The developer of the Laura Street Trio and the Downtown Investment Authority staff are agreeing on something, but it’s not an incentives package to resurrect the historic buildings.
Instead, it’s to quit talking.
Steve Atkins, the owner of the Trio and principal of SouthEast Development, said June 27 that he believed there was no point in continuing to negotiate with the DIA in the long-running effort to revive the buildings. Instead, Atkins says he and his team want to deal directly with the Jacksonville City Council, which has final authority on deals negotiated through the semi-independent DIA.
Atkins’ comments came a day before the DIA board was scheduled to consider a resolution from the authority’s staff to halt negotiations on the latest proposal for incentives for the project.
“For me, the bottom line is we want to get the project done,” Atkins told the Daily Record.
“In my mind, there’s nothing more important for Downtown. Now that the stadium deal is done, this is front and center. And the only way I think something is going to happen is if we work directly with the Council.”
Council President Ron Salem has signaled that he feels similarly, saying June 27 that he had directed the Special Committee on the Future of Downtown to explore options for moving the project forward.
Salem said the special committee’s chair, Council member Kevin Carrico, contacted him after learning that the DIA staff was recommending cutting off the latest round of talks with Atkins and SouthEast.
“He just asked to have it said he wanted to explore all options,” Salem said during an appearance on the WJCT Public Media talk show “First Coast Connect.” “And I said, ‘Fine, Kevin, I’ll send it to your committee.’”
Atkins said he supported the move.
“We just want to move on. Council is the place where this is ultimately going to get approved, so that’s where we want to go,” he said.
If the project is taken out of the DIA’s hands, it could be a first in Jacksonville since the DIA was created in 2012. Salem said he had not heard of it being done.
“I’m not aware that this has ever happened like this, where they just decided we are not negotiating anymore. That’s sort of foreign to me,” he said.
DIA staff’s position
In Atkins’ latest Trio proposal, plans call for a combination of renovation and new construction to transform the buildings into a mixed-use development with multifamily residential, restaurants, bars, a hotel and retail space. DIA documents show the total project cost at $194.2 million, with SouthEast requesting $89.9 million in city incentives.
A staff report accompanying the DIA’s proposed resolution says the funding structures in SouthEast’s proposal would “place the City at risk in multiple ways.”
Those ways include obligating the city to provide a higher-than-average share of the total development cost, producing a low return on investment and removing a clawback provision for city funding if the property were sold.
Under the resolution, the city would reject the proposal and would close the door to further incentive requests from Atkins for the project unless he brings more of his own equity to it or finds partners who can provide additional funding.
The staff report states that although the DIA and city have been “resolute and responsive” to consider and approve funding requests from SouthEast, the developer has pressed for incentives that are inadvisable for the city.
Twice, the report notes, the Council agreed to incentives packages but SouthEast was unable to follow through on construction.
Meanwhile, the developer’s requeste funding from the city increased from 13% of the total development cost in 2017 to 45.8% in June 2024.
The resolution marks the second time in two months that DIA staff has recommended cutting off negotiations with Atkins and SouthEast. In April, the DIA board approved a resolution that recommended denial of a previous agreement but left the door open to future conversations.
That action came after Council, in January 2024, opted not to vote on another proposed deal but directed the DIA to work with the developer to bring the project to reality.
The DIA offers a range of incentive programs, including for commercial leases and job creation, retail build-out, residential development, and preservation and revitalization of historic structures. Requirements and incentive levels vary by type.
Noting the complexities involved in redeveloping the buildings, all of which are gutted and have been exposed to the elements for decades, Council gave the DIA latitude to move beyond the parameters of its program guidelines to find a solution.
SouthEast responds
Jordan Elsbury, who served as chief of staff for Mayor Lenny Curry, joined Atkins’ team in November 2023 as a lobbyist and accompanied him to the June 27 Daily Record interview.
During the conversation, Elsbury accused the DIA staff of being noncommunicative with SouthEast and unwilling to consider innovative ways to move the project forward despite Council’s directive.
He said the DIA did not offer formal solutions, but that DIA CEO Lori Boyer instead verbally suggested three options that could be explored.
Elsbury said the options were not viable to SouthEast, particularly two that involved the city taking over the buildings, renovating them and then selling them to Atkins.
