The city of Jacksonville received $13.4 million in a settlement related to the bankruptcy of LandMar Group LLC, the company that had planned to build a $450 million mixed use project on the Northbank Shipyards property.
In the four years since LandMar and its parent company, Crescent Resources, both declared bankruptcy, the city has wrangled over how much it should get back from its unsecured debt.
The situation was complicated by the deal that put the property in LandMar’s hands: The company agreed to reinvest $22.5 million in riverfront public improvements and begin making $3.5 million in annual debt service payments on $46.7 million of bonds previously issued for the stalled project.
The snakebit site had previously been under the control of developer TriLegacy Group LLC, which had had ambitious plans for the property until the city took it back in a dispute over how incentive money was spent.
After Landmar got the property, it made $20 million in property improvements and paid the city about $13.8 million to cover the bonds the city had on the property before declaring bankruptcy. That left the city initially estimated it was owed $57.38 million, a figure that dropped to $37.38 million once it got back the property.
“We had a very rich deal where they were to continue paying off debt and put improvements into the property,” Jacksonville General Counsel Cindy Laquidara said. “Making us whole was giving us the value of the deal.”
The bankruptcy trustee objected to that amount in 2011, though, offering $893,750 instead. In response, the City Council agreed to lower its claim to $23.3 million, citing the uncertainty of winning a legal battle over the amount, as well as the cost of such a fight.
The $13.4 million is that amount minus things like trustee expenses, with the city getting about 18 percent of the total funds available for distribution.
The settlement agreement related to the money will go before the Jacksonville City Council Tuesday night. Once the council agrees to accept the money, legal counsel will have to figure out what the funds can be used for: Although Laquidara said it appears it will not have to be used for bond payments, it seems some of the money may have to be used for capital projects on which general revenue is now being spent — an issue which will be analyzed in coming weeks.
Source: Jacksonville Business Journal