A subsidiary of Related Group will remain in control of the former city-owned Southbank site of River City Brewing Co. after the Downtown Investment Authority canceled a deal with the Miami-based developer to build a 326-unit apartment.
Related acquired the 3.02-acre property from the city in August 2021 when it bought the restaurant’s leasehold for $10 million.
DIA CEO Lori Boyer notified Related executives in a letter Jan. 11 that the city was terminating its redevelopment agreement for failing to meet performance benchmarks in the deal.
City Council approved the deal in May 2021
Boyer said Jan. 26 it was “premature” for the city and DIA to exercise the option in the redevelopment agreement to repurchase the site from Related Group, which she said would cost the city nearly $11 million.
According to Boyer, Related recently informed DIA that it is redesigning the project and could consider building a high-rise residential complex instead.
She said he expects the new project to be submitted to DIA in spring 2023.
“I think we should look at their new plans first,” Boyer said.
“We’re disappointed that this particular project didn’t get off the ground before interest rates were higher, but ultimately it could be a win,” Boyer said.
“We could end up with a better project.”
The city’s $18.27 million redevelopment agreement with the Related subsidiary did not automatically return ownership of the land to the city if the site was not developed, but it does allow the city to repurchase it.
Boyer said that would include Related’s $10 million cost for the leasehold buyout plus the value of the city’s remaining interest in the land when it was acquired by the developer.
River City Brewing Co.’s parent company, Maritime Concepts LLC, completed the $10 million transaction with Related in August 2021 to buy out the restaurant’s leasehold with the city on a 3.34-acre property.
The developer bought the remaining 76 years of a 99-year land lease with the city from Maritime Concepts.
Related deeded back nearly 0.33-acre of the original restaurant site to the city to increase the size of St. Johns River Park and the Southbank Riverwalk that runs adjacent to the property.
With the deal canceled, Related will not receive the $12.99 million property tax refund or the $1 million in project completion grants for a proposed park-front restaurant and site infrastructure work.
The remaining money in the agreement was for improvements to the 29-slip public marina; increased maintenance on the adjacent park; and the city lease revenue loss. Those were considered incentives to build the apartment complex.
Plans called for an eight-story apartment building, a 511-space attached parking garage and a park-front restaurant.
Related and the city executed the development agreement in June 2021.
Boyer said she asked Related whether it intended to put the property back on the market.
“They said no. They have way too much invested in it,” she said.
A representative for Related did not immediately return requests for comment Jan. 26 on the contract cancellation or the company’s plans for the property.
Related Group contracted Jacksonville-based ELEV8 to demolish the two-story River City Brewing Co. restaurant building for $110,000 completed in late 2022.
The developer had also started the city’s permitting process to build the mid-rise apartment building and had received final design approval from the Downtown Development Review Board.
Boyer’s letter to Related Development LLC Vice President Jeffery Robbins and RD River City Brewery LLC President Steve Patterson said the DIA supported the company’s desire to redesign the project.
The letter said the existing apartment plan is not financially viable in the current economic market.
“Following my agreement to several extensions to the Performance Schedule, we both acknowledged that the Performance Schedule would neither be met as required, nor could it be within a reasonable cure period since due to changes in market conditions the current project is not economically feasible in the immediate future.”
As to the economic viability of a residential or mixed-use tower on the property, Boyer said adding more units to the site could allow Related to control its cost per unit.
Boyer said “she didn’t want to guess” on what the city’s timeline or strategy would be to repurchase the property if it sits idle.
“If all the other developments on the riverfront are moving forward and getting financing, then there is no reason this project shouldn’t be moving forward,” she said.
River City Brewing Co. co-owners Anthony Candelino and Eugene Van closed the restaurant July 18, 2021, after operating the business for 27 years.
Related was founded in 1979 by Chairman and CEO Jorge M. Perez. The development company’s focus is Southeast Florida with an emphasis on luxury high-rise condominiums.
The company lost a bid in February 2020 to redevelop the former Jacksonville City Hall and Duval County Courthouse site on the Downtown Northbank that now is under contract for development by Atlanta-based Carter.