Once again, the city of Jacksonville says it’s had enough of the developer of the proposed Laura Street Trio adaptive reuse project Downtown.
And this time, the city says it’s permanently ending talks with the development team, led by Trio owner Steve Atkins of SouthEast Development Group Inc.
In an announcement Nov. 12, the city said it was terminating negotiations and would refile a foreclosure lawsuit it filed in August 2024 that says SouthEast owes the city more than $800,000 in unpaid fines for municipal code violations.
That suit came after a previous round of talks involving SouthEast, the city and the Downtown Investment Authority hit a dead end. Both sides accused the other of negotiating in bad faith.
The city dismissed the suit in mid-September after Jacksonville-based Live Oak Contracting joined SouthEast, prompting hopes that a deal could be reached.
“We have worked long and hard to come up with an agreement that is financially viable for the city,” Phillip Perry, Mayor Donna Deegan’s chief communications officer, said in a Nov. 12 email. “Despite our best efforts and countless hours spent by staff, that has not materialized.”
The Trio
The Trio comprises the First National Bank Building, Bisbee Building and Florida Life Building. The structures were built from 1902 to 1912 and are among the last remaining unrestored buildings constructed during the years immediately following the 1901 fire that destroyed much of Downtown. The buildings are at Laura, Forsyth and Adams streets.
Since Atkins bought the Trio in 2013, SouthEast and the city have negotiated numerous times on redevelopment agreements. Two were approved by the City Council: a 2017 agreement that provided $5.8 million in incentives and a 2021 deal that provided a $26.6 million incentive package. The total development cost in the 2017 agreement was $44.64 million, which rose to $70.48 million in the 2021 deal.
At the time the city filed the foreclosure suit, Atkins had submitted a proposal including $85.77 million in city incentives comprising $18.3 million in loans and $67.57 million in development grants. The total development cost was $188.67 million to convert the buildings into a hotel, apartments, restaurant and bar.
Live Oak said the project would include a 143-key four-star Autograph Collection Hotel by Marriott, 169 blended-rate apartments and retail and entertainment spaces that “will be unlike anything else in Northeast Florida.”
Contacted the evening of Nov. 12, Atkins said SouthEast was planning to issue a statement in response to the city the morning of Nov. 13.
‘Ten points memo’
A summary document issued by the city states that in mid-September, the city dropped the lawsuit after developers submitted an “affirmative and satisfactory response” to a document referred to as the “ten points memo.”
According to a copy of the memo provided by the city, it contained such terms as reducing the incentives by $10 million to $15 million, giving the city recourse if the developers couldn’t close on their finances by a mutually agreed upon date, and maximizing the amount of funding through Recapture Enhanced Value grants. Those grants are refunds on ad valorem tax revenue generated by a new development.
They differ from completion grants and other types of funding that are paid out through the city’s general fund, which acts as its savings account. Based on Council auditor projections of budget deficits of up to $105 million through 2029, Council members have raised concerns about grants that draw from the general fund.
According to the city’s summary document, SouthEast agreed in principle to the 10 points memo but then returned with a follow-up proposal that “materially deviates” from the memo’s terms.
That proposal included a request for $96.81 million in incentives, including $20 million in loans, a $36.37 million construction grant and $40.43 million in completion grants. The cost of the project also went up again, to $211.74 million.
The city said the proposal isn’t feasible for reasons that include:
• It seeks a flow of city funds throughout the construction process as opposed to incentives being delivered on the back end following completion, inspections and third-party verifications.
• The timing of payments puts the city at “significant risk,” and the proposal contains “inadequate back stops if the project does not achieve a financial closing and does not get started and complete on time with no cost overruns.”