SouthEast Development Group LLC’s plans to renovate the historic Laura Street Trio Downtown could receive $24.67 million in city-backed incentives under a proposed deal with the Downtown Investment Authority.
The pending agreement negotiated by DIA staff includes forgivable and deferred loans for SouthEast’s $70.48 million project.
The project will adapt the vacant historic structures into a Marriott Autograph Hotel with a restaurant, lounge and ground-floor retail, according to documents submitted for the DIA Strategic Implementation Committee’s March 15 meeting.
If approved, the nearly $25 million package would be the largest awarded from the DIA’s Downtown Preservation and Revitalization Program authorized by City Council in October.
The DIA board approved an $8.7 million forgivable loan package through the program in January for JWB Real Estate Capital’s proposed Florida Baptist Convention Building and the Old Federal Reserve Bank Building renovation in Downtown’s North Core.
Both incentive packages need Council approval before the developers can receive the loans.
The DIA committee is scheduled to take an initial vote on the Trio loan awards and city economic development agreement March 15.
The Trio buildings, built between 1902 and 1912, are historic and contributing structures to the Downtown Jacksonville National Register District, which makes the adaptive reuse project eligible for the DIA program.
The Florida Life Insurance, Bisbee and Marble Bank buildings comprise the Trio at Laura and Forsyth streets in Downtown’s Urban Core.
In a presentation to the Downtown Development Review Board in February, SouthEast and project designer Dasher Hurst Architects said the buildings have been unoccupied for more than 20 years and had fallen into disrepair.
The program
To receive the full $24.67 million, the developer has to complete a minimum $66.98 million project and commit to a hotel with at least 140 rooms.
The deal also requires at least 8,000 square feet of retail space and 21,000 square feet of restaurant and lounge space.
SouthEast Managing Director Steve Atkins said in December the 145-room hotel and restaurant will be the Trio’s focus.
Tom Hurst of Dasher Hurst said during the February design review the hotel will require an eight-floor addition to increase the Trio’s total square footage and make the project financially viable and an 11-floor “connection core” to link the structures.
The developer’s proposed agreement with the DIA and city shows 11,037 square feet of dining and restaurant operations space and a basement wine cellar in the Marble Bank Building.
The Bisbee Building will house a 4,401-square-foot ground-floor bodega grocery store; a second-floor conference center; and hotel rooms on the second through eighth floors
The Florida Life building will have a media theater in the basement; a ground-floor lobby and business center; a second-floor fitness center; and hotel rooms on the third through 11th floors.
The DIA documents show the addition at Laura and Adams streets will include 8,843 square feet of ground-floor retail space; six floors of hotel rooms; and a 4,650-square-foot rooftop bar.
Who pays?
According to the DIA staff report, the city will finance 36.8% of the project. The taxpayer contribution is based on the $66.98 million portion of the project paid for by debt financing and government incentives and excludes $3.5 million in management and developer fees.
The DIA’s proposed offer has three components:
• A $9.377 million five-year forgivable loan
• A $10 million five-year forgivable code compliance loan
• A $5.279 million deferred principal loan
SouthEast, which owns the property through Laura Trio LLC, cannot sell the site within 48 months of receiving the loans without having to repay a portion of the loans.
The investment from SouthEast and its Minneapolis-based financing partner, Piper Sandler Companies, includes $25.76 million in debt; $9.46 million in expected Federal Historic Tax Credits; and $6.8 million in owner equity.
That’s about 63% of the project costs.
What’s next
The full DIA board could review the incentive deal as soon as March 17.
SouthEast needs final design approval from the Downtown Development Review Board, State Historic Preservation Office and the National Park Service before it can begin construction.
A performance schedule in the agreement requires construction to start within 90 days of receiving final city building permits and completion of the project within three years of starting work.
The timeline complicates Atkins’s goal of a first-quarter 2021 construction start. SouthEast could break ground by early July if Council approves the deal before the end of its June term.
Atkins wasn’t immediately available for comment March 8.
SouthEast is working with Marriott Hotels International Inc. to brand the Trio as one of the company’s Autograph Collection of hotels.
Atkins has contracted with Winegardner & Hammons Hotel Group LLC to manage the hotel.
Danis Construction is the project contractor.
Atkins has pursued the Laura Street Trio’s restoration for nearly 11 years.
This is the second time SouthEast has sought an incentive package for the Trio. The developer missed a deadline to complete a parking garage that was part of a city agreement to redevelop the Trio and Barnett National Bank Building, which completed work in 2019.
DIA CEO Lori Boyer announced in September 2019 the DIA and project developers were renegotiating that deal to ensure the Trio is renovated.