Shipyards Project Facing Foreclosure

15 05 2009

The Jacksonville Economic Development Commission’s office has authorized city lawyers to start a foreclosure process against the developer of a $450 million upscale residential and commercial riverfront project.

City officials made the decision after LandMar Group LLC representatives informed them that they would not be able to make a $3.1 million debt payment on the Shipyards project, which is a breech of the developer’s contract with the city, according to mayor’s office spokeswoman Misty Skipper.

The decision to take legal action against LandMar signals the probable end of the glitzy Downtown project that has stirred controversy for most of this decade.

City officials have been meeting on a weekly basis with representatives of LandMar and its parent company since the developer notified the city that it would not be able to pay the $485,000 bill for property taxes on the Shipyards due March 31. Since then, the city and the developer have been negotiating, Skipper said, but there has not been a resolution. The city can initiate foreclosure because it is the primary mortgage holder on the property.

In a memo to the Jacksonville City Council, JEDC Executive Director Ron Barton outlined the following:

•The developer has until May 21 to make the debt payment before the developer goes into default and will be given 10 business days make the debt shortfall payment.

•The city will begin monitoring the net worth requirements for both LandMar, which must maintain a net worth of at least $20 million during the agreement and its parent company Crescent Resources LLC, which must maintain a net worth of at least $500. Barton noted that in the last two quarters Crescent Resource’s unaudited net worth has fallen below the $500 million requirement.

•If on June 29 Crescent Resource’s net worth is below $500, LandMar will be required to provide the city an additional letter of credit for about $18 million to cover the remaining costs associated with the public improvements. If LandMar does not provide the additional letter of credit the city will send a default notice, and if it is still not addressed, will again take legal action.

“The JEDC, along with the Office of General Counsel and the Council Auditor, continue to meet with the developer’s representatives on a weekly basis and will continue to explore solutions and options that address the obligations of the agreement while recognizing the unprecedented economic times and financial strain experienced by the real estate development industry,” Barton said in the memo sent May 13.

Source: Jacksonville Business Journal

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