Negotiations are moving forward between Mayor Donna Deegan’s administration and a potential new owner of Laura Street Trio of buildings in Downtown Jacksonville, with a top Deegan aide saying the city will “make a very strong run” at cutting a new deal to redevelop the long-vacant properties.
Mike Weinstein, Deegan’s chief of staff, told the City Council Finance Committee on Dec. 3 that the city had delivered a draft agreement to Live Oak Contracting that was aimed at helping the developer obtain private financing to purchase the Trio.
Paul Bertozzi, president and CEO of Jacksonville-based Live Oak, told the committee that he and his team were reviewing the draft with hopes of finalizing an agreement with the city no later than Dec. 5. That would keep Live Oak on target to land its private financing and close on the property by the end of 2024.
The draft agreement involves a foreclosure lawsuit by the city against the current property owner, Laura Trio LLC, and Red Oak Capital Fund II LLC. The city says that Laura Trio LLC owes $827,500 in fines for municipal code violations.
Weinstein said the agreement with Live Oak would pause the city’s suit for up to 48 months in exchange for a commitment by the developer to correct the code violations during that time.
He said the agreement would include deadlines for Live Oak to close on its financing by the end of 2024, negotiate a new incentives package agreement with the Downtown Investment Authority, and begin construction. The city formed its draft after an hour-long meeting on Dec. 2 involving Deegan, Weinstein, city General Counsel Michael Fackler, Bertozzi and Live Oak’s legal counsel.
"I've known Paul for a little while, and I have had positive interactions with him," Deegan said Dec. 3. "I think he's very excited about the opportunity to do this. I think he's been down in that area for a long time, and would love to be part of the renaissance of those buildings. And so I'm very, very hopeful."
When it filed the suit, the city announced it was permanently ceasing negotiations with Trio owner Steve Atkins, the principal of SouthEast Development Group, after years of fruitless efforts to forge a redevelopment deal. Atkins and SouthEast are associated with Laura Trio LLC.
Red Oak Capital Fund II LLC, in its filing with the Securities and Exchange Commission, says it acquires and manages commercial real estate loans and securities and other real estate-related debt instruments. The city’s suit says Red Oak holds a $6.3 million mortgage on the property that is subordinate to the city’s lien.
Responding to questions from Council member Terrance Freeman, Weinstein said Atkins and SouthEast would not be part of the Trio development team after the prospective buyout by Live Oak.
“It looks like it is a totally fresh start,” Weinstein said. “We’re going to make a very strong run at making this thing work.”
During Atkins’ 11 years of owning the Trio, development of the project has been characterized by stops, starts and accusations on both sides of negotiating in bad faith.
In 2017 and 2021, Council approved incentive packages for Atkins and SouthEast only to see the buildings continue to sit and decay. None of the incentives were paid out, as they were based on the developer hitting targets for construction and completion that were not met.
The 2017 deal was for $5.8 million in public incentives toward a $44.6 million project that included only the restoration of the historic buildings. The incentive amount increased to $26.6 million in 2021 for a $70.4 million version of the redevelopment that included new construction for a Marriott Autograph Collection hotel.
SouthEast’s next request for public funding, which came in 2023, was for $63.5 million for updated plans that added new construction for 149 apartments with market-rate and workforce housing units. The price tag for that version of the project was $175 million.
In June 2023, the Downtown Investment Authority board voted 5-1 to send a term sheet for that version of the project to Council with neither a recommendation for or against it. DIA staff reported at the time that SouthEast did not meet certain DIA criteria for incentives, including the level of private investment and the return on public investment.
Six months later, Council member Matt Carlucci filed legislation that included $36.5 million in incentives along with a $22 million “city participation loan” that was designed to guarantee a construction loan that SouthEast had obtained from Capital One. It also included a previously authorized $2 million forgivable loan from an earlier agreement.
After city staff raised concerns that the city participation loan could expose the city to hundreds of millions of dollars in debt liability and trigger a downgrading of the city’s credit rating, the Council voted in January 2024 to send negotiations back to the Downtown Investment Authority.
In the next round of back-and-forth between the DIA and SouthEast, the total cost of the project rose to $191.2 million and the incentives request climbed to $87.2 million.
Meanwhile, Council took more direct involvement in the Trio when Ron Salem, in one of his last acts as Council president, formed the Council Special Committee on the Future of Downtown. Among Salem’s assignments to the committee was to examine options to move the project forward.
Enter Live Oak
Live Oak’s announcement in August 2024 that it had partnered with Atkins and SouthEast in the project sparked optimism for a breakthrough. The emergence of a new investor addressed the concern that SouthEast could not bring enough private capital to the table and was overreliant on city funding.
City officials said their hopes fell apart in October, when the development team came back with a proposal that once again increased the request for city incentives, this time to $96.8 million. The overall investment in the October proposal rose as well, to $211.7 million.
Deegan’s administration announced it was permanently cutting off negotiations with SouthEast and would refile the foreclosure suit.
Atkins and SouthEast responded by announcing they were cutting off talks with the administration and would negotiate only with Council. Atkins said the developers had diligently tried to formulate a workable agreement only to be abruptly cut off by the city. He further accused the city of unfairly using incidents of graffiti and vandalism to justify the lawsuit.
The breakdown prompted Council member Kevin Carrico to file legislation, Ordinance 2024-0966, to direct the mayor’s office to sign an agreement with Live Oak Ancient City Living LLC that would address the foreclosure suit and give Live Oak time to fix the code issues.
Council instead approved a nonbinding resolution, crafted by member Michael Boylan, strongly encouraging Deegan’s office to go back to the table. That resolution, which passed on Nov. 27, prompted the Dec. 2 meeting between the city and Live Oak.
“I’m pleased that the Council really took the lead on this,” said Salem, now chair of the Finance Committee. “The administration was ready to shut down the whole deal, collect the fines and file a lawsuit. And I’m grateful for chair Carrico for the effort to lead the Council to lead this thing back from the dead. We’ve got hope now that a deal can be done.”
Deegan addressed the Trio deal stalemate in a Nov. 25 news release.
“The city has suffered through nearly a decade of failed proposals. This lawsuit has been the only thing that’s moved the dial,” she said.
Historian: Trio is ‘our Picasso’
The Trio comprises the Florida Life Insurance, Bisbee and Marble Bank buildings at northeast Laura and Forsyth streets. The buildings, which have been vacant for decades, were among the first built after the 1901 fire that destroyed much of Jacksonville.
During a presentation to the special committee on Sept. 9, local historian Wayne Wood said the Trio constituted “Jacksonville’s most historically significant corner,” with the Bisbee and Florida Life buildings being designed by noted Jacksonville architect Henry J. Klutho. Wood said the layout of the structures was unique, with the bank building being placed at the corner and abutting its high-rise neighbors.
He said the arrangement was “breathtaking in its symmetry,” with the bank “perfectly framed by two skyscrapers of similar height and proportion designed by our most prominent architect.”
Wood said the buildings needed to be preserved as a group.
“It’s our crown jewel. It’s our Picasso,” he said.
Daily Record staff writer Dan Macdonald contributed to this story.