Historic incentives breath life into urban development
Preserving historic buildings is a key element to the redevelopment of downtown and now there’s a new tool available in the form of city incentives that will help cover some of the extra expenses that come with refurbishing an old building.
The incentives were approved by the City Council in October, and Lori Boyer, CEO of the Downtown Investment Authority, said she expects to see a number of development applications come in in the next few months.
“It will be transformative to old building stock. I think we’re going to see a lot of them get off the ground,” Boyer said. “By incentivizing, you can make something happen that is transformative or changes the value of downtown and the neighboring properties.
“It becomes a policy decision about how much you value historic building stock and the importance of that to the culture and identity of downtown. It creates an ambience,” she said.
DIA already gives incentives to downtown developments both old and new, such as Recapture Enhanced Value (REV) Grants, which give developers a tax rebate on the value of the enhanced property for a set number of years.
“It allows a developer to ask for an amount that is necessary to bridge the financial gap when they are trying to restore a building, the difference between construction costs versus what they get in rents,” Boyer said.
The Laura Street Trio for instance will only have 24 to 50 residential units. “That doesn’t yield a lot of rent, or pay off a big loan, but it will make all the difference in downtown,” Boyer said.
A company that brings jobs to the area can be eligible for other incentives.
In the last decade, DIA has given 16 downtown development projects various incentives. Here are some better known examples. The complete list accompanies this story.
- The District on the Southbank received a REV grant of 75% for 20 years, not to exceed $56 million.
- The Cowford Chophouse received a $500,000 Historic Preservation and Revitalization Trust Fund Grant
- 220 Riverside received a REV grant of 75% for 20 years not to exceed $4.9 million with a $30 million minimum capital investment requirement.
To qualify for the new historic incentives, buildings must be at least 50 years old and designated historic by the City Council and contribute to the Downtown Jacksonville Historic District.
The new incentives would include funding to offset the costs of upgrading fire and other systems required to meet building codes. The city also would cover some of the costs of exterior and interior renovations such as flooring and elevators.
Smaller projects could be eligible for grants capped at 40% of the total cost of the project.
The DIA also could give forgivable loans of up to $100,000 from the Downtown Historic Preservation and Revitalization Trust Fund without approval from the City Council. But there is currently no money in the fund.
Loans of more than $100,000 would be available through the Downtown Preservation and Restoration Program that would require City Council approval.
The legislation also removes the $1 million cap on historic incentives.
Jacques Klempf, who renovated the old Bostwick Building at 101 E. Bay St., into the Cowford Chophouse, said renovating an old building comes with special challenges.
The Bostwick building was in such poor condition, it was dismantled brick by brick and rebuilt.
“Nothing had been done to it for 80 years,” Klempf said. “I would have been better off mowing it down and starting from scratch. But that building is the entrance to downtown, that was my main reason for purchasing it.”
And it also yielded a cache of historic records and artifacts from its two vaults that contained 200 lock boxes that hadn’t been opened since the bank closed in 1926.
“We were very fortunate. DIA was willing to help developers to keep the fabric of historic downtown,” Klempf said. “We worked with the mayor and council. We shared with them our vision. Once we completed the project, they came through with incentives. It was a nice bonus.”
Robert Pavelka didn’t get incentives for his 2007 renovation of the Churchwell Lofts on Bay Street, but the project is a study in the complexity of renovating a historic building.
The building was constructed as a brick warehouse in 1904 and Pavelka’s grandfather and great uncle bought it in 1922.
“It was beautifully built. It’s a substantial building,” he said.
The walls on the lower floors are 24 inches thick and the building has over 100 windows.
In renovating the building into luxury condos, Pavelka said they left much of the original building intact. Many of the windows are the originals with wavy glass, and the walls are exposed brick.
“All the columns were heart pine. We just refinished everything, left it natural. We sanded and polyurethaned the floors. We didn’t stain them. I wanted it to be upscale, urban chic.”
Pavelka, an Ortega resident, said he applied for incentives under the Peyton administration but didn’t get them.
“A lot of it depends on who is running the city and how badly they want to work with you,” he said. “It’s great to have an incentive, but it doesn’t make it profitable. You have to have the right market. It has to make economic sense. Incentives didn’t work for us but hopefully it will work for other people.”
For Alex Sifakis, president of JWB Real Estate Capital, incentives are critical and essential piece of historic preservation.
“You need incentives because the rent is not enough to make money off development. In other downtowns, the rents are high enough, you don’t need incentives. If you incentivize development, eventually you will get enough residents and amenities that will make it more desirable and raise the rents.
“That new program is pretty great as far as enabling developers to save historic buildings,” Sifakis said. “We think it’s a great move and will make great impact on revitalization.”
JWB recently bought two historic buildings: Federal Reserve Bank at 424 N. Hogan St., and the adjacent Baptist Convention building at 218 W. Church St.
The bank was designed by Henrietta Dozier, the first woman architect in Jacksonville; the Baptist building by famed architect Henry Klutho, who helped rebuild the city after the 1901 fire.
