. 3.) Though JAA officials mistakenly believed that St. Joe was the only respondent, (Tr. II at 145-46; Ct. Ex. 1 at 144; Tr. III at 115, 241-42), three developers actually responded in March 1999. The Authority chose St. Joe of the three. (Tr. III at 137-43; Ex. 50 at 00193.) Negotiations with St. Joe eventually broke off. (Tr. III at 115-17, 120; Ct. Ex. 1 at 143-45.)

The JAA retained consulting firm Reynolds, Smith and Hills, Inc. ("RS & H") to prepare recommendations for the highest and best use on undeveloped land at the airport. On September 15, 2004, RS & H recommended that Woodwings East be "developed as light industrial and commercial sites, with additional uses including...

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