The Downtown Investment Authority is scheduled June 16 to consider an extension to AXIS Hotels LLC’s closing deadline.
A developer with plans to restore the historic Ambassador Hotel in Downtown Jacksonville wants city officials to give it until the end of June to close on financing for the estimated $17.6 million project.
The Downtown Investment Authority board will consider a request at its June 16 meeting from AXIS Hotels LLC to fix its default on a city-backed redevelopment agreement by securing the project financing by June 30 and starting construction by July 31.
Under AXIS Hotel’s plans, the Ambassador would become a 127-room TRYP by Wyndham.
The property is at 420 N. Julia St.
The company received all performance scheduled extensions allowed in the city agreement, according to the DIA resolution released June 9.
AXIS Hotels is finalizing terms for a $9 million mortgage at 10% interest for the project with Direct Lending Partners of Bethlehem, Pennsylvania, according to a Jan. 22 letter from the lender to the developer.
City documents show the project also will be financed through a $3.85 million loan from the Local Initiatives Support Corp., equity capital from AXIS, incentives from Wyndham Hotels & Resorts and other sources.
In a letter to AXIS Hotels co-managers Bryan Greiner and George Bochis, DIA CEO Lori Boyer said the city-backed agreement can be salvaged as long as the “cure” is in the works within 30 days of the default.
If AXIS cures the default and starts construction, Boyer told the company the DIA will recommend that City Council give the developer until Dec. 31, 2022, to complete construction.
The communication provided by the city show Boyer declined AXIS Hotels’ claims of force majeure related to the COVID-19 pandemic and a request to extend its financing and construction deadlines in the city deal.
In a March 10 letter to the DIA, an attorney for AXIS Hotels said a tax credit investor it secured to provide project financing notified the company March 23, 2020, it was “indefinitely suspending” investments in hospitality projects due to the coronavirus pandemic and related lockdown orders.
In a response letter, Boyer denied AXIS Hotel’s extension request based on the claim of circumstances out of the company’s control was not founded.
According to Boyer’s letter, construction was supposed to begin Feb. 15.
“At the time of each prior performance schedule extension request there was no claim of a Force Majeure Event causing the delay,” Boyer wrote.
Her letter said information provided by AXIS Hotel to the DIA shows that underwriting requirements from lenders that caused the delays, not an inability to obtain financing because of the pandemic.
“This is especially evident by the number of lenders that have gone through the underwriting process and then declined to finance the project as opposed to simply refusing to lend based on the pandemic,” Boyer wrote.
The documents provided by the city did not show the number of lenders AXIS Hotels contacted.
Council approved changes in May 2020 to the redevelopment agreement that includes a $1.5 million grant for the city’s Downtown Historic Preservation and Revitalization Trust Fund.
If approved by the board, Boyer will file legislation with Council to finalize the changes to the AXIS Hotel agreement.
AXIS Hotels parent company Augustine Development Group LLC plans to redevelop and restore three designated historic buildings, including the Ambassador, in a two-block area of Downtown’s North Core.
Through subsidiary PEP10 LLC, Augustine Development is working on a $30 million, 135-unit apartment retrofit of the 19-story former Independent Life tower at 233 W. Duval St.
The third project proposed by subsidiary AXIS 404 Julia LLC would convert the 1950s-era Central National Bank Building at 404 N. Julia St. into the lobby of a 139-unit, eight-story mixed-use apartment building.
The three developments would share a 487-space parking garage and provide space for the nearby Jacksonville Fire and Rescue Department headquarters.