A Brief Look at the Laura Street Trio Incentive Package

[Steve]

If I were voting on this I would approve it, if I knew that this was it. by that I mean it's finally going to get done and in a timely manor, and without additional asks or 'value engineering' or reduction of uses/scope.  But there is no such guarantee, especially with this developer.

If we're writing Southeast a $21 million check upfront, I think they should be wiling to put the Trio up as collateral.

If the project isn't completed or stalls mid-way, the city takes ownership of the property.

That I'd be on board with.

[Jax_Developer]

Why is there a $21M upfront check anyway? That doesn't make a whole lot of sense. Is that a bail out of existing sunk costs?

[Ken_FSU]

Could a deal be close?

https://www.news4jax.com/news/local/2024/05/22/laura-street-trio-developer-city-close-to-possible-67m-deal-on-redevelopment-project-sources-say/

Would be expensive, but if it gets the Trio done while protecting the city, seems like a far better use of the money than the Related project.

[heights unknown]

Light at the end of the tunnel? Hope springing eternal? Finally something might start, get done, and get finished?

https://www.msn.com/en-us/money/other/sources-city-of-jacksonville-developer-reach-75m-agreement-in-principle-on-laura-street-trio/ar-BB1mVKve?ocid=msedgntp&pc=U531&cvid=bfefce786bc94d62a6257871d5849b0e&ei=49

[marcuscnelson]

Another new proposal from SouthEast:

https://www.jaxdailyrecord.com/news/2024/may/31/draft-term-sheet-for-laura-street-trio-deal-includes-8723-million-in-city-incentives/

A new financial proposal to resurrect the Laura Street Trio of historic buildings in the heart of Downtown Jacksonville includes $87.23 million in city incentives, according to the most recent draft term sheet delivered by the developer to the Downtown Investment Authority.

The draft from SouthEast Development Group calls for the city to provide $42.48 million in completion grants, $22.03 million in historic preservation grants, a $14.42 million senior construction loan and $8.3 million in economic development loans.

Along with an adaptive reuse of the historic properties, SouthEast plans to add in new construction to create a mixed-use development that would include a hotel, apartments and a restaurant and bar.

The draft term sheet lists the project’s total cost at $190.62 million, divided between $99.2 million for the hotel and $91.42 million for the apartments.

The draft is dated May 24.

[Ken_FSU]

Another new proposal from SouthEast:

https://www.jaxdailyrecord.com/news/2024/may/31/draft-term-sheet-for-laura-street-trio-deal-includes-8723-million-in-city-incentives/

A new financial proposal to resurrect the Laura Street Trio of historic buildings in the heart of Downtown Jacksonville includes $87.23 million in city incentives, according to the most recent draft term sheet delivered by the developer to the Downtown Investment Authority.

The draft from SouthEast Development Group calls for the city to provide $42.48 million in completion grants, $22.03 million in historic preservation grants, a $14.42 million senior construction loan and $8.3 million in economic development loans.

Along with an adaptive reuse of the historic properties, SouthEast plans to add in new construction to create a mixed-use development that would include a hotel, apartments and a restaurant and bar.

The draft term sheet lists the project’s total cost at $190.62 million, divided between $99.2 million for the hotel and $91.42 million for the apartments.

The draft is dated May 24.

Someone smarter than me feel free to correct, but I believe the article is wrong in classifying $22 million in historic preservation grants as “city money.” Wouldn’t that money come from the state?

If yes, I believe local incentives would be $65 million, not $87 million as the story and headline claims.

[thelakelander]

^The DIA has a historic preservation program that I'm 100% sure they are tapping into. SouthEast isn't a nonprofit, so they aren't likely eligible for state or federal grants. However, it could be possible for them to get federal tax credits on top of what's mentioned in this article.

[Ken_FSU]

^The DIA has a historic preservation program that I'm 100% sure they are tapping into. SouthEast isn't a nonprofit, so they aren't likely eligible for state or federal grants. However, it could be possible for them to get federal tax credits on top of what's mentioned in this article.

Thanks Lake!

I don't envy City Council on this one.

That's a LOT OF MONEY when a lot of other people are looking for incentives too.

But also, the cost of doing nothing is just astronomical for the Trio as well.

[thelakelander]

https://www.actionnewsjax.com/news/local/itd-be-awesome-87m-proposal-bring-jacksonvilles-laura-street-trio-back-life/QHZ4S6HH5FDCLPAVVOBZZ3WO64/

[Jax_Developer]

Perfect example of everything wrong with the incentives thrown around DT.

