Laura Street Trio finally headed to DDRB

[Ken_FSU]

Things fell apart with the Housing Authority.

No longer an option.

Source: Biz Journal

[Charles Hunter]

From the article

Atkins told the Business Journal via email that the timing between SouthEast and JHA did not align.

"After much discussion and review, JHA wanted considerably more time to develop their program and engage on the Trio project," Atkins said. "While we would have liked to collaborate with JHA, we want to move forward immediately with the project. Therefore, we have changed directions to proceed with other financing options."

A plan announced in January would have had the housing authority partner with SouthEast on construction of an 11-story, 166-unit mixed-income apartment component, with a fifth of the units designated workforce housing.

It's unclear how the change will affect the multifamily part of the project.

https://www.bizjournals.com/jacksonville/news/2022/04/22/southeast-development-jha-no-longer-partnering-on.html

[thelakelander]

So groundbreaking isn't happening soon?

[Ken_FSU]

So groundbreaking isn't happening soon?

Sounds like it's going to need to go back through the DIA and City Council once again for an amended development agreement.

[landfall]

Just put a fork in this place its done. The worst Downtown real estate market in America with the worst politicians, decision makers, the most inept real estate players.

A centrally located historic site and after all the bullshit over how many years we have nothing. Just turn it into parking already.

Today is the day I officially gave up.

[thelakelander]

The DT real estate market is fine. Jax just needs to get out of its own way.

[Ken_FSU]

This is one project that's so strategically important that I'm fine with the city writing whatever check it takes to Southeast to just get the damn thing done.

Leanna Cumber won't be happy, but I'm not sure there's a better option.

Not sure there's anything more important in the CBD right now than removing the Trio's current blight and replacing it with active uses like SE is proposing.

[landfall]

There's no hope for the trio.

At best it somehow gets bought by VyStar and turned into another parking garage with ground floor retail. Atkins got every incentive and tax break under the sun and still had to beg a housing authority to get the deal done.

[tufsu1]

This is one project that's so strategically important that I'm fine with the city writing whatever check it takes to Southeast to just get the damn thing done.

Leanna Cumber won't be happy, but I'm not sure there's a better option.

Not sure there's anything more important in the CBD right now than removing the Trio's current blight and replacing it with active uses like SE is proposing.

the best option is to get Southeast/Atkins out of the deal

[fieldafm]

This is one project that's so strategically important that I'm fine with the city writing whatever check it takes to Southeast to just get the damn thing done.

Leanna Cumber won't be happy, but I'm not sure there's a better option.

Not sure there's anything more important in the CBD right now than removing the Trio's current blight and replacing it with active uses like SE is proposing.

Sorry, but unequivocally disagree.  Raiding affordable housing money because the developer can't or won't contribute their own capital, is a horrible option.   

In the last economic development deal approved by DIA/COJ, the only capital the developer had into the deal was the value of the land.  That land had a loan from LISC that was required to be paid off in order to get public funds.  The developer then convinced City Council to give them $2mm more in hard cash to payoff that $4mm loan (on top of the incentives they were already getting). So, basically they have to come up with $2mm in cash, to finance more than a $70mm project, about 40% of which was paid for with taxpayer incentives.  That is more of a subsidy then anyone has received Downtown, ever.  Its about as generous of a deal as it gets... more generous than Lot J, the original Landing deal (about 30% in initial taxpayer subsidies to construct- not counting the $25mm to buy it back and demo it 30 years later), insert project here____.  And that Trio deal did not include whatever was required to get a 'phase 2' of the project done at a future date.

BTW, that loan from LISC, was a lien placed against the Trio to give the developer cash to finish the Barnett because the Barnett's lender was wary of the amount of debt that was required to finish the project, and didn't want to further leverage their security (the building) with more debt. 

