Carling, 11 East Bleeding Money: developer asks city for more help

[stjr]

STJR - Have you been to Downtown Jacksonville? You do know that there is a central HUB at the end of the North line of the Skyway, correct? It feeds most of the buses that go all over the city, whenever I take the bus from Avondale I have to catch a new bus to the Southside or any other location from this central hub.

I totally disown our current JTA designed and managed transits systems in any mode.  I have always referred to what I think we SHOULD do, not what we ARE doing.  Unfortunately, the gulf between the two is wide.

Connections to the outlying suburbs has zero to do with my original thought about how to rebuild downtown through residential attractiveness.  So, why bring it up at all?

Regardless, happy 2010 to all.

[CS Foltz]

Vescor and Rood got a grant from the city for $5 Million Dollars? Let those suckers eat cake or twinkies I don't care! They have received the last dime from the City if I have anything to say about it! I don't care if it is just paying interest or whatever............no more money! Where is their business plan....why can't they go through a bank like normal investors.........why does the City have to be a bank for someones grandiose plans. The City is close to becoming bankrupt at this very time and we are supposed to cough more for the inner circle? NO!

[thelakelander]

The city banked their plans because projects involving the historic preservation of buildings that large are not feasible in DT Jax.  If the Laura Trio, Barnett, Ambassador or any other significant historic structure in DT is to be saved, as long as DT isn't vibrant, they'll need incentives as well.

[CS Foltz]

lake............I am just concerned with one thing at a time! Vescor and Rood got a grant of $5 Million Dollars......a grant mind you, not a loan, not an extension but an out right grant.............here is free money take this $5 Million Dollars and its yours! (This is courtesy of the JEDC and where do they get their money from? Taxpayers once again!) Then you take into account the $21 Million Dollars in low interest money that they received, courtesy of the taxpayers once again, and I would have to ask .......where does one draw the line at? A case could be made both ways on this, but I have to ask..........why come to the City? Don't they have banks or credit lines to draw on? Why does the taxpayer have to foot the bill just one more time? I am getting tired of maintaining the "Bank of Taxpayer" while City Hall, JEDC and all of the other buffoon Agency's spend, spend spend without any regard of where their operating money really comes from! It is time to stop now! This particular issue must not receive anymore taxpayer money for whatever reason.

[vicupstate]

But as the economy weakened and interest in downtown waned, so to did the occupancy levels, which are now 83 percent for the Carling and 76 percent for 11 E. Rents too, which now range from $800 to $2,000, have steadily dropped at both properties. And although the 16,199 square feet of commercial space at the bottom of the buildings were never completely full, that is now down to about 17 percent occupied.

The gist of the problem is that when the occupancy were near normal levels, it was successful, when it dropped significantly from that level, it started to lose money.  Even a standard suburban project at 76% occupancy would likely lose money. I suspect.

So the question is why has it dropped so much?  Obviously the economy is part of it, but the Vestcor suburban projects should be experiencing the same thing.  Are they, and to the same extent?

The lack of amenties and services DT could be part of it, but even when the occupancy was high, that was the case as well.

My theories...

1) The residents tired of waiting on the businesses and amenties that they ANTICIAPTED would arrive, but haven't yet
2) The loss of momentum DT generally, made the residents lose hope that a vibrant environment would ever occur.
3) A declining job base DT, shrank the potential market
4) a combinaton of the above
5) Something else

I feel bad for Vestcor because they took a chance on DT residential when virtually no one else would.  Just as private banks are renegotiating loans, perhaps Jax should at least consider doing the same on this one.  There is at least the possibility that the city will end up owning these buildings via foreclosure.  DOes anyone think that would be a good thing ??

Regardless, I think the city should try to determine why the occupancy level has dropped and what can be done about that.         

[tufsu1]

ok...for all those who seem opposed to grants or low interest loans for good projects like Carling and 11E, what would you propose instead?

I would argue that these kinds of investments are huige in that it allowed 2 historic buildings to be saved and rehabbed, more people to move downtown, and could spur other projects.

In fact, I heard about one tonight....apparently the owners/developers of Hotel Duval in Tallahassee may be planning to open a boutique hotel downtown sometime in the next year.

[thelakelander]

^New construction or in a historic building?

