City Council member Reggie Gaffney plans to introduce legislation Wednesday to advance a proposal to transform the former YWCA building and surrounding property in the Downtown Cathedral District into apartments.
He attempted to introduce it Tuesday to the council Finance Committee, which took no action on it.
Gaffney intends to introduce the bill this week as an emergency or on a one-cycle basis to allow the city to defer two loans on the 325 E. Duval St. property. It is the lien holder on those loans.
An emergency designation would allow council to vote on the bill Tuesday while a one-cycle designation would send it to council committees for one public reading before a full council vote in early January.
The nonprofit Cathedral District Jax Inc. wants to buy the land from another nonprofit, Community Connections Inc., to create a mixed-use development.
Community Connections ceased operations in December because of financial problems, vacating the property.
Although no formal agreement has been signed, Chase Properties Inc. President Mike Balanky wants to develop the 1.5-acre site into 115 market-rate and workforce apartments and possibly create street-level retail stores.
The property is bound by four mortgages, all of which are in default.
The city is the lien holder on two of them — a $382,000 Home Investment Partnership Program loan and a $281,204 State Housing Initiative Partnership Loan.
Another mortgage is from the state and another is with Valley National Bancorp.
A $288,200 State Apartment Incentive Loan was obtained in 1995 from the Florida Housing Finance Corp. As the lien holder, the state is threatening to foreclose on the property.
Cathedral District Jax board Chair Steve Kelley said the three government-backed loans are tied to a 45,000-square-foot flat-roofed building that is slated for demolition if the project moves forward.
The Valley National Bancorp mortgage loan is tied to a smaller building on the eastern edge of the property.
“There’s no co-collateral situations, they’re all independent of one another,” said Kelley.
Kelley said the goal is to get the property under single ownership to allow development.
“Right now, what happens on one piece of property will only influence what can happen on another piece, but it’s not directly tied to it,” he said. “That complicates things.”
Ginny Myrick, who is coordinating the project for Cathedral District Jax, urged the council Finance Committee on Tuesday to review the bill on an emergency basis.
She said the nonprofit has been working with Mayor Lenny Curry’s office since September to find a way to reduce the cost of purchasing the land.
Myrick said the quicker the land is purchased, the faster it will be added to the property tax rolls.
Myrick said the original pitch to Sam Mousa, Curry’s chief administrative officer, was for the city to forgive the loans with the condition that the apartment project would move forward.
She said Mousa and the administration’s staff declined that offer, opting instead to defer the loans for 24 months with the condition that the project is completed within that timeframe.
According to Myrick, if the project falls through, Community Connections would liquidate the property to satisfy the loan obligations and the deal would die.
If the project is completed, she said the city would subordinate the loans into a new mortgage when Cathedral District Jax purchases the property with funds it secured Oct. 5 from a national endowment by the Episcopal Church Building Fund.
According to a commitment letter, the Episcopal fund is willing to give Cathedral District Jax $850,000, or up to 100 percent of the appraised value, to purchase the land.
Myrick said an appraisal of the property should be completed this week.
Myrick told the Finance Committee the Episcopal fund has set a Dec. 31 deadline for Cathedral District Jax to complete its due diligence ahead of a January closing.
That deadline was set after the original due diligence period was extended from the end of October.
Myrick said while the Episcopal fund might be swayed to extend the deadline by another 30 days as council reviews the deal, the portion of the land tied to Valley National Bancorp presents more of an issue because the bank could decide to sell the property at its discretion.
Several members of the Finance Committee said they couldn’t approve the deal in just a week.
Council member Matt Schellenberg said it was unfair to the 12 council members not on the Finance Committee who might not have had the ability to vet the deal. Myrick has been unable to meet with every council member to explain it.
Council member Katrina Brown said she wanted to avoid doing committee work during next week’s council meeting, but that she was open to meeting with the nonprofit this week.
Kelley, who also serves as vice president of community development lending and investing at EverBank Financial Corp., said the nonprofit will spend the next week educating as many council members as possible on the situation.
“There’s so much nuance and complications with this particular situation, so it’s hard to bring someone up to speed in a half- hour,” he said.
Tuesday’s meeting was the latest in a yearlong process led by Myrick and Kelley to redevelop the property that was formerly home to the YWCA before Community Connections.
Because most the buildings were developed in 1949, the land is considered a contributing property in the Downtown Jacksonville Historic District as listed on the National Register of Historic Places.
Demolition requires approval from the Jacksonville Historic Preservation Commission, which pushed back last summer.
After months of negotiation, Myrick successfully persuaded the commission to designate only a portion of the structure as a historic landmark, allowing the rest of the property to be razed. In August, council approved the designation.
Any development still would need approval from the Downtown Development Review Board and any incentives offered by the city would need to be negotiated with the Downtown Investment Authority.
Kelley said Balanky remains onboard to develop the property.
“Mike has put a ton of time and capital in this, so we clearly see him as the most likely developer,” he said.