After the deadline was missed to complete a parking garage that was part of a deal to redevelop the historic Barnett National Bank Building, the Downtown Investment Authority and project developers are renegotiating the development agreements to ensure the companion Laura Street Trio project moves forward.
DIA CEO Lori Boyer said Wednesday the authority, SouthEast Development Group of Jacksonville and The Molasky Group of Cos. entered into a partial termination of the companies’ rights and obligations under the agreement signed in September 2017.
The parking garage now will be developed by VyStar Credit Union. The DIA board unanimously approved a resolution Wednesday to allow the city to sell the 0.77-acre parcel to VyStar for $943,403 to build a 550-space garage on the south side of Forsyth Street between Main and Laura streets.
For DIA officials, bringing in VyStar was the way to ensure that a project key for the Trio was completed.
“I think it’s important we retain the capacity to provide spaces to incentivize the Trio and to utilize for the Barnett,” Boyer said. “I also think the availability of this property for Downtown business use — parking is important and there is a great need in the immediate area.”
The DIA’s focus will shift to working with SouthEast to ensure the Trio project has financing.
In 2017, the City Council approved $8 million in redevelopment grants from the Downtown Historic Preservation and Revitalization Trust Fund split $4 million for the Barnett and $4 million for the Trio. That’s in addition to a $1.8 million Recapture Enhanced Value grant to be paid over 20 years.
According to the original development agreement, half of the Barnett grant was to be paid after completion of the Barnett building and the parking garage, with developers receiving the final $2 million after the Trio project is complete.
Because of the partial termination related to the parking garage, Boyer said $2 million of the Barnett grant is “in a holding pattern” and could be shifted to complete the Trio, if necessary.
“That’s an important thing. We want it to happen,” she said of the Trio redevelopment. “It’s probably the No. 1 Historic Preservation Trust Fund project Downtown. What does it take, and let’s get it done.”
The Trio redevelopment agreement is not affected by the amendment to the Barnett agreement. Boyer said construction costs for the Barnett were higher than developers anticipated and have risen since the agreement was signed.
“We need to look at Trio with a fresh set of eyes,” Boyer said. “We need to look at it realistically in terms of demand for hotel space, what you can expect to get in rent Downtown, what does the pro forma look like and what is their (financial) gap? What do they have in the way of a financing structure, how’s it going to work?”
SouthEast said Wednesday in a news release the developers and the DIA have agreed to work on revising their agreement and “re-align the public investments for the project to be most effective for the remaining work on the Laura Street Trio, along with the construction of a new neighboring parking structure at Forsyth Street.”
The company also announced The Barnett received its certificate of occupancy from the city, marking the end of major construction.
According to the statement, the 18-story tower’s 107 one- and two-bedroom loft-style apartments called The Residences at Barnett are approaching 50% occupancy.
Partners SouthEast and Molasky, based in Las Vegas, expected it would cost $90 million to renovate the Laura Street Trio and Barnett, situated on opposite sides of Laura Street at Adams and Forsyth streets.
SouthEast said developers have spent $53 million just on The Barnett.
The developers transferred ownership of The Barnett to a new company, Barnett Tower 2 LLC, in January 2018.
SouthEast principal and Managing Director Steve Atkins owns the Trio, comprising the Florida Life Building, the Bisbee Building and the old Marble Bank Building. They comprise about 72,000 square feet of general office space and 10,000 square feet of commercial and retail space.
Plans for the Trio include a Courtyard by Marriott hotel.
Any renegotiation of the Barnett or Trio agreements will require City Council to approve an amendment to the original legislation.
“Barnett may have taken longer, Barnett may have cost more, but I can’t in any way be critical of the development team for that because that seems to be a consistent story on any historic renovation I’ve ever seen,” Boyer said.
“It always costs more and it always takes longer. I am certainly hopeful they are able to pull it off and move on to the next parcel. I think they did a good job on Barnett. I think the quality of the renovation is lovely,” she said.
The DIA parking garage deal with VyStar mirrors the redevelopment agreement with Barnett Tower LLC, including the parcel cost and the number of parking spots created and reserved.
The agreement requires VyStar to lease up to 250 parking spaces to the city for tenants of the Barnett Building and Laura Street Trio at $100 per month per space. Until the Trio is complete, VyStar will lease up to 125 spaces to the city.
The agreement between the Barnett developers and the city stated that the Barnett and parking garage must be “substantially completed” within three months of each other.
The Barnett’s substantial completion deadline was Sept. 13 and developers have yet to break ground on the estimated $11 million parking garage.