[tufsu1]

not sure yet...I think I know the answer but I need to check

[brainstormer]

^ I agree with you tufsu!  I would much rather give a grant for historic preservation, than see the buildings torn down and living history demolished.  In a way, it is sort of like the government's penance for ruining downtown in past decades.  Historical preservation grants and incentives should continue to be used as a tool for revitalization.

[CS Foltz]

Correct me if I am wrong, but I don't believe that Vescor got that money for a "Historic Preservation" did they? Infact the City has a habit of passing out our money for what is said to be that, but in reality is not.....the case of the Boys Club  comes most readily to mind! Are any of those three Buildings in the Historical Register?  If they are then that may lend credence to the Historical aspect .....if not, they I ask WTF?They have already received a healthy chunk of taxpayer money,either outright freebie, or at a lower interest rate than either you or I could receive trying to deal with our Bank in a normal business Environment! Why not use a Bank for this............if the City wishes to incentives with taxbreaks that's one thing, to use our tax money as an imitation bank is wrong! IMO a Bank should be involved in these kinds of loans......so I would have to ask, why not?

[thelakelander]

Both the Carling and 11 East (Lynch Building) are on the National Register of Historic Places:

http://www.preservationnation.org/resources/case-studies/loan-funds/lynch-building.html

http://www.nationalregisterofhistoricplaces.com/FL/Duval/state.html

[CS Foltz]

In that case...........I stand corrected as to the Historical nature of those two bldgs! But still have to question about the validity of using City money,up front to pay for this! Incentives are one thing, but outright funding is something else! I would still have to ask ...........why do they not go through a Bank? I wish I could use free City money and low interest loans but will not even have that option!

[thelakelander]

I believe the city offers grants for historic preservation projects as well.  Perhaps that is where the $5 million came from.

[vicupstate]

In that case...........I stand corrected as to the Historical nature of those two bldgs! But still have to question about the validity of using City money,up front to pay for this! Incentives are one thing, but outright funding is something else! I would still have to ask ...........why do they not go through a Bank? I wish I could use free City money and low interest loans but will not even have that option!

Going from memory here, so I may be off on the details.....when Matt Carlucci was city council president, $20mm was set aside for grants to preserve historic properties.  The GRANTS for 11E and Carling were two of the project that received money, I believe.  The 20 W. Adams building (where construction started but since stopped) received about 200-400k as I recall.  I think some money was included for the Laura trio. I think the Dyal-Upchurch and/or Churchwell Lofts might have too.  Knight Lofts on Adams Street received incentives as well, although that might have been a different 'pot' of money from what Carlucci put in place.


http://jacksonville.com/tu-online/stories/071101/bum_6650812.html
http://jacksonville.com/tu-online/stories/072501/met_history.html

"There's no question it is quicker, cheaper and easier to develop empty land for an apartment complex," said Mike Langton, a managing partner of LB Jax Development, which is trying to put loft apartments in a 81-year-old, three-story building on West Adams Street. "You just cannot renovate an old building as easily as you can build a new building."

http://jacksonville.com/business/2009-12-13/story/lights_dimming_on_jacksonvilles_bold_plans_for_downtown

After the city bought the trio in 2002, the Downtown Development Authority and Jacksonville Economic Development Commission approved an $18 million incentive package with Signet Development Ltd. to turn the buildings into housing with street-level shops.

http://jacksonville.com/tu-online/stories/051302/met_9388163.html

If you read through these, you will see that but for incentives there would be virtually NO residences DT, and significantly fewer revived historic buildings.

The reason Vestcor didn't go to a bank was either 1) the bank would not lend money for such a unique project with an unproven market, or 2) at standard rates, the project would not show a profit even with normal occupancy.  Despite the craziness of the last few years, banks prefer cookie-cutter subdivisions in the burbs, not risky pioneering projects.

When the city's incentives dried up, so did the projects, then the economy took care of whatever might have been left.   

[mtraininjax]

banks prefer cookie-cutter subdivisions in the burbs, not risky pioneering projects.

Which is why NOW and for the next few years, I don't think we will see any new DT development for residential without significant investment by the City. Berkman 2 remains a skeleton of the past and it serves as a bleak reminder of the past DT residential revival. A change in the City policy won't happen without new leaders, as we agree on.