Sifakis said the buildings will be redeveloped as one project with the parking lot to be converted into an outdoor courtyard with seating for two to three restaurants. In addition, the Baptist building will have 24 residential units and the Federal Reserve will have event space on the upper floors.
JWB is in talks with DIA about incentives and plans to begin work by the middle of next year. Sifakis said they also will be pursuing a federal historic tax credit.
Sifakis said JWB did not get incentives for the shipping container apartments on Ashley Street, but in retrospect, wish they had because the project was more expensive than they had anticipated.
JWB also has acquired the Porter House mansion, 510 Julia St., another Klutho building catty corner to Federal Reserve and Baptist building that will be turned into office space and retail/restaurant.
It also owns Klutho’s Seminole building, 400 N. Hogan St., which is anchored by Sweet Pete’s and has a vacant restaurant space.
The buildings are in close proximity to City Hall and James Weldon Johnson Park. In a few years, the Emerald Trail will run down Hogan Street from Springfield to the river.
“The Emerald Trail is a great amenity,” Sifakis said. “Urban trails have proven to be a great catalyst for revitalization.”
Boyer said she hopes the incentives will help boost the residential population downtown and the number of restaurants and retail shops to sustain them.
“We have a great quality of life for the beach lifestyle and the suburban lifestyle, but we’re not as competitive with the urban lifestyle,” she said. “By creating an urban lifestyle, we’ll be catering to what millennials are looking for. It helps us compete for jobs and business recruiting.”
Downtown Historic development projects
List of open projects approved in the last 10 years that are currently administered by the Downtown Investment Authority:
RIVERSIDE/BROOKLYN
220 Riverside
Minimum Capital Investment Requirement: $30,000,000
REV Grant: 75%/20 years, not to exceed $4,905,980
Loan: None
200 Riverside
(a/k/a Vista Brooklyn)
Minimum Capital Investment Requirement: $50,000,000
REV Grant: 62.5%/20 years, not to exceed $9,000,000
Loan: None
Riverside Lodging
(a/k/a Residence Inn)
Minimum Capital Investment Requirement: $17,500,000
REV Grant: 75%/20 years, not to exceed $3,700,000
Loan: None
Lofts at Brooklyn
Minimum Capital Investment Requirement: $28,000,000
REV Grant: 75%/the earlier of 15 years or 2037, not to exceed $3,380,000
Loan: $625,750, 20 years at 0% interest
Brooklyn Riverside
(BR Riverside, DST)
Minimum Capital Investment Requirement: $35,500,000
REV Grant: 75%/20 years, not to exceed $5,154,000
Loan: None
Fidelity Information Services (d/b/a FIS)
Minimum Capital Investment: $145,000,000
REV Grant: 75%/20 years, not to exceed $23,400,000
Loan: None
Other: City QTI contribution of up to $600,000 for 500 new jobs over ten (10) year period
LaVILLA
Lofts at LaVilla 2
(a/k/a Jefferson Station)
Minimum Capital Investment Requirement: $26,000,000
REV Grant: 75%/15 years, not to exceed $2,980,000
Loan: $400,000, 20 years at 0% interest
Lofts at LaVilla on Monroe
Minimum Capital Investment Requirement: None
REV Grant: None
Loan: $303,750, 20 years at 0% interest
DOWNTOWN
ACE Jax, LLC (Jones Brothers)
Minimum Capital Investment Requirement: None
REV Grant: None
Loan: None
Other: $1,500,000 Historic Preservation and Revitalization Trust Fund Grant
AXIS Hotels, LC
(Ambassador Hotel)
Minimum Capital Investment Requirement: None
REV Grant: None
Loan: None
Other: $1,500,000 Historic Preservation and Revitalization Trust Fund Grant
FOODONICS EQUITIES, LLC (Cowford Chophouse)
Minimum Capital Investment Requirement: None
REV Grant: None
Loan: None
Other: $500,000 Historic Preservation and Revitalization Trust Fund Grant
SOUTHBANK
Southbank Apartment Ventures
Minimum Capital Investment Requirement: $37,000,000
REV Grant: 75%/15 years, not to exceed $7,810,000
Loan: None
CDP Home Street (SoBA)
Minimum Capital Investment Requirement: $21,000,000
REV Grant: 75%/15 years, not to exceed $2,530,000
Loan: None
The District
Estimated Capital Investment: $280,000,000
REV Grant: 75%/20 years, not to exceed $56,025,000
Loan: None
GV-IP Jacksonville Owner, LLC
(One Call)
Minimum Capital Investment Requirement: None
REV Grant: None
Loan: None
Other: $100,000 annual Commercial Revitalization Grant for creating/maintaining 900-1,175 jobs
SunGard Data Systems, Inc.
Minimum Capital Investment Requirement: $1,235,000
REV Grant: 50%/10 years, not to exceed $80,000
Loan: None
Other: Create/maintain 120-250 jobs
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