Laura Street Trio in Trouble? Updated status of six key Downtown projects

[simms3]

^^^can you remind me what financing we are talking about?

In my world, stuff happens when financing is in place.  Sometimes stuff happens when financing isn't in place.  We went spec on an office tower in Denver without financing in place, and then we secured financing, but it was structured such that proceeds wouldn't be available until certain hurdles were met along the way.  Why isn't anything happening here?  What kind of financing is it, and for what?

Is Stashe/Khan providing what is essentially a subscription line to help the project get started without traditional c-loan in place?  If that's the case, it's hard to call that "financing" if it's only a limited option to start the project and nothing more (and there are probably hurdles in place for that...and it's probably not the cheapest money).

Based on my experience, and obviously I'm not sitting in the Edgewood Bakery with all of the partners hashing things out like you are, but if this thing could get done today and someone was motivated enough to do it and that person or another involved person had the money, this thing would be underway.

Someone, or some people, are not pulling the trigger, for years now.  For a project this small (and it is small...maybe not for Jax, which is probably part of it, but in terms of dollars and cents it is small), this project is really dragging.

I don't think anyone is saying that they know for sure this isn't happening sometime in the next 100 years, but really, when IS this going to get going?

Wasn't Marriott lined up as an operator/flag for the hotel component?  Isn't the parking component easy enough to get done?  Even in Jax?  Certainly we're not waiting on a restaurant here?  An un-leased restaurant space of this magnitude has the same risk profile of a leased restaurant space of this magnitude.  This deal cannot possibly hinge on the restaurant - that in and of itself is almost like a separate investment, especially when compared in size to the rest of the project (it's a heft component).

Can't they move forward with the hotel piece?  Or is that contingent on signing up an operator that Marriott agrees with?  Thought it was only going to be a Courtyard or some similar limited service concept?

Rambling, but come on, Stephen, remind us all what's going on here.

Thanks,

yours truly

In jville financing is not a guarantee of success, as Cameron Kuhn can tell you.

He had all the liquidity in the world at the top of the real estate boom and was still unable to move the project forward because the JEA took more than a year to 'negotiate' whether or not they were going to run chilled water to the building to make air conditioning possible.

I think you're confusing financing with potential access to financing.  Actual financing starts with a term sheet and deal terms.  Sources can be public or private, senior first secured or junior/subordinated with multiple participators.  Unless you're speaking of some sort of revolver, subscription line, LoC, etc etc.  Those wouldn't apply to this project.

Maybe someone is holding these assets as-is on their balance sheet (who holds title?).  But that's not "financing".  And a lender isn't going to underwrite and "finance" a deal that may not happen.  Basically, a lender will finance a deal whereby the only thing getting in the way of the edal happening would be the lender's decision to finance it (in simplified terms...lenders don't do underwriting exercises for no reason, especially for deals of this small size and extreme risk profile).

[simms3]

Jax property taxes are a drop in the bucket for a company like CSX.  Somehow companies manage to survive with much larger offices in New York and San Francisco!

CSX doesn't pay property taxes to COJ anyway.

Assessed Value: $23,177,200.00
Railroad Oper Property (926)- $23,061,314.00
Taxable Value: $115,886.00

http://apps.coj.net/pao_propertySearch/Basic/Detail.aspx?RE=0889580010

Is that because they are a "public utility"?  Basically, this says they'll stay downtown at least for a long while.  Own the building outright, no taxes (there wouldn't be taxes it would appear even if they moved, but there would be moving costs, potential construction costs to build something).

[Lunican]

^ Railroads pay property taxes to the states they operate in. They will be right where they are until another round of railroad mergers is started. After that they will likely leave Jax and be consolidated in Omaha or Fort Worth. Five years or fifty is the question.

[mmike]

Just my comment.  If there will be any catalyst for downtown it will the the 220 Riverside project.  If 4 or 5 hundred renters move into that area I think it will be the spark downtown developers need. 

[thelakelander]

I doubt it. In the grand scheme of things, apartment complexes like 220 Riversides come a dime a dozen on strips like Baymeadows, Gate Parkway and Kernan Blvd. DT would have all the momentum in the world if we, as a city, facilitated that growth and interest. Instead, several of the things that do happen, happen "in spite of". Clean up the streets, parks, schools, allow tactical urbanism to sprout, get out of the way of the private sector and let the market take control. It really is that easy.

