Downtown Investment Authority CEO Lori Boyer granted performance schedule deadline suspensions to the developers of The District on the Southbank and the Jones Bros. Furniture building on the Northbank because of the COVID-19 pandemic.
The developers requested the suspensions through force majeure clauses in their contracts. A force majeure clause protects contract holders from extraordinary events or circumstances beyond their control.
Boyer said the suspensions, which began March 13, will end when the COVID-19 emergency is lifted by government officials. The performance schedules will resume with the number of days that remained before the emergency, she said.
In January, Boyer granted a 90-day performance schedule extension from Jan. 13 to April 13 to The District developer Elements Developers of Jacksonville LLC.
Michael Munz and Peter Rummell control Elements Development through Rummell Munz Equity LLC.
The COVID-19 pause will allow Munz and Rummell more time to obtain equity capital to finance $31.1 million in Community Development District bonds and bond insurance needed to pay for public infrastructure to support the development.
Munz said April 10 that Elements was preparing to offer the bonds before the global COVID-19 pandemic stalled the economy.
“When this hit, we were ready to move forward going to the market with bonds. We’re going to have to do a careful analysis of how we ramp this back up,” Munz said. “What will be available in the labor force, materials, contractors and consultants once we come out of this? It’s uncharted territory for all of us.”
Munz said he would not predict the post-pandemic availability of equity capital to finance The District.
The District is a proposed $600 million, 32-acre mixed-use development comprising residential, retail, hotel and office space on the former site of JEA’s Southside Generating Station.
Jones Bros. Furniture project
ACE JAX LLC, managed by Elias Hionides, expected to close on the Jones Bros. Furniture property March 31 before the force majeure suspension.
Hionides and ACE JAX co-manager Christian Allen of Atlantic Beach plan to transform the vacant seven-story building at 502 N. Hogan St. Downtown into 28 apartments, 10,247 square feet of retail or restaurant space and a 1,040-square-foot office.
Boyer said in her letter to the developer that she was skeptical it will have the financial ability to begin construction by its May 7 deadline.
The former Jones Bros. Furniture Co. building is owned by OUR Properties Inc. and the adjacent building is owned by Mandarin Emporium Inc.
ACE JAX asked the DIA for a deadline extension from Feb. 28 to March 3 to its redevelopment agreement, which includes a financial incentives package of up to $2.3 million for the estimated $11.1 million renovation.
The DIA incentives approved in May 2018 comprise a $1.5 million grant from the Downtown Historic Preservation and Revitalization Trust Fund and a 20-year, $750,000 loan at 1.5% interest from the Downtown Economic Development Trust Fund.
In addition, the city plans to convey the surface parking lot along West Ashley Street to ACE JAX for $1. The land is valued at $120,141.
Boyer’s letter said Hionides requested to convert the $750,000 loan to a grant to make the project financially viable.
The letter said Hionides told the DIA that the developer did not have the financial ability to complete the Jones Bros. redevelopment and suggested increasing the number of residential units in the project and reducing the retail square footage.
Hionides said in an April 10 interview that the Jones Bros. project is financially viable. He said the scenarios Boyer stated in her letter were only ideas and are no longer being considered.
“If this emergency lasts and we have a second wave in the fall, it’s out of our hands. Nobody is lending,” Hionides said. “Your capital partners are not going into the market.”
As COVID-19 continues to create uncertainty in the state of the local economy, Hionides said commitments are difficult from retail tenants.
“The biggest challenge is finding retailers,” Hionides said. “At this juncture in history, no one is getting deals done. We’ve been thrown a couple of curveballs along the way. COVID is one of them.”