Two of the biggest Downtown property developments on the Northbank have fizzled due to increased costs of construction and difficulties obtaining large-project financing, according to the chief executive of the Downtown Investment Authority.
In an interview with the Jacksonville Daily Record, DIA CEO Lori Boyer said the city-owned sites of the proposed American Lions tower and Hardwick at Ford on Bay may be put back up for disposition – offered up for new redevelopment proposals, in other words.
The DIA approved a $36.93 million incentives package for American Lions LLC’s proposed 44-story residential tower at the former Jacksonville Landing site, now called Riverfront Plaza, in September 2022.
Four months earlier, the DIA approved a $41 million incentives package for Atlanta-based developer Carter to build a 22-story mixed-use project at the site of the former Duval County Courthouse at 330 E. Bay St.
Boyer said both developers ran into the same problem after their redevelopment agreements were finalized.
“(The projects) didn’t pencil with the increased costs from what they had agreed to,” she said.
“They couldn’t deliver on it when costs went up.”
Now, she said, the DIA is likely headed back to square one on the properties. Bolstered by recent visits from what Boyer described as “national developers” interested in Downtown Jacksonville, she said the DIA is “getting very close to the time that we’re going to be having negotiations with folks on what they can do now in today’s market and be putting those dispositions back out.”
Boyer said American Lions and Carter would both be welcome to return with new proposals.
Carter, in requesting an extension on its redevelopment agreement in mid-2023, cited a “frozen” capital market in addition to higher construction costs for its failure to launch.
“We value the design dollars they have spent and the effort they have made,” Boyer said.
“In both cases, the developers have spent a bunch of money on those sites. I don’t want to be unfair to them and say, ‘Oh, by the way, I’m selling it to somebody else.’”
Boyer said the DIA was likely to act in the next six months.
“If someone else can make it work and they (American Lions and Carter) can’t, then it’s time to move forward if we’re now seeing enough of a change in the market that people are feeling bullish and willing to invest,” she said.
A major project on the Southbank, the Miami-based Related Group’s 24-story residential tower, also ran into problems with increased costs to the tune of $30 million more for construction than the developers initially anticipated.
Boyer said the DIA and Related are discussing a new agreement, which she hopes to present to the DIA board in March.
Meanwhile, Boyer said residential developers are still having trouble securing loans.
“So you’ve got to be looking at either having someone like Related who has a lot of funds on deposit and a long track record with a particular bank where they can get a loan, or you’ve got to be somebody that has an equity trust or an REIT or something where they can put in a substantial amount of equity,” she said. “Those are the deals that are going to move right now.”
Trio of options for the Trio
After the City Council hit the reset button on the latest proposal to resurrect Downtown’s Laura Street Trio, Boyer said the DIA and city administration presented the developer with three options to move the project forward.
The city and developer, SouthEast Development Group, are set to meet this week to review the new options.
SouthEast has proposed transforming the Trio into a $175.1 million adaptive reuse complex that would combine renovation of the historic buildings with new construction. The project includes a hotel, residential units, bars and restaurants.
In January, the Council deflected a financial deal that included $38.5 million in previously approved incentives plus a $22 million “city participation loan” designed to guarantee a 25-year construction loan obtained by SouthEast principal Steve Atkins from Capital One Public Funding.
That package was introduced by Council member Matt Carlucci after the DIA board sent a $36.5 million agreement to the Council without a recommendation either in favor of it or against it.
After hearing concerns from city staff that the participation loan could be unconstitutional, expose the city to hundreds of millions of dollars in debt liability and trigger a downgrading of the city’s credit rating, the Council requested that the DIA and SouthEast negotiate a new agreement.
Noting the historic nature of the buildings, which were among the first to be built in Jacksonville after the Great Fire of 1901, the Council gave the DIA leeway on its guidelines for determining whether projects are financially eligible for public incentives.
Council members said the significance of the buildings in the overall Downtown revitalization effort also made them exceptional and potentially eligible for incentives that would normally fall outside the framework of the DIA’s guidelines.
The Trio was built from 1902-12 at Laura, Forsyth and Adams streets. It comprises the Florida National Bank, Bisbee and Florida Life Insurance buildings.
Boyer said that although she valued the new construction in the project, the DIA and city administration focused on saving the historic buildings in crafting new agreement options. She said that emphasis was based on input from the Council.
“The directive was: These are unique, these are important to the system,” she said.
The meeting with SouthEast is scheduled for Feb. 15.
Ambassador, Independent Life tower developer in default
The developer of three other vintage Downtown buildings clustered along Duval and Julia streets – the Ambassador Hotel, Central National Bank and Independent Life tower – is in default of its incentives agreements and may be seeking to offload the properties.
Boyer said Augustine Development Group had not recently sought extensions for its deals on the projects. Both agreements included deadlines, which have passed, for completion of the projects.
“My understanding from third parties, but not from them, is that they are shopping the projects to others,” she said.
“And there are others who are interested in acquiring them. But until those transactions are signed and somebody else is approaching us, they’re not moving forward.”
Augustine Development Group bought the Ambassador and CNB properties in 2018, unveiling plans to bring the Ambassador back to its “original luster” as a hotel and raze the bank building to make way for construction of new apartments and retail space.
Augustine bought the 19-story Independent Life building in 2019 with plans to transform it into apartments, a grocery store and a 10,000-square-foot rooftop restaurant and lounge.
Council approved a $1.5 million historic preservation grant for the Ambassador/CNB project in January 2019.
Two years later, the Council OK’d a $3 million historic preservation grant for the Independent Life building.
Today, the bank building remains standing and the Ambassador and Independent Life buildings are largely unfinished, surrounded by construction fencing.
Augustine had received several extensions for the Ambassador, including in 2023 when it cited difficulties in obtaining windows from a contractor.
Boyer said the situation was unfortunate.
“They’re probably not any more of an eyesore than they were before they started them, but they’re also not any better,” she said.
“From my perspective, we should insist that the construction fencing be pulled back and the traffic lanes reopened and things like that, because it’s not really an active construction site anymore. So there’s no reason to inconvenience anybody else as a result of it.”