- $2M "forgiven" for "other" expenses thus far
- $6.2M for paying off an existing bridge loan
- $2M in escrow for developer "cost overruns"
- Out of the $42M completion grant, the developer has the right to "keep" excess funds on the balance sheet
- COJ Taxpayer essentially 100% funding the construction of the hotel (bc of completion grant)
- $8M+ valuation for the land (lol)
- $5.5M for "predevelopment expense"

For being such a free-state, you sure wouldn't think that with the incentives DT. Are we are paying for a developers mistake & time? It's a tough business, and clearly if this deal falls though, Southeast will have some 7-figure notes being called. I want the trio revitalized too, but it shouldn't be the taxpayer's responsibility to pay for the errors of a private market venture.

[CityLife]

Perfect example of everything wrong with the incentives thrown around DT.

- $2M "forgiven" for "other" expenses thus far
- $6.2M for paying off an existing bridge loan
- $2M in escrow for developer "cost overruns"
- Out of the $42M completion grant, the developer has the right to "keep" excess funds on the balance sheet
- COJ Taxpayer essentially 100% funding the construction of the hotel (bc of completion grant)
- $8M+ valuation for the land (lol)
- $5.5M for "predevelopment expense"

For being such a free-state, you sure wouldn't think that with the incentives DT. Are we are paying for a developers mistake & time? It's a tough business, and clearly if this deal falls though, Southeast will have some 7-figure notes being called. I want the trio revitalized too, but it shouldn't be the taxpayer's responsibility to pay for the errors of a private market venture.

That basically reads like a judgement for a Bert J. Harris claim where the government was found responsible for taking away a property owner's development rights. 

[Jax_Developer]

Perfect example of everything wrong with the incentives thrown around DT.

- $2M "forgiven" for "other" expenses thus far
- $6.2M for paying off an existing bridge loan
- $2M in escrow for developer "cost overruns"
- Out of the $42M completion grant, the developer has the right to "keep" excess funds on the balance sheet
- COJ Taxpayer essentially 100% funding the construction of the hotel (bc of completion grant)
- $8M+ valuation for the land (lol)
- $5.5M for "predevelopment expense"

For being such a free-state, you sure wouldn't think that with the incentives DT. Are we are paying for a developers mistake & time? It's a tough business, and clearly if this deal falls though, Southeast will have some 7-figure notes being called. I want the trio revitalized too, but it shouldn't be the taxpayer's responsibility to pay for the errors of a private market venture.

That basically reads like a judgement for a Bert J. Harris claim where the government was found responsible for taking away a property owner's development rights.

Not when you are trying to develop a 11-story hotel with little to no market for it while forcing the "deals" (as Southeast refers to them as) to be tied together (& 11-story apartments - not cheap). If this was just the historic buildings, the project would have already been approved.

[thelakelander]

I thought the historic buildings were supposed to be the hotel. Did the plan change again?

[CityLife]

Perfect example of everything wrong with the incentives thrown around DT.

- $2M "forgiven" for "other" expenses thus far
- $6.2M for paying off an existing bridge loan
- $2M in escrow for developer "cost overruns"
- Out of the $42M completion grant, the developer has the right to "keep" excess funds on the balance sheet
- COJ Taxpayer essentially 100% funding the construction of the hotel (bc of completion grant)
- $8M+ valuation for the land (lol)
- $5.5M for "predevelopment expense"

For being such a free-state, you sure wouldn't think that with the incentives DT. Are we are paying for a developers mistake & time? It's a tough business, and clearly if this deal falls though, Southeast will have some 7-figure notes being called. I want the trio revitalized too, but it shouldn't be the taxpayer's responsibility to pay for the errors of a private market venture.

That basically reads like a judgement for a Bert J. Harris claim where the government was found responsible for taking away a property owner's development rights.

Not when you are trying to develop a 11-story hotel with little to no market for it while forcing the "deals" (as Southeast refers to them as) to be tied together (& 11-story apartments - not cheap). If this was just the historic buildings, the project would have already been approved.

Correct. We all know there is nothing close to a government taking here, so I was pointing out how crazy it is for a government to punish itself for the mistakes of a developer.

[Ken_FSU]

I thought the historic buildings were supposed to be the hotel. Did the plan change again?

Assuming it ever happens, both portions of the project (hotel & residential) will be a mix of historic building stock and new construction.

Hotel & Restaurant Portion

1) The Marble Bank Building (to become a restaurant with basement cellar for the hotel)
2) The Bisbee Building (to become the hotel lobby and 56-62 guest rooms)
3) The new 11-story hotel add-on (to become 71-84 additional hotel rooms)

Multi-Family Portion

1) The Florida Life Building (to become 18-20 housing units)
2) A new multi-family mid-rise (to become 140-149 housing units)