After a weekend of accusations and legal filings between the city of Jacksonville and the owners of the Jacksonville Landing, much still is unknown about the future of the Downtown riverfront mall.
The Office of General Counsel on Friday informed Jacksonville Landing Investments LLC, which operates the Landing, that it is terminating the 1985 lease agreement in reaction to the company allegedly breaking terms of the contract.
The city owns the land beneath the 31-year-old mall, while JLI owns the buildings as a subsidiary of Sleiman Enterprises Inc.
JLI paid Rouse-Jacksonville Inc. $5.3 million for the three buildings comprising the “west parcel” of the site in 2003 and assumed and extended the lease agreement, which runs through 2056.
Assistant General Counsel Christopher Garrett wrote Friday that the city is demanding JLI provide it with “immediate access to, possession of, the Leased Property and all building improvements and other fixtures thereon.”
A statement released Saturday from Mayor Lenny Curry’s Chief of Staff Brian Hughes said the administration “is prepared to demonstrate, in any venue necessary, that JLI has been out of compliance with their legal obligations.”
“Mayor Curry is committed to ensuring the value of taxpayer assets is protected and that the property is put to its best use for the people of Jacksonville,” Hughes said.
In response, Sleiman Enterprises issued a response calling the city’s action a “non-event” and that the “city is the cause for the unfortunate state of The Jacksonville Landing.”
“It’s a desperate attempt to disrespect and circumvent the legal system where we’ve already filed in court to prove the city, not Sleiman Enterprises, is the defaulting party,” the statement reads.
Curry and City Chief Administrator Officer Sam Mousa were subpoenaed by JLI to provide depositions in the Landing lawsuit.
Both could appear in August, pending approval from Judge Virginia Norton who is overseeing a separate lawsuit between the parties in the 4th Judicial Circuit Court.
Norton has not scheduled any court-ordered activities since JLI filed its suit in November.
What happened?
The Jacksonville Landing was built and developed by Rouse-Jacksonville Inc. in 1987, with the city entering a lease agreement with the company in 1985.
Rouse sold the buildings to Sleiman Enterprises Inc. in 2003. The company, led by President Toney Sleiman, owns and operates shopping centers, strip malls and other developments in North Florida and across the U.S.
Over the past 15 years, Sleiman and the city unsuccessfully floated several redevelopment plans to fix the aging mall which lost high-profile retail tenants in the late 1990s and early 2000s.
By 2015, the “east parcel” of the property became the subject of a separate lawsuit between the city and JLI over unpaid property taxes and the purchase of an adjacent parking lot.
Last fall, another legal fight erupted.
The action by the city Friday is a follow-up to a default letter the Office of General Counsel sent to JLI on Oct. 17 accusing the company of failing to maintain and operate a “first-class retail facility having a broad range of merchandise and services consistent with the site and location,” essentially breaching terms in the lease agreement.
In that document, also authored by Garrett, city attorneys cited five main issues, including a lack of high-quality merchants in the mall and that “many of the spaces that appear to be occupied are closed during normal business hours.”
The letter also states JLI hasn’t used all reasonable efforts to lease those storefronts.
City attorneys point to section 11.2(b) of the lease agreement, which describes how it would pursue remedies to a breach of contract.
The section reads in part that in the event of a default, “the city may immediately and without further notice or demand send written notice to [JLI] of the termination of the term and of this lease, whereupon the term and this lease shall terminate.”
The document stated Rouse-Jacksonville, but JLI assumed the lease agreement.
According to the section, JLI also would face financial penalties, with options that include a formula for continued rent payments to the city as well as payments tied to an appraisal value.
Per the requirements of the lease, Garrett wrote that the city notified mortgagee PNC Bank N.A. of the default Nov. 27.
“PNC has not pursued any of the rights it may have had under the lease agreement within the time period set forth,” he states.
What’s next?
General Counsel Jason Gabriel on Tuesday declined to speak about what steps the city plans to take next, citing a pending lawsuit between the parties initiated by JLI in November in which the company accused the city of breaching the lease terms.
Sleiman’s suit, filed in the 4th Judicial Circuit Court, asserts that the city intentionally created obstacles for redevelopment, among other issues.
The case resides with Norton.
The 539-page complaint states that since Sleiman purchased the Landing, the company has made multiple attempts to redevelop the property, “yet the city has blocked those efforts each time.”
It said the city has not provided contractually obligated short-term parking, invested in public security, and hasn’t maintained the surrounding areas.
The city moved to have the case dismissed in December, calling it “little more than a laundry list of stale grievances, false and incomplete assertions, and gratuitous and self-serving statements.”
Both parties remained quiet about the dispute in public through April until Sleiman told the Daily Record how he felt about the state of negotiations.
“I’ve been dragged along for 15 years with 20 different plans and I’ve spent lots of money listening to everybody and we haven’t gotten anywhere yet, so I am just going to keep pushing forward,” Sleiman said April 5.
“The lawsuit will bring out a lot. There are going to be a lot of interesting things that we’re learning about,” he said.
In May, JLI filed another motion, accusing the city of another breach of contract, this time over the damaged state of riverfront bulkheads and docks outside the mall.
Attorneys Rutledge Liles, Michael Lee and Ryan Mittauer with Jacksonville-based Liles Gavin P.A. filed the motion on behalf of JLI asking the circuit court to force the city to repair docks along the St. Johns River damaged by hurricanes Matthew and Irma.
JLI’s attorneys claim the city “made no effort to repair the docks” in the months since the storms.
The legal fight continues to raise questions about the Landing’s future.
It’s unclear how Norton will interpret the separate breach of contract accusations, or how eviction of JLI from the property could commence.
There also are the ramifications to the Landing’s remaining tenants.
According to the Jacksonvillelanding.com website, the mall has 37 shopping, dining, retail and other tenants.
The letter from the Garrett on Friday also asked JLI for copies of all subleases in effect.
