The most recent plans for Downtown’s Barnett Bank building received a proverbial “nail in the coffin” last week, said one member of the Downtown Investment Authority.
Yet, the foreclosure ruling seen to some as a setback could also be a positive.
“On the other hand, it’s a press of the reset button,” said Oliver Barakat, a DIA board member and senior vice president of CBRE Inc.
With developer Steve Atkins consenting to foreclosure on the building and owing $4.6 million to an investment company owned by Jacksonville Jaguars owner Shad Khan, the building will be up for public auction Sept. 14 if the judgment is not paid.
The “reset button” Barakat mentions could come in the form of other potential buyers — and he does think there will be interest.
He bases that on numerous conversations he’s had with people both locally and nationally who have seen a high demand for historic projects with retail components.
Atkins’ most recent plans for the building included a bank in the ground floor with businesses and residences above.
It’s a “buyer beware” situation that will take a lot of work — and a lot of money — but Barakat said he would be surprised if no one turned up to bid.
“There is an appetite,” he said. “There is interest.”
Barakat’s DIA board colleague Jack Meeks said he hopes that’s the case, but he’s more doubtful.
Meeks has some experience with historic, urban core rebuilds, his latest being Downtown’s Elena Flats. And while that project pales in scope to the Barnett Bank Building, it’s the time and money — specifically a lack of city funding — that could be a deterrence.
Atkins’ Barnett Tower LLC has had a partnership with Las Vegas-based Molasky Group of Cos. for the Barnett Bank Building and Laura Street Trio revitalization projects.
Those plans called for the city to contribute about $8 million toward the $78 million group of projects, not counting a request for a parking structure.
Large-scale projects like Atkins’ plans don’t have large-scale public capital at this point. Instead, priorities have been shifted to accommodate the pension woes that have been eating away at city budgets.
The lack of city funding means whoever wants to develop the building likely will need to have mostly private funding and have some deep pockets, Meeks said. He added that maybe someone could take it on as a “legacy” project and keep it mostly private.
Given the circumstances, though, Meeks said his expectation is Khan will end up owning the building.
If Khan wanted to do a project himself, there is a little history there.
When he first arrived in town in 2012, he took a tour of the deteriorated building, telling his tour guide at the time of the building’s potential.
A spokesman for Stache Investments last week in a short statement said about the future of the Barnett Bank building, “time will tell.”
Last week’s ruling, said Barakat, isn’t a blow for Downtown. Ongoing delays with the project already stymied momentum.
Meeks said despite the situation, Downtown is still in better shape than it was three years ago, when Atkins’ and Khan’s groups struck the financing deal for the building. There’s more activity in the street and a lot of smaller projects have come to fruition, most notably the authority’s retail enhancement efforts.
Still, he said, figuring out how to get vacant buildings restored and contributing again “is a lot bigger deal.”
Khan’s company loaned Atkins’ LLC $3 million in April 2013 to buy the building at 112 W. Adams St. Atkins never made a payment on the loan. Stache Investments filed a foreclosure lawsuit last June.
Atkins in his statement Friday said plans now are to move forward on projects of the Barnett Bank building’s neighbors, the Laura Street Trio. The plans for the three buildings include a hotel and restaurant.
If that’s the case, then the project will need to be resubmitted to the authority, said Meeks. Financial numbers for the $78 million series of projects last year included the Barnett Bank building restoration. And much has changed since then, Meeks said.
Atkins’ statement about moving forward also references his partnership with the Molasky Group.
Brad Sher, Molasky chief financial officer, did not return a call or email Friday seeking comment about the group’s future involvement with the projects.
When it comes to the future to that cluster of projects that have had plans for years, Khan’s spokesman might have summed it up best — time will tell.
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