Council approves legislation to subordinate two loans on property.
After more than a year of navigating local and state agencies, a Jacksonville nonprofit is a significant step closer to purchasing Downtown Cathedral District property, saving it from foreclosure and launching a proposed housing development.
City Council members voted 18-1 Tuesday to approve emergency legislation, Ordinance 2017-849, allowing the city to subordinate two loans on the former Community Connections building at 325 E. Duval St., once the home of the YWCA.
The city holds liens on the property.
Cathedral District Jax Inc., a branch of Saint John’s Episcopal Cathedral, wants to buy the property more than a year after the nonprofit Community Connections of Jacksonville Inc. dissolved and vacated the site.
After Community Connections stopped operating, the four mortgages bound to the property went into default.
The legislation allows the city to assign the loans to Cathedral District Jax, which plans to buy the property from Community Connections through a grant from the Episcopal Church Building Fund.
“It’s been a cumbersome process,” said Ginny Myrick, who is leading the redevelopment plan for Cathedral District Jax. “We’re still not out of the clear yet,” she said.
The city has ties to a $382,000 Home Investment Partnership Program loan and holds the first lien holder position on a $281,204 State Housing Initiatives Partnership loan.
The 1.5-acre property also is bound by a $288,200 State Apartment Incentive Loan, obtained in 1995 from the Florida Housing Finance Corp. The state is the first lien holder on it.
Those mortgages are tied to a 45,000-square-foot flat-roofed building, the former home to Community Connections’ offices.
The fourth mortgage – which is for a small portion of the land – is with Valley National Bancorp., which began foreclosing on the property in September after Community Connections failed to make payments in February, March and April.
That $500,000 loan was made to Community Connections in February 2004 by First Guaranty Bank and Trust Co. of Jacksonville. The note was obtained by Valley National Bancorp. in November 2014, according to court documents.
A verified complaint filed Sept. 20 in U.S. District Court by Valley shows the bank is seeking the remaining $230,973 balance, “plus protected advances, interest, late charges, costs of collection, and attorneys’ fees.”
“They are very aggressive,” said Myrick, who added that the bank has been unwilling to send a representative to meet in person with the nonprofit.
“We’ve had one conversation with them through an intermediary,” she said. “We offered to buy the land at a discounted price and they said absolutely not.”
On Nov. 30, the bank filed for a summary judgment.
Myrick said the nonprofit tried to explain to the bank how serious a problem it would be if the property is split up as a result of the foreclosure.
“One of the things we’re planning to tell them is there are a lot of people watching this,” Myrick said.
“If they’re seen as being the only entity stopping this catalytic project from happening, I think they’ll have a bit of a PR nightmare on their hands,” she said.
Myrick said attorneys for both sides agreed to postpone a scheduled hearing on the motion to March 14 to give the nonprofit time to move through the council process.
The bill approved Tuesday included more than a dozen amendments from the Finance Committee and Neighborhoods, Community Services, Public Health and Safety Committee. The amendments were, for the most part, technical changes to the bill’s text.
“Clearly the city has an interest in what goes on with that property, and we’ve recognized that since day one,” said Cathedral District Jax Board Chair Steve Kelly.
“We hope that they can see that all of our efforts are in alignment with what they’re trying to achieve, so we had no problem with the amendments,” he said.
The Council Auditor’s Office raised the issue that there was no provision in the bill guaranteeing the property will be sold to and redeveloped by a private company so that the land can go back on the city’s tax rolls.
Myrick explained that Chase Properties President Mike Balanky remains attached to the project and has a sale-and-purchase agreement with Cathedral District Jax.
“We need you to trust us a little bit here,” she told the Finance Committee on Jan. 4.
The Neighborhoods Committee approved the bill 7-0, with Finance Committee members voting 6-1 in support last week.
Council member Katrina Brown was the no vote on the Finance Committee. Brown, who couldn’t be reached for comment after the vote, said in December that she “didn’t want to do committee work during council meetings.”
Brown also was the only no vote Tuesday night.
Calls to her office earlier in the week to clarify her objections were not returned. She was not available after council to comment.
Myrick said the next step is to begin settling all the loans with an endowment it secured Oct. 5 from the Episcopal Church Building Fund.
According to a commitment letter, the Episcopal Fund promised Cathedral District Jax $850,000, or up to 100 percent of the appraised value, to purchase the land.
“It’s going to be a complicated closing because there’s so many entities involved,” Myrick said.
She hopes to close by mid-February.
The plan is to convert most of the property into 115 apartments that could include a retail component.
As part of the agreement with the city, the development must set aside 15 percent of the units for what the Florida Housing Finance Corp. refers to as “low income” housing for the first 10-years of the project.
The homes would be reserved for individuals making between 51 percent and 80 percent of the average median income, or about $47,000 per year.
Private developers also won’t be able to raze the entire property.
Because most of the buildings were developed in 1949, they’re considered contributing structures in the Downtown Jacksonville Historic District, as listed on the National Register of Historic Places.
After months of negotiating with the Jacksonville Historic Preservation Commission, only an L-shaped building was given the Historic Landmark Designation, clearing the way for the rest of the property to be demolished.
Any development would need approval from the Downtown Development Review Board and any incentives offered by the city would need to be negotiated with the Downtown Investment Authority.
Myrick said the nonprofit is in the early design stages with Washington, D.C. architects Torti Gallas + Partners. The firm also assisted with a master plan for the Cathedral District.
“The idea would be to recognize the architectural design of the district and perhaps make it look a little like the cathedral,” she said.
Myrick said the group also has identified other “catalytic” projects in the approximately 33-block Cathedral District, although she declined to offer specifics.
“In time,” she said. “Right now, we’re focused on closing this deal.”
By David Cawton