Council agrees to higher price threshold for LaVilla town house revenue sharing

Developer Johnson Commons said rising construction costs made the previous deal with city unprofitable.

Johnson Commons plans a town house project near  Lift Ev’ry Voice and Sing Park in LaVilla.
Johnson Commons plans a town house project near Lift Ev’ry Voice and Sing Park in LaVilla.
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Three weeks after Johnson Commons LLC started site work on its 91-unit town house project in LaVilla, the Jacksonville City Council has agreed to amend its 10-month-old deal with the developer to sell the homes at a higher price. 

Council voted 14-0 on Aug. 24 on Ordinance 2022-0458, that says Johnson Commons will split the net revenue from the town house sales with the city beyond $320,000. 

The original deal, approved by Council in October 2021, set the revenue-sharing threshold at $250,250.

Johnson Commons struck the deal with Council and the city Downtown Investment Authority in exchange for 3.45 acres near Lift Ev’ry Voice and Sing Park to build the development,  appraised at $3.58 million in 2019. 

Johnson Commons, a joint project of JWB Real Estate Capital LLC and Corner Lot Development Group, says the change was needed because rising construction costs over the past two years. 

JWB President Alex Sifakis said Aug. 23 the cost to build a town house is up 50% since the lower price for the project 2½ years ago and the developer would lose money on the investment. 

Previously, Sifakis said the development team planned an $18 million investment in the project.

DIA officials agreed. 

“Construction costs have risen such that they can’t build the units for that amount anymore,” DIA Director of Downtown Real Estate and Development Steve Kelley told the Council Finance Committee on Aug. 16. 

Sifakis said Johnson Commons expects site work to continue for at least four months before vertical construction starts. 

Council Vice President Ron Salem abstained from voting because he invests in JWB .  Members Joyce Morgan, Randy DeFoor , Rory Diamond and Garrett Dennis were absent for the vote.

The developer hopes to have some units built by the end of next year, but Sifakis said the speed at which the town houses are completed will depend on market demand. 

There has been no decision when Johnson Commons will break ground on a proposed second phase with ground-floor retail space facing the park on Lee Street and second-floor, for-lease apartments, Sifakis said.

Johnson Commons has not determined the final unit price, but Kelley told Council members it likely will be about $350,000. 

“We’ve had a ton of interest, but we’re not setting the price point yet,” Sifakis said. 

Despite increasing the revenue-sharing threshold, Kelley estimates the city still will receive up to $1.3 million from the deal and generate a $1.38 return for every $1 invested by the city. 

For example, under the previous deal, a LaVilla town house that sold for $400,000 would net the city $74,875. Under the change, that same sale would net the city $40,000.

That investment comes from the value of the land that Johnson Commons acquired from the city Nov. 30, 2021, for $100. 

The DIA board approved the amended agreement in April.

The town house project has faced starts and stops since it was proposed in 2019. 

At the time, DIA officials hoped the town house bids would fill what city officials call “the missing middle” — affordable market-rate housing Downtown. 

Johnson Commons finished second to Vestcor Companies Inc. in a 2019 request for proposals issued by the DIA to develop the site, bounded by Adams, Lee, Houston and Forsyth streets.

Council signed off on the redevelopment agreement with Vestcor in January 2020.

The DIA allowed JWB and Corner Lot to take over the project in March 2021 after Vestcor subsidiary VC LaVilla Townhomes Ltd. abandoned the project due to what the company cited as market uncertainty because of the pandemic and returned the land to the city.

Johnson Commons also donated $150,000 toward the development of Lift Ev’ry Voice and Sing Park as part of the deal. 

Crews contracted by the city Department of Public Works started work on the park in early August. 

Landscape architect Walter Hood of Hood Design Studio in Oakland, California, designed the park. The city said he made several trips to Jacksonville and researched LaVilla’s history.