A lobbyist for the planned Downtown resort cites contamination and USS Adams concerns; the city wants the existing 'eyesore' building removed.
A deal to redevelop the vacant Berkman II building and property will not proceed as planned, according to the group seeking city incentives to develop the project.
Barrington Development, through 500 East Bay LLC, proposed to build a 340-room hotel and resort, amusement park and parking garage at 500 E. Bay St. along the Downtown Northbank.
The development group sent a letter Friday to Downtown Investment Authority interim CEO Brian Hughes asking the administration to withdraw legislation approving the deal in City Council.
Barrington sought $36 million in city-backed financial incentives to proceed with the project it anticipated would require $122 million in private capital to complete.
Southern Strategy Group lobbyist Matt Brockelman, who is representing Barrington, said Friday the group made the decision because of issues outside of Barrington’s control.
“For one, the USS Adams not coming to Jacksonville caused them to look at their projections,” Brockelman said.
In December, the U.S. Navy announced it was not donating the USS Charles F. Adams to the Jacksonville Historic Naval Ship Association, which planned to restore and anchor the retired warship outside of the development as an attraction.
“When that was taken off the table, they had to look at the current deal and think about how that loss would impact the entire project,” Brockelman said.
He said over the past few months, the group’s engineering partners also raised concerns about the level of existing contamination on part of the Shipyards property Barrington was to secure from the city as part of the agreement.
“They got less and less comfortable from both a cost and a timing perspective that the contamination issue could get resolved quickly,” he said.
Brockelman said Barrington has spent the past couple of months “talking about the best path forward.”
He said the culmination of those talks resulted in the letter sent to Hughes on Friday.
“We remain committed to bringing a high-end development, so that hasn’t changed,” he said.
Brockelman said the request to withdraw is more about process than anything else.
He said there’s no sense in keeping the bill deferred while a new deal is worked out. He said there would be substantial changes to the economic development agreement.
“We know that after we’ve gone back to the drawing board, any decision is going to require the city’s input,” Brockelman said.
He said Barrington expects to begin meeting with the city and the DIA in the next few weeks.
Hughes said that while the decision is disappointing, “we are encouraged that they remain confident in the viability of a path forward even though it will require modification.”
“For more than 11 years, no development team had brought forward a path for the Berkman II property that works,” Hughes said.
He said the analysis and review of the agreement by the DIA staff and the board of directors was worthy of council support.
“First and foremost, because the incentives in the project would come after development was completed and put no risk on taxpayers,” Hughes said.
“At this point, the property owners will have the capacity to let the property sit idle for quite some time into the future if they choose,” he said.
Hughes said the DIA is ready to work with Barrington “to find a plan that gets this eyesore off our riverfront.”
Brockelman said the amusement park is likely gone and that there will be changes to the hotel development.
“We’re not getting into specifics right now because we need to meet with the city first,” Brockelman said. “Because any decision needs to be made with the city.”
He said if there is a “front-runner” idea, it would involve a mix of hotel rooms and residential units.
“We haven’t decided if that means apartments or condos,” he said.
Legislation introduced to council in February said the economic development agreement approved by the DIA includes a $20 million Recapture Enhanced Value Grant, which is an annual tax rebate of up to 75% of new ad valorem taxes generated by the project, paid over 10 years.
Other elements of the deal included:
• The city selling the group 2.8 acres adjacent to the east side of the Berkman II parcel for $1,635,200
• The city providing $1 million toward environmental remediation of that property
• Barrington setting aside 200 parking spaces for public use
• The city issuing a $3.5 million parking garage grant payable upon completion of the garage
• The city giving a $3.25 million grant for the hotel, payable after the structure is built
• The city providing an $8.25 million operational performance grant, payable over 15 years after the hotel opens.