Shad Khan’s Stache Investments Corp. has filed a complaint to foreclose on the Barnett Bank Building Downtown, claiming it is owed more than $3.9 million as of Dec. 5.
The move comes more than two years after Stache loaned Barnett Tower LLC, led by manager Stephen Atkins, $3 million to buy the vacant, historic 18-story tower at 112 W. Adams St.
Stache Investments, led by President Shad Khan, filed the foreclosure complaint May 22, saying Barnett Tower has not made a single payment on two notes issued in 2013 and 2014. The complaint was served on Barnett on May 27.
Atkins apparently continues to control the historic and vacant Laura Street Trio buildings across the street. Atkins bought the tower and the Trio on March 29, 2013. That also was the day Stache made the first loan.
However, separate deeds were issued. Atkins bought the Barnett Building through Barnett Tower LLC, from JDI Adams Street LLC of Chicago. He bought the Laura Trio through Laura Trio LLC from JDI Trio LLC.
The Trio is not mentioned specifically in the foreclosure complaint.
Atkins has been trying to redevelop the Barnett Bank Building, built in 1923 but vacant for more than two decades. He issued a statement Tuesday that he continues to work with the city and lenders to renovate the tower.
“Following our purchase of the Barnett National Bank Building in 2013, our plan was to work with Stache Investments on the programming and redevelopment of the property. Unfortunately, our visions for that project are no longer aligned,” he said.
Atkins said while Stache Investments has chosen to pursue a legal course of action, he is continuing “to work with the engaged financial institutions and the City of Jacksonville to finalize a public-private partnership that will protect and satisfy both Stache's and my personal financial investments in the Barnett Building.”
Atkins said his goal of helping revitalize Downtown remains.
“The preservation and reactivation of the Barnett Building should be an integral part of that effort,” he said.
A hearing on the foreclosure is scheduled for July 7 before Circuit Judge James Daniel. Stache Investments asked the court to appoint a receiver on the property to maintain it.
Atkins is represented by Fred Franklin and Scott Kennelly of Rogers Towers. Stache Investments is represented by Gunster, Oakley & Stewart attorneys David Wells, William Adams Jr. and Timothy Danninger.
Wells declined comment. Franklin did not return a phone call.
Khan spokesman Jim Woodcock said in an email, "The court filings speak for themselves."
In the complaint, Stache Investments says it holds the promissory notes, mortgage and security agreement on the property.
According to the foreclosure suit, Barnett Tower LLC borrowed $3 million from Stache for a mortgage on the building on March 29, 2013.
In addition, Barnett Tower LLC borrowed another $165,764 from Stache in June 2014, but the lawsuit gives no reason for the second promissory note.
Attorneys for Stache Investments notified Barnett Tower LLC in two separate letters on Dec. 5 that it had failed to make payments and demanded immediate payment of $3,765,038.15 and $169,978.87 on the two notes.
Atkins has proposed residential, office space, restaurants, a sports bar and a boutique hotel for the Barnett Bank Building and the Laura Street Trio.
He told the World Affairs Council in September the $70 million project would require at least $8 million from the city to become reality.
Aundra Wallace, Downtown Investment Authority CEO, said he didn’t know about the foreclosure and called it a private matter between the two sides.
In April 2014, Atkins said he wanted to convert the former Barnett Bank Building into office, classroom, residential and retail space. Southeast planned to lease the ground floor and mezzanine level to a retail tenant and develop the upper floors for office space, classrooms for the use of the University of North Florida and 80 apartments for students, building tenants and other residents.
The top floor would be a lounge and conference center.
Atkins has opened the ground floor of the building for One Spark events, allowing the public into the structure that once housed one of the city’s legendary homegrown businesses.
The Barnett Building was Jacksonville’s tallest tower when it opened and remained so until 1954 when the Prudential Building, now the Aetna Building, was built on the Southbank. It has been empty since 1991, when Barnett moved a block south into its new 42-story office building, now Bank of America Tower.
Stache Investment’s foreclosure action follows two other moves by Khan to close out investments. He also invested in Edgewood Bakery and KYN, a Downtown business accelerator.
Stache pulled KYN’s funding in October, saying only 12 percent of his $1.1 million investment went to the startup companies. This year, he won a court case to prove he was majority owner of Edgewood Bakery so he could keep the longtime business operating.
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