NOON UPDATE: The Downtown Investment Authority board approved the development agreement for the Barnett Bank building, Laura Street Trio and a parking garage. The $90 million project would receive $9.8 million in taxpayer incentives. City Council is the next step.
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The first question Aundra Wallace was asked on his first day on the job in 2013 was “How are you going to get the Laura Street Trio done?”
By that time, developer Steve Atkins had been pitching his Laura Street Trio and Barnett Bank building redevelopment for more than three years. Iterations of the mixed-use project would bring a hotel, bank, retail, office space and residential to the Laura Street corridor, a critical thoroughfare Downtown.
But the finances never lined up for serious consideration of public incentives.
That changed this morning.
Wallace, CEO of the Downtown Investment Authority, planned to introduce a $9.8 million performance-based incentives package to his board of directors for Atkins, principal of SouthEast Group, and the Molasky Group of Cos.
The private investment would total about $90 million, including an $11 million parking garage with 550 spaces and 12,000 square feet of retail.
The $44.6 million Laura Street Trio project would include a hotel, restaurant, bodega and rooftop bar and receive $5.8 million in incentives.
The $34.2 million Barnett Bank building project would have a bank, retail, office space and apartments and receive $4 million in incentives.
Wallace said the deal came together late last week, bolstered by Molasky reaching an agreement to buy the Barnett Bank building from Stache Investments.
The Shad Khan-owned company retained control of the building in September after Atkins lost it to Stache in a foreclosure lawsuit.
Wallace said the Las Vegas-based Molasky firm put the full amount of the request in escrow and is working to close the transaction in mid-February.
That, coupled with Molasky’s reputation and financial capability, led to serious conversations. Wallace soon realized if the deal was going to get done, this was the best time in his tenure.
A priority was making sure taxpayer dollars were not in danger, which is why there is no front-end risk.
The $8 million in grants will be paid when the final certificates of occupancy are issued. The $1.8 million Recapture Enhanced Value grant is a rebate of 50 percent of the ad valorem taxes generated by the completed project for 20 years.
Wallace said using $4 million from the Downtown Historic Preservation and Revitalization Trust Fund for the Laura Street Trio project leaves “somewhere in the range of $300,000” in the account.
But it provides an opportunity to address four vacant abandoned properties in the urban core on the main thoroughfare of Laura Street.
“That doesn’t come along every day,” Wallace said. “I feel it’s a darn good investment.”
Atkins and the Molasky Group did not return calls for comment.
Wallace said the gross square footage of the restoration and new construction for the projects is 320,000 square feet.
“That’s significant space in the urban core,” Wallace said.
The projects also add to the recent efforts of putting historic buildings back to constructive use, he said.
The Bostwick Building at Bay and Ocean streets is being converted to the Cowford Chophouse restaurant and the former Lerner building at 20 W. Adams St. will become student housing for Florida State College at Jacksonville and a restaurant.
Wallace said he has talked to DIA board members about the Barnett Bank and Laura Street Trio projects and incentives package. He said they were surprised because it’s not something he’s talked about for a while.
“When you reach an opportunity to go, you’ve got to go and so we’re moving,” Wallace said.
He said the developers will build the parking garage, for which the DIA will make master lease payments for the 550 spaces for up to $660,000 for 20 years.
The developers will lease from the city 250 spaces on a monthly basis for 20 years, estimated to generate about $300,000 a year.
DIA, which is in charge of public parking Downtown, would lease or rent the remaining spots to other customers.
Wallace said the proposal allows him to check off several boxes:
• Meeting Mayor Lenny Curry’s threshold of generating a rate of return worthy of the public investment
• Public incentives not providing the lion’s share of investment
• Addressing some of the unflattering perception and imagery of Downtown
• Providing more residential in the urban core
“I see way more positives than I can see negatives,” Wallace said.
The proposal has several steps to clear before becoming reality, starting with the DIA board’s approval and through the City Council signing off. He hopes to have final approval by late March or early April.
A document in the DIA agenda package says the parking garage should take 11 months to build and the Barnett Bank building should be completed in 22 months.
The Laura Street Trio will lag behind the Barnett Bank project by eight to 12 months.
Wallace said the proposal protects the public’s investment, while also allowing the development community an opportunity to take on large-scale projects and generate a rate of return that is worth them taking the risk.
It may also allow him the chance to answer that question from Aug. 19, 2013, about how he is going to get the Laura Street Trio done.
@editormarilyn
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