Downtown Investment Authority CEO Lori Boyer said Aug. 6 she will recommend the agency’s board put The Ford on Bay property back on the market as the project’s developer seeks changes to its proposal.
A DIA board committee could vote as soon as Aug. 13 to terminate the agency’s tentative agreement with New York City-based Spandrel Development Partners LLC, according to meeting agenda documents released Aug. 6.
In February 2020, the board approved Spandrel’s term sheet with the city to develop the former City Hall Annex and Duval County Courthouse site at 220 E. Bay St. and 330 E. Bay St.
Boyer said Spandrel wants to reduce its capital investment and the amount of retail space in what was a $136 million plan for the riverfront property. Spandrel also wants to include workforce housing instead of market-rate apartments.
Boyer said the changes differ enough from the original deal that the DIA board would need to draft and approve a new term sheet to keep Spandrel as the developer.
Regardless of what the board decides, Boyer expects and said she hopes Spandrel continues to pursue The Ford on Bay.
“The only way to get off dead center and proceed is to formally terminate that (bid award) and then you can decide if you want to continue with what Spandrel proposed or consider third-party offers,” she said.
New interest in site
Spandrel won a competitive bid for The Ford on Bay with a two-phase proposal comprising 520 apartments and up to 74,000 square feet of retail space.
Since the DIA board selected Spandrel 18 months ago, local and national developers have reached out to the DIA with interest in building at the riverfront property, Boyer said.
They include SouthEast Development Group Managing Director Steve Atkins’ $1.1 billion proposal to redevelop a large piece of the Downtown Northbank riverfront.
Atkins wants to build a 27-level, 410-unit residential tower at 330 E. Bay St. and a 500,000-square-foot exhibition/convention hall at 220 E. Bay St. adjacent to the Hyatt Regency Jacksonville Riverfront.
Boyer said the board will have to decide whether to renegotiate with Spandrel or ask real estate firm CBRE to remarket the property. The DIA contracted CBRE for professional marketing services in 2019.
According to the agenda documents and Boyer, the DIA committee also could vote Aug. 13 to extend CBRE’s contract and to issue a 30-day property disposition notice.
The agenda calls for a discussion before voting on any resolutions and leaves the board the option to defer action until September.
Boyer said COVID-19 shutdowns in March 2020 temporarily halted Spandrel’s access to capital markets and the company had delays in financing the project.
The DIA and Spandrel resumed negotiations about April 2020, according to Boyer.
Whether the company reduces or keeps its investment at $136 million, Boyer said rising material and labor prices still could mean diminished product quality.
“Once you start to depart from what’s in the (approved) proposal, I only have a small margin of change that could happen before it would require a renotice,” Boyer said.
Spandrel co-founder Emanuel Neuman said Aug. 9 he was informed Aug. 6 that the DIA would consider rebidding The Ford on Bay.
He said as Spandrel looked at “fine-tuning” its development plan, the DIA denied its request to increase the project’s Recapture Enhanced Value Grant.
Instead of a 50% tax refund over 20 years on the increased value of the property, Spandrel wanted 75%.
Neuman said he will not “close the door” on rebidding The Ford on Bay.
“We are disappointed. We think a 75% REV grant is in line with what (the DIA) offered all other recent large developments,” he said.
“We were ready to take action. We were ready to start working. But we have to have a collaborative partner.”
If the committee votes to terminate the deal, extend CBRE’s contract or issue the 30-day notice of disposition, the full board could make final decisions at its Aug. 18 meeting.
The Hyatt
The deal with Spandrel is designed to work around Hyatt parent company Westmont Hospitality Group Inc.’s first right of refusal for the former City Hall parcel at 220 E. Bay St. north of the hotel.
Westmont has no control over the 330 E. Bay St. parcel, and Phase I of Spandrel’s development could proceed without the hotel’s approval.
Spandrel Acquisition and Development Director Benjamin Scharf said Feb. 11 that Phase I would comprise 279 residential units and 40,000 square feet of retail space anchored by a 10,000-square-foot riverfront restaurant.
Boyer said the deal with Spandrel did not reach the point where Hyatt’s right of first refusal was called into question.
The DIA does not have an agreement with Hyatt for the property.