Elsbury said the city does not have the expertise to handle the renovation, which requires special craftsmanship and materials to make the finished buildings comply with historic restoration standards imposed by the U.S. National Park Service.
All three structures were built in the early 20th century and are listed as contributing structures within the federally designated Downtown Jacksonville Historic District.
“The city can’t get a park built. It took them eight years to build a water fountain,” he said, referring to the refurbishment of Friendship Fountain along the Southbank.
Atkins and Elsbury said the DIA staff report contained errors and mischaracterizations of facts surrounding the situation.
For example, Atkins said SouthEast’s proposed contractor, Atlanta-based Turner Construction Co., had offered a 100% completion guarantee. According to Turner’s website, the company employs a workforce of more than 10,000 and completes $15 billion of construction on 1,500 projects each year.
“They (DIA) made assertions that we don’t have development partners, but we do,” he said. “Turner is about as good a development partner as you can get.”
Elsbury said DIA staff did not notify SouthEast of its requests to halt negotiations and that the company instead learned of the requests through the media.
He said staff also did not respond to requests by SouthEast to discuss the project with DIA board members. SouthEast asked three times to hold workshops with the board, he said, but the requests were met with silence.
Boyer defends staff
In response to the comments from Atkins and Elsbury, Boyer said the DIA provided a proposed outline of incentive options in writing to SouthEast in February 2024. She said the options were “creative alternatives within the bounds of Florida law and Florida constitutionality” and would serve the city’s best interest.
As for the staff report containing errors and falsehoods, Boyer defended the report and its author, Steve Kelley, the director of Downtown real estate and development. She said Kelley had submitted staff reports on numerous projects and had a track record of accuracy and thoroughness.
“Nobody said they didn’t have development partners. What we’re saying is the developers’ lack of equity and liquidity impair their ability to obtain financing. We stand by that,” Boyer said.
Boyer said it was not customary for the DIA to hold board workshops to negotiate deals. Instead, she said, DIA staff members review underwriting documents and make recommendations to the board based on their expertise and experience. During board discussions on staff recommendations, she said, it is not uncommon for agreements to be amended.
“But in terms of having a communal negotiation with all of the board members on the level of detail and underwriting that goes into this, that’s not how our board has operated,” she said.
Boyer said the DIA has never denied developers access to individual board members, “nor would there be any way” to do so.
Regarding the assertion that the DIA had failed to notify SouthEast about resolutions, Boyer said Kelley placed a call to Atkins after the board was notified about the most recent resolution, but before it was posted to the public and media. She said it was standard for board members to be notified first about DIA legislation.
Boyer said the DIA board asked staff to make a recommendation on SouthEast’s most recent proposal, as opposed to deferring to the board on it, in light of the authority’s mission to “drive growth in business and investment through transparent and responsible leveraging of public investment.”
“The size of this ask, and the structure of this ask, are both such significant departures from way we do business,” Boyer said. “Our board was asking us to provide a recommendation as to how this fits.”
Although the board and Council may decide otherwise, Boyer said, staff determined that the proposal did not meet the DIA’s mission standard.
‘We’ve wasted six months’
Atkins said the staff’s latest action puts negotiations to the point they reached in early 2024, when a stalemate between SouthEast and the staff prompted Council member Matt Carlucci to introduce legislation containing a $60.5 million incentive package to redevelop the Trio.
“We’ve wasted six months of time and resources and patience,” Atkins said. “I have no ill will. I’ve got friends at the DIA, including on the board, and I wish them all the best. But the staff is either unwilling or incapable of making a deal.”
Now, an element of Carlucci’s legislation could be back on the table.
Salem, in a June 26 memo, asked the special Downtown committee to review pending legislation that would provide a $22 million city “participation” loan that would serve as a guarantee on a construction loan that Atkins had obtained from Capital One.
City administrators and the Office of General Counsel raised concerns that the loan would violate a state constitutional prohibition on cities lending money for private purposes and that the package could expose the city to $265 million in debt liability. Administrators said the liability could trigger a downgrading of the city’s credit rating.
Atkins says his attorney, former city chief General Counsel Jason Gabriel, had advised him that the loan would pass constitutional muster. He said Gabriel’s advice was backed by an opinion from the Florida Attorney General’s office.