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Pensacola CRA approves amended Hawkshaw redevelopment agreement after extended financing negotiations
Summary
The Pensacola Community Redevelopment Agency voted to approve a seventh amendment allowing a new ownership structure for the Hawkshaw redevelopment and to finalize terms intended to make construction financing feasible, after lengthy discussion about repurchase rights, liquidated damages and construction milestones.
The Pensacola Community Redevelopment Agency on a vote approved an amended agreement that allows a change in ownership and governance for the Hawkshaw redevelopment project and authorizes the CRA chairperson to execute documents needed to implement the changes.
The amendment, described to the board as the seventh amendment to the original covenants and agreement for the property at 50 South Ninth Avenue, was discussed for more than two hours. The development team told the CRA that the change in membership, management and voting control is necessary to secure construction financing and to claim certain tax credits. Agency staff and the city attorney circulated a red-line version to board members the prior Friday and negotiated further edits in the meeting.
Board members focused much of their questioning on three financing-related provisions: a developer-proposed repurchase right, the amount and cap of liquidated damages for missed milestones, and what constitutes the commencement of construction. City staff and the developer negotiated language intended to balance the CRA’s interest in ensuring the project gets built and the developer’s need to present acceptable collateral and lien priority to lenders.
Developers described a new project entity that would hold the property for financing purposes and a two-class ownership structure in which "A class" equity holders would sign personal guarantees for the loan. The team said it expects to be guarantors and sponsors of construction debt and to bring in additional equity investors after contribution of the property to the special-purpose entity.
Board members and the mayor pressed the developer on how a buyback provision tied to a below-market repurchase price would affect lenders’ willingness to provide a construction loan. City legal staff warned that a repurchase right that could be exercised for less than fair market value would undermine a lender’s first-lien position and could prevent financing. The developer offered alternatives, including limiting any buyback right to a period before closing of construction financing or tying it to an appraisal or other objective valuation mechanism.
The developer also asked the board to limit the definition of commencement to meaningful on-site contractor mobilization rather than vertical construction, and to allow modest relief if market conditions caused a temporary inability to meet an appraisal contingency. The development team asked for 42 months to complete construction (an increase from a previously stated three‑year term) and proposed liquidated damages set per missed milestone with a cap tied to the prior year’s tax assessment for the vacant property; participants discussed figures in the range of $25 to $150 per milestone and a practical cap in the vicinity of the prior year tax amount (about $18,000–$19,000 was repeatedly cited during discussion).
After negotiating a set of amendments on the record — including making the buyback contingent on financing steps and adding a one‑year pause provision tied to an appraisal contingency — the CRA voted to approve the redlined agreement as amended. The board instructed city staff and the city attorney to finalize the exact contract language consistent with the motion and amendments approved on the floor.
The development team presented project details to the board during the meeting: they described plans for a multifamily development they estimated at roughly 209–228 units, identified proposed architecture and management partners, and said they would pursue tax credits and conventional construction financing. The presenting team cited prior projects in the region and told the board they would sign personal guarantees and put equity into the deal once financing closed.
Board members emphasized they wanted tangible evidence that the developer would be more invested than the CRA before relinquishing meaningful control. The mayor framed the decision as a choice between continuing on the prior trajectory and giving the new development group additional tools to secure financing; he urged the board to weigh which option was likelier to produce a built project.
The motion approved at the meeting directed the CRA chair and staff to conclude the amendment consistent with the negotiated changes and to allow the developer to proceed with the financing steps necessary to begin construction.
