A sullied, storied chapter in the Shipyards property is on the brink of being closed.
The city will receive $13.4 million from the developer of the failed Downtown project, a figure that represents the city’s portion of what’s been recovered in a Texas bankruptcy case.
“I think it’s a huge win for the city,” said General Counsel Cindy Laquidara.
It was a sentiment expressed by many city officials Tuesday evening, some of whom already have ideas for how the money could be spent.
How the city finally received the money dates back years.
LandMar and its parent company, Crescent Resources LLC, filed for Chapter 11 bankruptcy in 2010, years after the former entered into an agreement with the city to redevelop the riverfront property into a an almost $1 billion mixed-use community. LandMar completed close to $20 million worth of public improvements — mainly in the form of a bulkhead — before company sales plummeted and it was in “desperate financial condition,” according to a bankruptcy lawsuit.
LandMar was managed by Jacksonville businessman Ed Burr, a defendant in the case, who also was an officer and one-time co-owner of Crescent Resources.
LandMar returned the land to the city in 2011 in lieu of foreclosure. At that time, the land was valued at about $20 million.
City Council approved legislation in 2011 that sought $23 million from the company for the city’s unsecured debt claim, down from the $37 million that remained after subtracting the land value.
The lowered amount represented a compromise, of sorts, as the city could continue costly litigation that would likely take years.
Payouts in such cases often are “pennies on the dollar,” Laquidara said, and the $13.4 million, combined with the $20 million in land value and close to $20 million in improvements represent a substantial return despite the situation.
Legislation to accept the money and the settlement was added to council’s addendum Tuesday afternoon with the intent to be passed as an emergency. But members decided to bring it back for approval when the full council next meets again May 13.
If council approves the settlement, the money would then be put into the general fund — months before Mayor Alvin Brown submits his budget and council reviews it at length.
“We feel this is a big win for taxpayers,” said David DeCamp, Brown’s spokesman, while council Finance Chair Greg Anderson called it “a wonderful surprise.”
“I’m glad the city will be getting some of its money back,” said council member Matt Schellenberg.
Several other council members had early ideas on where such a windfall could be used.
“I like money,” said Council President Bill Gulliford. “I think it’s great and wish it was more.”
He said he thought the money should be used for capital improvements, not operating dollars, and that vehicle purchases to help the city’s fleet system could be an idea.
Council member Reggie Brown said infrastructure improvements, particularly in underserved areas, needed to be a priority.
Council Vice President Clay Yarborough said a consideration should be made to use it to offset the city’s actuarially required pension contribution, estimated to be $11 million.
Others wanted more time and more information.
“It sounds good, but I want to read all the details,” said John Crescimbeni.
In particular, he said he wanted to see if funds needed to be provided for environmental cleanup issues on the site.
If unencumbered, though, he said consideration should be given to restoring the Downtown Investment Authority fund that was slashed last budget year. The $9 million slated for Downtown economic development was taken down to $4.1 million.
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