The new scheme presented to the Jax Housing Authority bumped up the project cost and scope, and required JHA to buy the land for $10.3mm (Vystar paid about $1mm for roughly the same size property next door... so taxpayers would be overpaying for the land by more than $9mm), then pay a developer fee of another $3.5mm, and another 3.5% annual property management fee.  That cash would payoff the rest of the $2mm LISC loan ($4mm less $2mm from City Council) and net the developer roughly $12mm in cash to contribute back into the project.  That would also take the property off the tax rolls for the next century (99 year ground lease). The JHA would then be paying off more than $15mm in bond monies for the next 30 years, which would adversely impact their ability to issue new bond money for additional (and badly needed) affordable housing projects for decades to come.  That would be a total of almost $16mm in cold hard cash up front from taxpayers, additional cash each year based on a % of the rental income collected, a $16mm forgivable loan from taxpayers, almost $10mm in historic tax credits, and a $5.5mm deferred principal loan (at less than market rate interest) from taxpayers... all so that 33 very small (likely one bedroom or studio) workforce housing apartments (with no parking) would be around for 15 years (after 15 years, the developer could rent them at market rate- and still never pay property taxes).  Hard working Jacksonville families would be denied affordable housing for the rest of my lifetime, so that a hotel can be built Downtown that will never pay property taxes? How is that a wise use of taxpayer money?    Its hard to follow, but here's a basic breakdown of this JHA ask:  Cash from the developer= 0%.  Cash from taxpayers= 45%. Cash from bank/equity partners= 55%.  Property Taxes= none.  COJ policies for historic renovations incentives, which are very generous, requires the developer to have at least 10% in equity to qualify for these loan programs.  In this latest proposal, it would have been 0%, with again... no property taxes ever owed (historic tax abatements already give developers of designated historic properties a 10 year tax break, this JHA scheme would extend that tax break from 10 years to basically in perpetuity).   

This is a situation where two wrongs don't make a right.  There were many people who wouldn't talk bad about this deal publicly, because the Trio is such a high profile eyesore... but behind closed doors knew this JHA deal stunk worse than the Jacksonville papermills of yesteryear.  If Shad Khan asked for this deal, there would be men dressed like Sam Adams storming the Kismet and throwing barrels of tea overboard.  Remember how Kahn was vilified after he loaned the developer money to acquire the Barnett and Trio buildings, and then foreclosed because he realized that this very same situation was going to happen a decade later?  Perhaps some of those people are walking back that vengeance now.


The only party failing the Trio right now, is the developer.   

100% in favor of turning that blighted lot into something better.  100% in favor of DIA's historic renovation loan program- the long-empty buildings that are being rehabbed Downtown at this very moment is proof positive that the program works as intended. 

100% NOT in favor of 'whatever it costs'... constantly dealing with the bait and switch... and another decade of inaction by the developer because they are trying to curry their political favor towards getting a deal that is so far out of the best interests of the taxpayer.  You wouldn't bankrupt yourself in order to renovate the kitchen in your home, so why should taxpayers contribute well above what is reasonable to turn this blighted property into something better?  There are all kinds of examples of bad development deals Downtown which should give one pause towards the 'whatever it costs' mindset: IE the Metropolitan parking garages (total tab from taxpayers is going to approach $100mm soon, there's still almost $30mm in bond debt that will be paid out over the next 20+ years), the Landing ($30mm and counting, and still a grass lot), the Shipyards (COJ still owes about $25mm in bond money from the development deal in 2005- 17 years ago- that went into foreclosure), etc.

Perhaps its time for a new developer to be in control of that property. 

[Steve]

I get the sentiment here though about "Whatever it takes". If there's any project that I've believed could really be transformative for the urban core it's this one - more than any other mega-development that whoever in the past has proposed. Yes, the JHA deal was terrible. I didn't know the economics as well as field laid out but I knew it was bad. It's obviously a balance. Historic renos aren't always truly economical, in that the renovation cost often exceeds the value of the building after (not news to anyone here of course). This is why the program the north core projects are taking advantage of is so important.

Clearly Atkins can't pull this off, and every time this has a setback and then he proposes some underground parking garage thing that doubles as flood control underneath a $2B concept I want to scream. I genuinely believe he's trying to do it and has a passion for doing this project, but sometimes that isn't enough.

