With the Jacksonville City Council’s OK of a $26.67 million taxpayer financing package, developer Steve Atkins said everything is in place to begin restoration of the historic Laura Street Trio.
Council voted 16-1 on Sept. 14 to approve a forgivable and deferred principal loan package to help Atkins’ SouthEast Development Group convert the vacant Downtown buildings into a 145-room Marriott Autograph Hotel with a restaurant, lounge, ground-floor retail and a bodega grocery store.
After the vote, Atkins said the work will be challenging but that the Trio needs to be put “back into service.”
“It’s a really important project for our city,” he said.
“It’s something that we absolutely need to continue to focus on — historic and development in our Downtown. And not just individual projects but large-scale. We’re going to continue to talk about that in the coming months.
“I think when it’s completed, I really, truly believe that this will be the crown jewel of Downtown,” Atkins said.
After the bill passed the Council Finance Committee on Sept. 8, Atkins said he expected site work to begin by early November on the estimated $70.48 million project.
Atkins has been working for nearly a decade to restore the Florida Life Insurance, Bisbee and Marble Bank buildings that comprise the Trio at northeast Laura and Forsyth streets.
The Downtown Investment Authority approved a $24.656 million incentives package in March with a $9.377 million five-year forgivable loan; $10 million five-year forgivable code compliance loan; and a $5.279 million deferred principal loan.
“This has been a bill that has been 20 years in the waiting. If you love Jacksonville, you love this city and you love our history, you have to love this project,” said Council member Matt Carlucci.
“This is the most significant historic corner in Jacksonville, Florida, Downtown.”
$2 million added
The bill added a $2 million forgivable loan to the city commitment to help SouthEast satisfy an outstanding bridge loan on the property that remained from the company’s previous attempt to secure project financing through the city.
City officials and Atkins said the lien on the Trio is a $4 million bridge loan from the nonprofit Local Initiatives Support Corporation Jacksonville tied to SouthEast’s renovation of the Barnett National Bank building completed in 2019.
That structure is across the street from the Trio.
According to LISC Jacksonville Real Estate and Lending Program Officer Charles Shealy, SouthEast’s construction lender on the Barnett US Bank would not approve a second lien on that building.
LISC issued the loan for the Barnett work against the Trio, owned by Atkins through Laura Trio LLC, to secure the bridge loan.
In 2017, the Council approved $9.8 million in grants and a tax refund for SouthEast and its then-development partner The Molasky Group of Companies to renovate the Barnett and the Trio.
However, that deal fell through after the DIA said SouthEast missed a construction deadline for the project’s parking garage. The garage project was later taken over by VyStar Credit Union and is under construction.
In September 2019, the DIA and SouthEast begin renegotiating the city agreement to ensure the Trio is renovated.
According to Atkins, losing the Barnett grant made repaying the full LISC loan on the Trio a challenge.
City officials said the lien was preventing SouthEast from securing its construction financing.
LeAnna Cumber was the only Council member to vote “no” on the $26 million Trio deal. Council member Rory Diamond was absent.
Cumber argued that the Council was awarding SouthEast $2 million for a project on which it defaulted and she did not like that the extra money was not vetted by the DIA.
Cumber noted Council was hesitant to approve incentives in January for Jacksonville Jaguars owner Shad Khan’s Lot J project for that reason.
She also took issue with incentives pushing the developer equity in the project below the 10% threshold required by the Downtown Preservation and Revitalization Program, which required Council to attach a policy waiver to the amendment.
She said SouthEast has “no skin in the game.” She said the $24.67 million approved by the DIA is “essentially free money” to the developer from the city.
“Now that we just gave them an extra $2 million, there’s essentially no cash that they’re putting into this,” she said.
“Now, I have ... philosophical reasons on why we shouldn’t be giving money for historic properties. I think that if the private sector doesn’t see that it’s something we should be doing and it’s not going to make money, then I would just rather, for the most part, tear them (the Trio) down and build something else that does make money.”
A DIA staff report released in March shows that SouthEast plans to invest $6,802,635 in equity along with $25.67 million in debt financing. The project is expected to receive $9.461 million in federal historic tax credits.
The developer is working with investment bank Piper Sandler Companies on the Trio renovation.
Atkins said the Barnett renovation went over budget by $17 million, reaching $55 million from the estimated $38 million. He said without the city incentives, SouthEast had to apply for federal New Market Tax Credits to finish the project.
Trio past and future
The Trio buildings, built between 1902 and 1912, are historic and contributing structures to the Downtown Jacksonville National Register District, which makes the adaptive reuse project eligible for the DIA historic incentive program.
Atkins declined Sept. 14 to say who will operate the bodega. The restaurant and bars will be run by hotel operator Winegardner and Hammons Hotel Group of Cincinnati.
According to Atkins, foundation work on the addition will be completed simultaneously over 10 to 11 months with structural remediation on the existing Trio buildings. That would ensure it is safe to begin vertical construction, he said.
According to a legislative fact sheet with the bill, the Trio’s historic buildings would house 86 hotel rooms while the remaining rooms would be in the addition planned at the northwest corner of the property.
Atkins said Sept. 14 that SouthEast will not formalize leases with third-party retail operators until the project is closer to opening.
Dasher Hurst Architects designed the project and Danis Construction is the contractor.
The full project will take 24 months, Atkins said.