[simms3]

^^^I agree with everything you said.

To add, jobs drive growth.  Jobs are all going to the SS.  Literally all of them.  Downtown needs to figure out what these companies want (besides "to be where their employees live" because that's a chicken v egg argument).  Part of that is that downtown needs to figure out why people want to live on the SS.

If it's for open space and trees, then as open as downtown is compared to most, it needs to do a better job with its parks, make them family friendly, and make sure they are the BEST maintained parks in the city (as if a fancy HOA managed them).

Nobody moves to Jax for an urban living option.  That includes young professionals, too.  Almost everyone I know in Jax in their 20s is already owning a house and having kids.  Versus in a New York or San Francisco where it remains to be seen if these people are getting married ever, at all, or having kids ever, at all (even dating seems to be a big step and most people opt for open or polyamorous relationships).  A place like Atlanta is somewhere in the middle.

So it's a huge demographics shift, different ideals, and an uphill battle to make downtown the place.

For apparency and a comparison - look at all the residential towers in Miami or Atlanta.  And those downtowns are still pretty dead.  It takes A LOT - more than just new apartments, especially more than just a few hundred new apartments.

Nashville and Charlotte each have a longggggggg way to go, still, and yet each is 2+ decades ahead of Jax, if Jax starts developing now.


Someone just needs to pull the trigger on something.  How much riskier can it get in Jax - whether or not you start now or next year?  City financing a piece of a project can help take *a smidge* of risk off the table.  If you're going to have the balls to throw money down and start up something when the city gives you a couple million or "next year" when the market will improve, then in Jax you should really just have the balls to do it today, or you simply don't have the balls to do the project period.  And nobody would blame you for that.  But as the saying goes, talk is cheap.

[MusicMan]

Quote from PJS:

How so? Downtown takes off, their property value rises, and they get to pay higher taxes? I don't see how a bustling downtown helps an international transportation company. Hell, maybe they'll relocate.


Maybe it works the same way it is currently working for all the people who bought near or around the old boarded up hospital that is now Publix and Five Points in Riverside 17 years ago (1998). That area was mediocre at best, then Publix came in, Starbucks joined the crowd, and that crappy bungalow you paid $30,000 for , is now worth $230,000. Now, you don't have to sell, and yes your taxes have gone up (not too much if you homestead the place) and you live in one of the hottest and most desirable neighborhoods in Jacksonville. You can walk to all kind of great restaurants, do all the things your friends in cool cities do.  See, the guys who run CSX would be better off if dowtown Jacksonville became one of the most attractive places for people and business in North America.  They could attract even more talented people to work there and offer all the cool things great cities offer. That's how it works. Then CSX swallows up the other companies, not the other way around.

What I'm proposing is that CSX (who is amazingly profitable) puts forth a (relatively) small sum ($8 million??) as seed money to get the project off the ground.

Ever heard of Gate Hospitatlity? It's the luxury and comfort wing of Gate Petroleum. Has nothing to do with running gas stations but gives the company a neat little gold piece it can flash at potential executives and their families, plus increases the allure and quality of life in Jacksonville, maybe even for their employees. I'm pretty sure it has nothing to do with gas.

[thelakelander]

When I relocated to Jax in 2003, I came for a job but wanted to live in an urban setting. However, urban "to me" meant reliable mass transit, great parks, vibrant pedestrian scale street life and a variety of urban housing types (I wanted a rowhouse or at least a townhouse). I basically had two days to find a place and I ended up in the Southside for three primary reasons.

1. More housing types available on short term notice
2. Closer to my Ponte Vedra based office.
3. More retail and services available in closer proximity (I would have had a reverse commute on my hand if I selected DT)
4. I passed on the urban core because it wasn't the type of vibrant walkable environment that I would be willing to pay extra... for less space.

I literally felt that what I wanted, wasn't available, so I'd pocket the extra housing cash instead.

