Laura Street Trio owner Steve Atkins is increasing his financial request from the city to $62.48 million to redevelop the historic Downtown buildings into mixed-income housing, a restaurant and a Marriott Autograph Hotel.
In his latest pitch, Atkins is asking for a $25 million completion grant from the city in addition to $37.48 million in historic preservation and property tax incentives for what has become a $178.87 million project.
He made the request April 19 at a Lunch and Learn event at City Hall with City Council members Matt Carlucci and Michael Boylan.
Carlucci and Boylan said they will try to make the case to other Council members to support the public investment.
“This is, in my opinion, the most important, historic signature project of Downtown Jacksonville. And we can hit it out of the park or we can strike out,” Carlucci said.
“And I hope that our Council will see the significance ... of what this brings to our Downtown area,” he said.
Atkins, principal and managing director of Southeast Development Group, proposes to transform the Trio at Laura and Forsyth streets into a 143-room, four-star Marriott Autograph Collection Hotel; a restaurant and bar open to hotel patrons and the public; and 169 apartments with market rate and workforce housing units.
The project would add two 11-story structures to the historic Florida Life Insurance, Bisbee and Marble Bank buildings that comprise the Trio. One would be hotel rooms and the other apartments.
Atkins said at the meeting that the apartments would be named The Klutho at Laura Street after the Trio’s original architect, Henry Klutho.
The hotel would have an underground speakeasy bar and lounge in the old Florida Life vault as well as indoor-outdoor rooftop bar.
The plan calls for 6,550 square feet of street-level retail space.
According to Atkins, the total project would be 308,305 square feet.
The Council approved a redevelopment agreement and $26.67 million in incentives for the Trio in September 2021 when the plan was a $70.48 million hotel and restaurant without the apartments.
A new incentive package will require a new redevelopment agreement approved by the DIA board and Council.
Atkins conceded that the $178.8 million total will require a “significant ask” in city financial incentives to fill the financial gap.
According to Atkins, the coronavirus pandemic made it difficult to find private financing to build a hotel project. He said multifamily was added to make the project financially viable.
“Not only did the financial markets change, so did the costs (associated) with building these types of projects. Over that year period from late (20)21 to (20)22, costs, not just on our project but most projects, increased on a 30% to 40% basis. So that’s one of the other factors we have to address,” he said.
Trio designer Dasher Hurst Architects took the latest plan to the Downtown Development Review Board in January 2022 and was awarded conceptual approval.
DIA CEO Lori Boyer said at the meeting her agency could support the historic loans and Recapture Enhanced Value Grant, a property tax refund, but cannot back the $25 million completion grant.
The DIA’s Council-approved policy does not allow it to support a completion grant investment that has a return on investment to the city below $1 for every $1 invested. The final ROI calculation for the proposed Trio incentives is not yet complete but DIA officials said the $25 million grant would fall below that threshold.
Boyer said after the meeting the project could qualify for a smaller completion grant.
“There are adopted rules and regulations of having the ROI at 1, and it doesn’t get there. It doesn’t meet the tiers analysis, so we can’t recommend it. But we can acknowledge that there’s a (financial) gap that exists,” Boyer said.
For Atkins and Southeast to receive the additional $25 million, she said City Council will have to approve separate legislation, which Boylan and Carlucci said April 19 they intend to introduce.
“Lori Boyer raises a very important point. This is a policy issue that we’re talking about. Are we setting precedent with this opportunity or is this opportunity so unique that it warrants an exception to policy? And that’s what we’re going to be discussing in the coming months as we move forward,” Boylan said.
Atkins said the remainder of the financing would come from debt, investors and equity. He said after the meeting that his lenders will not close on the financing until the city deal is in place.
The Trio’s affordable housing will be set at 80% of the area median income which, according to Southeast, would put rental rates for those units at $1,548 per month in 2024.
The plan shows 118 units will be market rate and 51 apartments, 30% of the project, will be workforce housing.
“Downtown living can’t be for all rich people. It has to be a blended market and folks that are representative of the entire demographic of our city,” Atkins said.
Boyer said that in March the Florida Legislature passed the Live Local Act, which attempts to bolster affordable housing. It could exempt some affordable housing properties from ad valorem taxes and impact the Trio’s REV grant potential.
Atkins said Southeast is monitoring the impact of the legislation, Senate Bill 102, and will make adjustments if necessary.
“That’s what makes downtowns work. It’s not always about a special place that people go to for a show and leave,” Atkins said.
“You have to create a community and that’s what workforce and sustainable housing does.”