The challenge is he owns the buildings now, correct? Is there any way COJ can set a "no kidding" deadline, then if the project hasn't truly commenced COJ gets the property and can RFP the thing? I can't believe I'm suggesting this because normally I want COJ to get out of it's way, but it's time I believe.

I don't think Atkins can pull this off, but I also don't want us to slam the door in the guy's face then he lets the buildings continue to deteriorate.

[fsu813]

This is one project that's so strategically important that I'm fine with the city writing whatever check it takes to Southeast to just get the damn thing done.

Leanna Cumber won't be happy, but I'm not sure there's a better option.

Not sure there's anything more important in the CBD right now than removing the Trio's current blight and replacing it with active uses like SE is proposing.

Sorry, but unequivocally disagree.  Raiding affordable housing money because the developer can't or won't contribute their own capital, is a horrible option.   

In the last economic development deal approved by DIA/COJ, the only capital the developer had into the deal was the value of the land.  That land had a loan from LISC that was required to be paid off in order to get public funds.  The developer then convinced City Council to give them $2mm more in hard cash to payoff that $4mm loan (on top of the incentives they were already getting). So, basically they have to come up with $2mm in cash, to finance more than a $70mm project, about 40% of which was paid for with taxpayer incentives.  That is more of a subsidy then anyone has received Downtown, ever.  Its about as generous of a deal as it gets... more generous than Lot J, the original Landing deal (about 30% in initial taxpayer subsidies to construct- not counting the $25mm to buy it back and demo it 30 years later), insert project here____.  And that Trio deal did not include whatever was required to get a 'phase 2' of the project done at a future date.

BTW, that loan from LISC, was a lien placed against the Trio to give the developer cash to finish the Barnett because the Barnett's lender was wary of the amount of debt that was required to finish the project, and didn't want to further leverage their security (the building) with more debt. 

The new scheme presented to the Jax Housing Authority bumped up the project cost and scope, and required JHA to buy the land for $10.3mm (Vystar paid about $1mm for roughly the same size property next door... so taxpayers would be overpaying for the land by more than $9mm), then pay a developer fee of another $3.5mm, and another 3.5% annual property management fee.  That cash would payoff the rest of the $2mm LISC loan ($4mm less $2mm from City Council) and net the developer roughly $12mm in cash to contribute back into the project.  That would also take the property off the tax rolls for the next century (99 year ground lease). The JHA would then be paying off more than $15mm in bond monies for the next 30 years, which would adversely impact their ability to issue new bond money for additional (and badly needed) affordable housing projects for decades to come.  That would be a total of almost $16mm in cold hard cash up front from taxpayers, additional cash each year based on a % of the rental income collected, a $16mm forgivable loan from taxpayers, almost $10mm in historic tax credits, and a $5.5mm deferred principal loan (at less than market rate interest) from taxpayers... all so that 33 very small (likely one bedroom or studio) workforce housing apartments (with no parking) would be around for 15 years (after 15 years, the developer could rent them at market rate- and still never pay property taxes).  Hard working Jacksonville families would be denied affordable housing for the rest of my lifetime, so that a hotel can be built Downtown that will never pay property taxes? How is that a wise use of taxpayer money?    Its hard to follow, but here's a basic breakdown of this JHA ask:  Cash from the developer= 0%.  Cash from taxpayers= 45%. Cash from bank/equity partners= 55%.  Property Taxes= none.  COJ policies for historic renovations incentives, which are very generous, requires the developer to have at least 10% in equity to qualify for these loan programs.  In this latest proposal, it would have been 0%, with again... no property taxes ever owed (historic tax abatements already give developers of designated historic properties a 10 year tax break, this JHA scheme would extend that tax break from 10 years to basically in perpetuity).   