[heights unknown]

Tsk, tsk, tsk; what is happening to my Jacksonville. I thought we had got rid of the old "good ole boys" cronies who impeded and/or destroyed Jacksonville's potential and possibilities for the future...and then I hear (gossip?) this. Miami is looking like New York City, Tampa is beginning to stir once again, Orlando is also stirring, and Jacksonville seems to not be moving at all downtown for the exception of little rinky dink projects like bars, restaurants, street improvements, etc. I was really thinking about moving back to Jax because though it seems there's no significant projects on the line, it's still much better than when I was living there in the 70's, 80's and early 90's. I am now 58 years old, when I left Jax 21 years ago, there was nothing, I repeat NOTHING going on; yes, things are better than then...but when are we (Jax) going to reach the par of "world class" like Miami, Atlanta, Houston, Philadelphia, and even New York City; Jax's population, due to consolidation is illusory; and I guess the state of our downtown, and the way we handle things, are indicative of the small city mentality that we had before consolidation; heck, we sure are living up to it aren't we? Love Jax, always will, but I wish we'd just strip the consolidation thing, shrink back to our old city limits with maybe some annexed areas (new), and be the small city ranked 80th or so that we really are. And yes, things like this upset me and makes me mad; I just love Jax and it infuriates me when I see things like this.

[heights unknown]

If it is lost as a result of the pension, then I'll say what I've said many times on this forum: the whole city must suffer, but the police and others collect obscene pensions will make no sacrifice.

What is going to be embarrassing is the 200k visitors next week for OneSpark, that saw the announcement for the Barnett building last year and there's been no progress.

How does CSX play into this and what can they do? Am I missing something?

[mtraininjax]

How does CSX play into this and what can they do? Am I missing something?

It's a Hail Mary, since its holy week.

[edjax]

Why doesn't our Port Authority issue bonds to move some project ahead.  The Cleveland Port Authority has been instrumental in helping with both private and public financing of projects in downtown Cleveland as noted:

PORT OF CLEVELAND APPROVES FINANCING FOR MAJOR DOWNTOWN REDEVELOPMENT PROJECTS
Thursday, November 21, 2013
CLEVELAND, OH- The Port of Cleveland's Board of Directors voted today to help support more than $400 million in downtown Cleveland redevelopment projects.
At its monthly board meeting, The Port approved:
Issuing up to $97 million in lease revenue and tax increment financing bonds for Phase II of the Flats East Bank project. Total project costs are estimated at $149 million.
Issuing up to $57 million in lease revenue and tax increment financing bonds for the development of "The 9", a mixed-use development adjacent to the new County Headquarters.  Total project costs are estimated at $171 million.
Granting a leasehold interest in the Optima-Sage hotel project to continue the development of the $73 million redevelopment of the former Crowne Plaza hotel".
William Friedman, president and CEO of the Port of Cleveland, said it is part of the Port's mission to finance development through the sale of project revenue bonds to private investors. The Port of Cleveland is the only local government agency whose sole mission is to spur job creation and economic vitality in Cuyahoga County. "These three projects that our Board approved today are vitally important to the redevelopment of downtown Cleveland. They will bring construction jobs, permanent jobs, tax revenues, and will change the feel of our downtown," he said. "We're proud to play a role in attracting private investment capital to these projects and our community."  Full Press Release 2013.11.21 Financing

[thelakelander]

Different responsibilities. If our port had the cash, it would be dredging the river instead of seeking cash from other sources.

[hiddentrack]

As we have been saying on this site for ten years now, if the goddam 'redevelopment professionals' would just get out of the way, the Downtown would have already recovered, expanded and be in a healthy place.

Get out of the way, facilitate financing, give up some perception of controlling things, stop being dicks about it and let the market take over.

Amen. My sense is there's a perception that anything new happening has to be big because we don't have the pieces in place for someone to take a chance on something small downtown. The chances for those small projects are few and far between, so we rely on big projects like this or the Shipyards to get us out of a rut when a dozen or so small projects would be healthier for downtown than one big project.

(But if all we can get right now are 1 or 2 big projects, I'll take them if they get things moving...)

[oxman2016]

Here we find ourselves back here again.  A cheap city will always be a cheap city.  I guess we will have to hold our breath and see, but given the way things work around here...

Spending money that you don't have is not being smart,its being stupid. Jacksonville has a lot of debt that must be dealt with and many more financial problems on the horizon until the pension fund for the police/fire fighters is dealt with.