Dallas-based Preston Hollow Capital LLC is assuming control of The District, the $600 million, mixed-use project on the Downtown Southbank.
Michael Munz, co-lead of Elements Development of Jacksonville LLC, which led the proposed development since 2014, said in a statement Sept. 4 that Preston Hollow will assume the rights and responsibilities for The District under Elements’ redevelopment agreement with the city and Downtown Investment Authority.
The announcement comes as Elements approached an Oct. 1 deadline set by DIA CEO Lori Boyer and city attorneys to close on revenue bonds needed to break ground on the project and meet the progress benchmarks in its development agreement.
The statement said Preston Hollow will follow the construction timeline outlined in the deal with the city and close on the revenue bonds.
The District’s $31.1 million in Community Development District bonds and bond insurance will pay for the infrastructure supporting the development.
Munz and Elements co-lead Peter Rummell will stay on as consultants to provide “support, counsel and development expertise” to Preston Hollow’s team.
“Today’s development constitutes another important step in transition from planning to actual development,” Munz and Rummell said in the statement. “Preston Hollow Capital brings a strong track record of executing and finalizing projects like these, and we are delighted they will be working with us to take the project to the next level.
“Most importantly, they share our passion and excitement to see 5-years of work come to life as The District,” the developers said.
Preston Hollow facilitated an $18.59 million payment to Elements in July 2018 to secure the 30-acre site next to the Duval County School Board building from previous owner JEA.
Elements secured a $20 million mortgage with Preston Hollow Capital at that time, according to Duval County property records, then closed on the property.
Plans for the proposed project comprise residential, retail, hotel and office space on the former site of JEA’s Southside Generating Station.
Boyer granted Munz and Rummell’s request in March to invoke the contract’s force majeure clause and suspend The District’s performance schedule deadline because of the COVID-19 pandemic, the latest in a series of delays that began in 2015.
This halted a 90-day performance schedule extension Boyer approved from Jan. 13 to April 13 under the terms of the redevelopment agreement.
Boyer said in a letter to the Elements developers Aug. 21 that to continue the force majeure suspension granted in March, Munz and Rummell would need to produce evidence that the pandemic was preventing closing on the bonds.
“I believe the bond purchaser is still prepared to buy them, and other closings are occurring. Business activity has resumed and schools are opening, and concerns over market stability are not a basis for use of this provision. Absent some other tangible evidence, I believe the closing could take place and thus we would need to resume the contract extension period,” Boyer said.
In a text message Sept. 4, Munz said Elements notified the DIA of Preston Hollow taking control of The District and said “our team” plans to meet with Boyer soon.
Munz said that since Elements’ position in the agreement will remain unchanged, the DIA will not have to transfer development rights for the project.
Boyer did not immediately return phone calls for comment Sept. 4.