Shortly after Shad Khan came to Jacksonville in early 2012, he took a tour of the historic Barnett Bank building in Downtown.
The tour guide was Don Shea, executive director of the Jacksonville Civic Council at the time.
Shea said Khan saw beyond the deterioration caused by years of neglect in the building that had been vacant since 1991. He saw beyond the hypodermic needles strewn around the floor by drug users who trespassed there.
Despite a “good poker face,” the Jacksonville Jaguars owner smiled a couple of times, Shea recalled Tuesday.
“This has got potential,” Khan said.
Shea said conversations with a representative from Khan’s Stache Investments continued until shortly before he took a job in Louisiana in January 2013.
Developer Steve Atkins, managing partner of SouthEast Group, also saw the potential in the building.
He had been talking about the structure at Laura and Adams streets for a couple of years by then.
Atkins first announced plans in 2010 to renovate the Barnett Bank building and the nearby Laura Street Trio.
The Barnett building would become the 120-room Bank Hotel, inspired by the building’s deep roots in Jacksonville’s banking community. There also would be 40 apartments.
The Trio would have 98 loft-style apartments and 17,000 square feet of retail. It was the first in a series of announcements Atkins would make over the years about progress of projects that never materialized.
In 2013, Khan and Atkins were tied together in the Barnett project when Stache Investments loaned $3 million to Barnett Tower LLC, led by Atkins, to buy the building.
A second promissory note for Barnett Tower LLC for $165,764 followed in June 2014.
Since then, according to court records, no payments have been made by Barnett Tower LLC for either obligation. Stache Investments is foreclosing on the building, saying it is owed just under $4 million.
A disappointing ending to a deal where both sides saw such potential.
Many dreams, little to show
From the beginning, Atkins has been a prolific marketer for the properties. Oftentimes, the plans changed from announcement-to-announcement.
They routinely came with an indication that progress or a big announcement was right around the corner, according to stories in the Daily Record.
Atkins first pitched the project in May 2010 when Mayor John Peyton was in office, saying the Barnett building and Trio would be a retail, residential and boutique hotel with a price tag of $70 million.
As Mayor Alvin Brown was coming into office in mid-2011, Atkins said the project had drawn interest from Marriott Corp. for a hotel and from someone who wanted to open a grocery in one of the buildings. Panera Bread was one of the restaurants being recruited, Atkins said.
In April 2014, Atkins said the Barnett renovation would be completed by summer 2015 and wouldn’t require public funding.
A retailer to be named within 30 days was leasing the ground floor and mezzanine, he said.
The rest would include office space, classrooms for the University of North Florida and the entrepreneurial trifecta of CoWork Jax, One Spark and KYN, a business accelerator funded by Stache Investments.
Last September, Atkins said he had private commitments to cover 89 percent of the necessary funding. But he said he would need $7.7 million in public money, a tough sell when officials were considering several major Downtown projects.
Then in January, Atkins said he hoped to announce legislation in two weeks for a development agreement with the city on the Barnett building and the Trio. Once financing was secured, he said the Barnett building would take 12-14 months to complete, while the Trio would take 20 months. Downtown Investment Authority CEO Aundra Wallace said at the time there was no pending legislation.
Even the news of Stache Investments’ intention to foreclose didn’t stop Atkins from sharing his next step on Tuesday.
He said he was continuing to work with financial institutions and the city to finalize a public-private partnership “that will protect and satisfy both Stache’s and my personal financial investments in the Barnett Building.”
Jim Woodcock, spokesman for Stache Investments, said by email the court filings speak for themselves.
Difficulties of historic renovation projects
Projects like the Trio and Barnett building bring a specific set of challenges, which often take years to complete even in the best of economic times.
The condition of the buildings, the requirements for historic renovations and the recession contributed to Atkins’ inability to land the funding he needs.
“Steve knows what to do in terms of development,” Shea said a couple of weeks before the foreclosure notice was reported. “But he can’t rub two nickels together.”
He said Downtown Jacksonville is “not the biggest hot spot in development,” but it just takes one project to serve as a catalyst. Someone to be the pioneer that causes others to follow, said Shea, who also served on the DIA.
Greg Anderson, a banker and the next City Council president, said the buildings have been vacant for too long.
“It’s inhibiting our renovation,” Anderson said. “It’s time for us to find the right use for those structures.”
Shea said Atkins has missed a couple of market cycles, when the potential for capital is higher for the project Atkins envisions.
In the end, it’s all about the capital for Wallace.
Capital challenges
When Atkins announced he needed $7.7 million in capital for his project, Wallace quickly pointed out the DIA doesn’t have that much money.
Plus, he’s juggling a series of major projects for Downtown that have the potential to be major catalysts for the urban core. The Shipyards, Healthy Town and the Jacksonville Landing lead that potential.
Wallace said many parts of the Barnett plan are key to Downtown, such as the residential and office space it would bring, as well as getting more students in the urban core.
In 2014, he said he wanted a “go or no go” on the Barnett and Trio projects in the first quarter of this year.
Wallace recently said he would revisit the project with Atkins when the developer had “all the sources for the project lined up.”
He said timing is critical in projects with a hefty price tag and with historic renovations, which are specialized work and often can get buried in unforeseen costs. The Barnett Bank building was constructed in 1923.
When asked if Atkins was the right developer for the job, Wallace said, “I’m always confident when the private financial institutions give me what I need. I don’t judge the developer, because I’m the backend. I’m filling the hole somewhere.”
The next step in the foreclosure proceedings is a July 7 hearing.
In his statement, Atkins said his goal of trying to help revitalize Downtown remains.
“The preservation and reactivation of the Barnett Building should be an integral part of that effort,” he said.
A dream he still believes has potential.
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