A Brief Look at the Laura Street Trio Incentive Package

[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.

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.

Ah yes, agreed! I can see a weak argument if it was just the historic buildings, but yes Lake... Ken has broken down the components in such a clear format, it became apparent that they have slipped in a new construction component for both projects.

Thank you again Ken.

[Ken_FSU]

Thank you again Ken.

You got it buddy!

Despite the stadium catching headlines as the biggest decision City Council has to make this summer, I think the Trio - if this incentive package makes it to Council - will be an infinitely harder decision to make.

On the surface, to your point, it's a comically dreadful deal for the city.

On the other hand, it's also comically dreadful to have what appears to be the remnants of a WW2-era Tokyo Fire Bombing hanging out for another 30 years dropping concrete on passersby as we try to revitalize our downtown.

Deeply dislike both options, and neither is fair to the taxpayer.

Real Sophie's choice.

[marcuscnelson]

DIA staff now recommending negotiations end until SouthEast is able to provide more equity.

https://www.jacksonville.com/story/news/local/2024/06/26/jacksonville-board-could-end-talks-on-restoring-laura-street-trio/74215868007/

[heights unknown]

DIA staff now recommending negotiations end until SouthEast is able to provide more equity.

https://www.jacksonville.com/story/news/local/2024/06/26/jacksonville-board-could-end-talks-on-restoring-laura-street-trio/74215868007/

Here we go. so...these buildings will probably just sit there and rot for the next 10 to 30 years I would guess. If nothing is going to be done, just raze the buildings (whoever owns them), and build something else in their place. No, I don't think they are a pure eyesore, but its embarrassing that these buildings have sat like this, proposal after proposal, rendering after rendering, promises after promises, and NOTHING done; NOTHING at all.

[Ken_FSU]

Good grief. Did the DIA honestly expect Southeast to magically come back to the table with $50 million in additional equity? I think it’s myopic and stupid for the DIA to compare Trio restoration incentives to the pie-in-the-sky Related Tower (which may or may not ever get built), and use those discrepancies as justification to shut down talks with Southeast. The importance of the two projects are worlds apart. This needs to go in front of City Council. Let them make a strategic decision as elected representatives of the taxpayers, rather than having the DIA shut it down because the ROI doesn’t reach the required threshold for their phantom projects that never materialize.

[Joey Mackey]

This just seems like a pissing contest between DIA and Southeast, and the Trio is unfortunately being used as leverage. Dissolve DIA and eminent domain the Trio. Get these clowns out of here and put this project into capable hands.

[tufsu1]

DIA staff now recommending negotiations end until SouthEast is able to provide more equity.

https://www.jacksonville.com/story/news/local/2024/06/26/jacksonville-board-could-end-talks-on-restoring-laura-street-trio/74215868007/

Good for them - I am not in favor of continuing to negotiate in futility with SouthEast

[heights unknown]

Good grief. Did the DIA honestly expect Southeast to magically come back to the table with $50 million in additional equity? I think it’s myopic and stupid for the DIA to compare Trio restoration incentives to the pie-in-the-sky Related Tower (which may or may not ever get built), and use those discrepancies as justification to shut down talks with Southeast. The importance of the two projects are worlds apart. This needs to go in front of City Council. Let them make a strategic decision as elected representatives of the taxpayers, rather than having the DIA shut it down because the ROI doesn’t reach the required threshold for their phantom projects that never materialize.

I could be wrong, but I get the feeling that this is being done to the trio on purpose; why? Well, it appears that DIA (and others) really want this related project; and maybe the trio is or will be a "sacrificial lamb" so to speak to free up some stuff for Related. Could be wrong. But who knows?

[thelakelander]

How much equity is Southeast currently proposing to put into the deal? How does that percentage compare with other recently completed adaptive reuse projects in downtown?

[marcuscnelson]

Atkins… also endorsing an end to negotiations.

https://www.jaxdailyrecord.com/news/2024/jun/27/laura-street-trio-developer-agrees-with-dia-that-further-talks-are-pointless/

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.

Also the price of this project has continued to rise, at the end of May it was $190.62 million with $87.2 million in incentives:

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.”

[thelakelander]

The cost is larger than the CBA council could not stomach.

[heights unknown]

You guys know more about this stuff than I do, but DIA/Boyer is worthless IMO. Don't know whether her hands are tied (or DIA as a whole), but it just appears that she is doing little to nothing to put a fire under all concerned and get this project going. Along with that, sometimes it appears that Atkins is money hungry for money, incentives, etc., and I understand that the price of all of this keeps going up and sky high; but IMO, Atkins could have had this done years ago; didn't he or hasn't he already received money, incentives, etc. a few times in the past for the Trio? Approach Gateway (someone, some thing), and see if they are willing to take the Trio onboard and do the "right thing" with these jewels of downtown Jacksonville (they certainly can be if they now are not).

[jaxjags]

I understand DIA's problem. It is clear based on the articles online today, Southeast has no capital to invest. Their own contribution is only around 13% and some of that is the value of the land. They essentially want the city to finance their project. Keep in mind this is different than the stadium. The stadium is owned by the city and regardless of the Jaguars is a city asset. The Trio is a private project. Totally different.

[jaxoNOLE]

I certainly understand the DIA's point on this one. It would be one thing if getting this project done was just a question of having enough city money behind it: take the tough pill and pony up $90M to get one of the most important downtown projects behind us.

But there's legitimate reason, IMO, to think Atkins is just in over his head. Every month there's a new cost estimate and a new incentive ask. How many times has the design been changed? Not to mention, he had a prior deal passed, signed, sealed, and delivered, that was supposed to start construction in Fall of 2021, and he failed to fulfill his end of that deal. That project included $27M of city incentives.

Now he asks the city to provide $89M in incentives, which are very front-loaded. It's fair to wonder how safe an investment that would be given his history of moving goalposts on this project.  Any deal involving cash grants to fund construction before the buildings are complete should include terms that turn ownership of the property over to the City if the project isn't finished.

If City Council engages in direct negotiations with Atkins and passes a version of this deal, it would really beg the question: what is the point of the DIA?

If this deal dies, it's time to start racking up the blight fines a la Regency Square Mall. He has rights as a property owner not to develop the buildings, but he's also subject to the same blight ordinances as the rest of us.

[acme54321]

Is the city levying fines against these buildings for their current condition?  I'm starting to think the city needs to approach this like the Bostwick Building.

It seems like Southeast did a fine job on the Barnett building but this has been dragging on for too long for such a high profile property.