JACKSONVILLE, Fla. — Mayor Donna Deegan's administration is ready to drop its foreclosure lawsuit against the owner of the Laura Street Trio and shift back to negotiating a deal for restoring the historic downtown buildings rather than try to force a change in ownership through legal action.
The strategic reset by Deegan comes as SouthEast Development Group has gained a deep-pocketed partner in Paul Bertozzi, the founder and CEO of Live Oak Contracting, a fast-growing construction company whose office is located in a downtown office building directly across the street from the Laura Street Trio.
City Council member Kevin Carrico, the head of a special City Council committee examining the future of downtown, has meanwhile been moving to take a leadership role in bringing a development deal to City Council for reviving the vacant buildings that date back to the decade after the Great Fire of 1901.
Carrico said after a meeting Monday of the downtown committee that Live Oak's participation in the Laura Street Trio restoration is significant because of the financial investment and construction expertise it brings. Carrico said the foreclosure lawsuit is "the biggest impediment" to reaching a redevelopment deal.
"It's not just Live Oak," he said. "It's other capital partners that are coming to the table with them. If they see this litigation as something that the administration is just going to hang over this, then they're going to walk."
The three Trio buildings top the list of historic structures that preservationists fear are endangered in the city and across the Southeast U.S. Two of the buildings were designed by famed architect Henry Klutho. All three structures have been vacant for decades, even as the city has made the Laura Street corridor from James Weldon Johnson Park down to the St. Johns River a prime focus for revitalizing the historic core of downtown.
At the direction of the mayor's office, the city filed a foreclosure lawsuit on Aug. 19 that contends Laura Trio LLC, the name of the legal entity owning the buildings, owes about $800,000 for code violations that have been piling up since 2015 at a rate of $250 per day. The violation is for graffiti on the outside of the buildings.
If the city were successful in the foreclosure lawsuit, it would result in a public auction when anyone interested in purchasing the property could put in a bid. SouthEast Development Group, the Jacksonville firm that has owned the Trio since 2013, has said it would vigorously contest any attempt by the city to wrest ownership away from SouthEast.
Steve Atkins, the principal and managing director of SouthEast, and his team have been meeting over the last couple of weeks with city administration officials. Bertozzi also has been engaged in talks with city officials about finding a path to move the Laura Street Trio project forward.
Scott Wilson, who is a liaison from Deegan's office to City Council, said that during those discussions, the development team asked the city to dismiss the foreclosure lawsuit. Wilson told the downtown committee the administration would agree to do so provided the developers agree to a set of conditions for how to handle the negotiations.
Jason Gabriel, an attorney representing the developer, said the conditions generally appear workable.
"We had a couple of good, informative, productive conversations last week with members of the administration, DIA (Downtown Investment Authority), and our project team, and we've generally come up with a plan going forward where we can all work together," Gabriel told the downtown committee.
He said dismissing the pending city lawsuit is needed to "allow space and time for those good faith negotiations" and private lenders are watching closely how the city moves forward.
"We've got a great team at the table but they will leave in a heartbeat if the prospect of litigation is a real one," Gabriel said.
Gabriel said the city could dismiss its lawsuit without prejudice, leaving it the option of refiling it in the future. He said once negotiations start, Southeast believes it should be possible to move expeditiously to come up with a term sheet for a development deal.
Wilson said the Deegan administration welcomes the addition of Bertozzi to the development team. Wilson said with more private funding in the deal, that should reduce how much the city must provide in financial incentives.
"So we're hopeful that's a workable solution," Wilson told the committee.
SouthEast's plan would restore the three buildings and construct two new 11-story buildings beside them, bringing 169 apartments, 143 hotel rooms plus restaurants and bar venues to the property.
Carrico said he will be filing legislation at some point for City Council to approve a redevelopment deal for the Trio.
"I'm going to work with everyone in the administration, the DIA, whoever needs to come to the table to land this plane," he said.
This story was first published by The Florida Times-Union.