This is a situation where two wrongs don't make a right.  There were many people who wouldn't talk bad about this deal publicly, because the Trio is such a high profile eyesore... but behind closed doors knew this JHA deal stunk worse than the Jacksonville papermills of yesteryear.  If Shad Khan asked for this deal, there would be men dressed like Sam Adams storming the Kismet and throwing barrels of tea overboard.  Remember how Kahn was vilified after he loaned the developer money to acquire the Barnett and Trio buildings, and then foreclosed because he realized that this very same situation was going to happen a decade later?  Perhaps some of those people are walking back that vengeance now.


The only party failing the Trio right now, is the developer.   

100% in favor of turning that blighted lot into something better.  100% in favor of DIA's historic renovation loan program- the long-empty buildings that are being rehabbed Downtown at this very moment is proof positive that the program works as intended. 

100% NOT in favor of 'whatever it costs'... constantly dealing with the bait and switch... and another decade of inaction by the developer because they are trying to curry their political favor towards getting a deal that is so far out of the best interests of the taxpayer.  You wouldn't bankrupt yourself in order to renovate the kitchen in your home, so why should taxpayers contribute well above what is reasonable to turn this blighted property into something better?  There are all kinds of examples of bad development deals Downtown which should give one pause towards the 'whatever it costs' mindset: IE the Metropolitan parking garages (total tab from taxpayers is going to approach $100mm soon, there's still almost $30mm in bond debt that will be paid out over the next 20+ years), the Landing ($30mm and counting, and still a grass lot), the Shipyards (COJ still owes about $25mm in bond money from the development deal in 2005- 17 years ago- that went into foreclosure), etc.

Perhaps its time for a new developer to be in control of that property. 

Don't worry, when the underwater hydrokinetic turbines in the St. Johns River are installed, the project will literally be overflowing with surplus cash! It's all part of the plan:
https://www.jaxdailyrecord.com/article/atkins-ups-riverfront-jacksonville-proposal-to-dollar2-billion-adds-hydropower

Does it matter that the developer didn't run that idea past JEA first? (a mere technicality)

[CityLife]

^Haha. Even worse than not running it by JEA is even claiming it is in the works. The St. John's River like most flat/Florida rivers is a slow moving river at .3 miles an hour and while there may be higher flows downtown where the river narrows, I doubt that is enough to generate anything. At 1 mph, barely any energy is produced. The bare minimum to even run hydrokinetic turbines is around 2 mph, with 5.5 mph and greater being optimal.

It took me less than 5 minutes of online research to figure that out. Hopefully people in Jax will catch on to Atkins...

[Ken_FSU]

I actually totally agree with almost everything you're saying Mike - the JHA proposal was a bum deal, nearly everyone I talk to thinks Atkins is a clown, and two wrongs don't make a right - I just want to see the damn things developed in the next five years.

If an extra $10 million is what it takes to break ground in the next three to six months now that the National Park Service has given the final go-ahead, I don't know if the city has a more realistic alternative other than pinch our nose and beef up the subsidy.

He's already been sitting on the property for a decade.

Assuming he'd be willing to sell, or assuming the city tried to force the property out of his hands, you've gotta think that would add another 5 years to the timeline. And, with our city's track record down the street with the Landing, with the Courthouse & Annex, with the old Greyhound Station, with the Doro, etc, there's no guarantee that an ownership change wouldn't result in three new blocks of surface parking with a future promise of redevelopment.

All the while, tourists, visitors, and businesses considering relocation are coming to our city, being told we're a hot market, but seeing a Laura Street that looks like it was bombed. I think we see the Trio so often that we kind of get blinded to how awful of a message it sends.

Maybe I'm jaded, but after 30 years of blight with these building, if Southeast really does have all the necessary clearance to move forward "immediately" with historic rehab and an agreement with Marriott for a four-star hotel and restaurant, I still think that long-term, the cost of doing nothing and allowing these blocks to remain blighted for years to come will ultimately outweigh the cost of a bad deal that gets these building rehabilitated quickly.

The ol' Broken Window Theory.

I secretly suspect that Vystar - after already bailing out Southeast on the garage - ultimately becomes involved with the project in some way.

[thelakelander]

I hope they find a solution to get these properties renovated, but I'm not upset at JHA money not going into this project.