The proposed $24.67 million taxpayer-backed deal to partially finance SouthEast Development Group LLC’s planned historic Laura Street Trio renovation Downtown cleared its first hurdle March 15.
The Downtown Investment Authority’s Strategic Implementation Committee voted 3-0 to advanced the deferred and forgivable loan package for the full board’s consideration March 17.
If approved, City Council could take the final vote on the incentive agreement by the end of June for SouthEast’s $70.48 million proposal to adapt the vacant structures into a 145-room Marriott Autograph Hotel with a restaurant, lounge and ground-floor retail.
SouthEast Managing Director Steve Atkins said March 15 that the 4,401-square-foot, ground-floor bodega grocery store that will be in the Trio’s Bisbee Building has been leased to a retired Winn-Dixie employee. He did not release any additional information about the operator at the meeting.
Committee members David Ward, Craig Gibbs and board chair Ron Moody voted in favor.
DIA board member Carol Worsham, who will vote on the deal at the March 17 meeting, said she also supports the term sheet.
“This is one of the most important projects I think that’s come before us. It’s been a long time coming,” she said.
The numbers
According to the DIA staff report, the city will finance 36.8% of the project. The taxpayer contribution is based on the $66.98 million portions of the project paid for by debt financing and government incentives and excludes $3.5 million in management and developer fees.
The offer has three components:
• A $9.377 million five-year forgivable loan.
• A $10 million five-year forgivable code compliance loan.
• A $5.279 million deferred principal loan.
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 program.
The Florida Life Insurance, Bisbee and Marble Bank buildings comprise the Trio at Laura and Forsyth streets in Downtown’s Urban Core.
Atkins told the committee that renovating the Trio would not be possible without the financial benefits of the DIA’s Downtown Preservation and Revitalization Program authorized by City Council in October.
The Trio’s nearly $25 million package would be the largest awarded from the program.
The DIA board approved an $8.7 million forgivable loan package through the program in January for JWB Real Estate Capital’s proposed Florida Baptist Convention Building and the Old Federal Reserve Bank Building renovations in Downtown’s North Core.
Both incentive packages need Council approval before the developers can receive the loans.
“Having the buildings able to be restored in their proper historic context is extremely important and would not be possible without the DPRP program,” Atkins said.
“It is a great privilege to be from Jacksonville and be able to be in the position to see these buildings back into service.”
In a presentation to the Downtown Development Review Board in February, SouthEast and project designer Dasher Hurst Architects said the buildings have been unoccupied for more than 20 years and have fallen into disrepair.
To receive the full $24.67 million, the developer has to complete a minimum $66.98 million project and commit to a hotel with at least 140 rooms.
The deal also requires at least 8,000 square feet of retail space and 21,000 square feet of restaurant and lounge space.
Trio hotel operator Winegardner & Hammons Hotel Group LLC also will staff and run the restaurant planned in the Marble Bank Building.
SouthEast, which owns the property through Laura Trio LLC, cannot sell the site within 48 months of receiving the loans without having to repay a portion of the award.
The investment from SouthEast and its Minneapolis-based financing partner, Piper Sandler Companies, includes $25.76 million in debt; $9.46 million in expected Federal Historic Tax Credits; and $6.8 million in owner equity.
That’s about 63% of the project costs.
SouthEast needs final design approval from the Downtown Development Review Board, State Historic Preservation Office and the National Park Service before it can begin construction.
Enough time?
A performance schedule in the agreement requires construction to start within 90 days of receiving city building permits and completion of the project within three years of starting work.
The timeline complicates Atkins’s goal of a first-quarter 2021 construction start. SouthEast could begin work as early as July if Council approves the deal before the end of its June term.
DIA board member Craig Gibbs questioned if the 36-month timeline with a possible six-month extension in the agreement was too ambitious considering past unsuccessful efforts to renovate the Trio.
Atkins has pursued the Laura Street Trio’s restoration for nearly 11 years. This is the second time SouthEast has sought an incentive package for the project.
The developer missed a deadline to complete a parking garage that was part of a city agreement to redevelop the Trio and Barnett National Bank Building, which completed work in 2019.
The DIA and Atkins renegotiated the deal to include the latest incentive package to ensure the Trio is renovated.
Atkins said he expects the project will take two years and SouthEast and its project partners will be able to meet the performance benchmarks without any “unforeseen challenges.”
SouthEast is working with Marriott Hotels International Inc. to brand the Trio as one of the company’s Autograph Collection of hotels.
Atkins has contracted with Winegardner & Hammons Hotel Group LLC to manage the hotel.
Danis Construction is the project contractor.