Jacksonville Taxpayers to Pay Shipyard Back Taxes — Plus $86,000 in Interest
Investors bought Tax Certificates on Landmar property for delinquent 2008 taxes. The certificates pay 17% interest. The city needs to clear liens to get clear title.
Palm Coast, FL – May 20, 2010 – The city of Jacksonville, FL will likely pay the back taxes and $86,000 interest that has accrued on Tax Certificates related to a failed downtown real estate development known as Shipyard. Two investors bought the certificates when Landmar Group LLC, a division of Crescent Resources LLC, failed to pay 2008 property taxes due on a prime development parcel in downtown Jacksonville. Jacksonville deeded Shipyard to Landmar Group as part of a 2005 development deal estimated to be $450 million.
Jacksonville is between a rock and a hard place. When Landmar notified the city a year ago that it could not make a $3.5 million debt payment, Jacksonville’s Economic Development Commission began foreclosure proceedings to regain title to the property. Landmar and its parent company, Crescent Resources LLC (along with approximately 120 other subsidiaries) filed for Chapter 11 bankruptcy soon thereafter.
The Tax Certificates held by the investors represent liens against the property. According to a story in the Florida Times Union, the certificates pay 17% interest and have so far accumulated $86,000 of accrued interest. The city must clear the liens to gain clear title. To do that, they have to pay the investors the face amount of the certificates plus accumulated interest. Meanwhile interest continues to accrue at 17%. Jacksonville officials think it’s better to bite the bullet now to prevent future accruals.
Ironically, the hearing to consider confirmation of Crescents plan to exit bankruptcy begins today in Austin,TX.
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