Jacksonville might guarantee repayment of bank loan to bring hotel and apartments to Trio

The newest proposal for restoring the historic Laura Street Trio would put city taxpayers in the highly unusual position of guaranteeing a bank's loan to the developer so the three vacant buildings can be rejuvenated as part of a $175 million project with a hotel and apartments in the heart of downtown.

The city's willingness to take on the risk of being the financial backstop would unlock the private financing that would finally restore the three boarded-up buildings that date back to the wave of construction in downtown after the Great Fire of 1901, according to the redevelopment deal filed by a group of City Council members.

In addition to agreeing to take over loan repayments to the bank if the developer cannot, the city would provide about $38.5 million of other taxpayer incentives. The bulk of those are part of the city's usual menu of taxpayer support and would kick in after the construction is finished.

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City Council member Matt Carlucci said the importance of the buildings to Jacksonville's history and to the future of downtown make it worth the taxpayer backing and risk involved in the proposal.

"The Trio represents, I think, a lot of the spirit of Jacksonville and our ability to bounce back from disasters," he said. "That fire was the worst disaster Jacksonville ever had."

SouthEast Group proposes to restore the vacant Florida National Bank Building, Bisbee Building and Florida Life Insurance Building. Carlucci said the architecture of the buildings makes them among the most historic structures in the Southeast region of the country, and their location makes them critical to development in the rest of the downtown core.

"It's right smack dab in the middle of downtown Jacksonville," he said. "That will be a huge, signature project and will stimulate a lot more redevelopment. We need a success downtown and I think this is just the project to do it."

SouthEast also would build two new 11-story buildings next to the Trio. The five buildings would contain at least 140 hotel rooms and 165 apartments. The city would require 30% of the apartments to be workforce housing with rents set at rates for people who could not afford the higher market rates for the other apartments.

The complex would have 15,000 square feet of restaurant, lounge and bar space plus 6,500 square feet of retail space and 6,000 square feet for conferences and events.

Carlucci was joined by council members Michael Boylan, Raul Arias, Joe Carlucci and Ken Amaro in introducing the legislation. Council member Randy White signed on as a co-sponsor.

City Council President Ron Salem said he has is examining the bill and has not taken a position on it yet. Salem said when the bill comes up for votes by City Council in early 2024, he will have the council meet as a "committee as whole" so all council members can be together for discussion from the get-go.

"I occasionally use committees as a whole for projects like this and I just think this is one of them where I'd like all of us to hear it at the same time," Salem said.

SouthEast Group and its president, Steve Atkins, successfully renovated the 18-story Barnett Bank building that also had stood vacant for years in downtown. The Residences at Barnett has 107 loft-style apartments with a ground-floor bank.

The Laura Street Trio has been a different story. The city has approved a series of redevelopment deals for Atkins to restore the Trio. Even though each incentive package raised the bar on the city's commitment of taxpayer dollars, those deals withered on the vine before work began.

The proposal filed with City Council would go beyond previous deals by requiring the city to put up $22 million on the front end. That money would go into a fund so the bank has assurance the city is ready to step in if SouthEast Group is unable to repay the loans.

Carlucci said the $22 million would be returned to the city if the development works out as expected. In addition, the city would get a share of revenue from the completed project.

"If the development team makes the (loan) payments, which they very much expect to, then the city gets the money back," he said.

In the worst-case scenario, however, the city would have to take over the obligation of paying off the loans made by the bank and the city would take possession of the buildings. The proposed development deal does not have any cap on the amount of loan obligations that the city would have to absorb.

"If for some reason the apocalypse happens and the development team just can't make the payments at all, then the loan is passed on to the city," Carlucci said. "That's the risk."

In addition to putting up the $22 million for the fund guaranteeing the bank loan and agreeing to keep the money there over a 25-year period, other incentives for the deal would come from programs already in place for downtown development.

The city would provide $22 million in loans from the Downtown Preservation and Revitalization Program. That program would forgive $17.6 million of the loans over a five-year period if the development complies with terms of the deal after it's built.

The developer also would get $14.5 million in property tax rebates over a 20-year period. The amount of the rebates would be based on 75% of the increase in city property taxes collected because of the increase in property value from the new development.

The city also would give a $2 million loan that it would forgive after five years.

This article originally appeared on Florida Times-Union: Jacksonville considers deal for historic buildings in downtown