Jackson Free Press

By the end of this month, city leaders should have an independent study to determine whether the city of Jackson should help finance a long-awaited convention center hotel.

Yesterday, the Jackson Redevelopment Authority approved a $15,000 contract with C.H. Johnson, a Chicago-based financial consulting firm, to assess proposed financing for a downtown convention center hotel.

In 2007, TCI Investments, a Dallas-based real-estate agency, purchased property along Pascagoula Street extending to Farish Street to build a convention center hotel and mixed-use development called Capital City Center. The original plans included condos, retail space and 1,500-car parking garage; however, TCI has scaled back the plans to a $90 million hotel and skywalk to the Jackson Convention Complex completed in 2009. The development has stalled due to financing issues, and the city has been negotiating with the developers on finalizing a cost-sharing agreement.

In March, TCI Investment Executive Director Alfred Crozier presented the city with a draft of a cost-sharing agreement. The proposal would require the city to obtain 50 percent ownership of the hotel. Under the agreement, the city and JRA would designate the property as an urban-renewal area, and the city would extend the terms of a $7 million U.S. Department of Housing and Urban Development loan that the city gave to the developers in 2007 to purchase the property. TCI paid approximately $17 million for the property, using the HUD loan, a $4 million private loan and other private funds.

Last year, TCI presented a feasibility study by PFK Consultants to the city. The TCI-financed study determined that the hotel would have to charge $150 per night to be financially viable. Jackson Mayor Harvey Johnson Jr. requested an independent study before finalizing an agreement with the developers, JRA Executive Director Jason Brookins said.

JRA Board members expressed concern about the city's liability if the deal falls through after Brookins said TCI is behind on its HUD loan payments. Brookins said he did not know the exact amount that the developers are behind on; however, the developers also have not paid Hinds County property taxes for 2010, which were due Feb. 1. In June 2010, the Jackson Free Press reported that the developers had not paid more than $120,463.34 in property taxes for 2009. TCI has since paid those taxes.

"We are saying we will borrow $93 million and pay a loan that the ones we are in bed with have defaulted on," JRA Board member Matt Thomas said yesterday.

Brookins responded that the developers have not officially defaulted on the loan.

"In the colored community, if you don't pay, it's considered a default," Thomas, who is black, replied.

Porter Bingham of Malachi Financial Group, who works as the city's financial adviser, and Robert Swerdling of Swerdling and Associates attended yesterday's meeting. Swerdling, who consults municipalities on financing projects and works with Malachi, gave his assessment to JRA members of TCI and the deal.

"From a personality perspective, I have come to like Al Crozier," Swerdling said. "From a business perspective they are substantial and big enough to carry a deal of this consequence. From a performance perspective, they haven't honored the covenants that they should have honored at this point. (TCI is) a real-estate company and not the government. I can't predict how this whole thing will work out. ... Because (TCI) is a private real-estate company, it is not strong enough to do this deal on its own. It needs the city's financial credit to make it work."

Swerdling said that because TCI owns the property, not the city, the developers are unlikely to walk away from their investment. He predicted that because of the slow economy, it would be nearly impossible to find another developer to finance the project without some degree of public financing.

"The financial deal is not a bad deal," he said. "It's probably the best deal you can have if you want a private owner. (The city) absolutely needs a hotel. This town is under roomed for the business sector, none the less the convention center."

The city would look at all options before moving forward, Johnson said yesterday.

"We are getting ready to put taxpayer dollars at risk, so we want to make sure it's a sound deal," he said. "It's not an ideal deal--we know that ...If there are some other deals or models out there that are more likely to be successful, we'd like to know that, too."

Crozier was not immediately available for comment.

Previous Commentsshow

Really. Public private partnerships for convention center hotels work all over the country - many developers thrive in that market. Why did Jackson have to reinvent the wheel once again and get involved with a developer who appears not to know the ropes of this particular type of deal and who appears to lack the ability to pull it off without public money. The city needs to find a way to get out of this deal now before it puts too many dollars down the hole and find someone with the experience to make this hotel happen - the city and convention center need the hotel to be succcessful.

onewhoknows

Aug 11 2011

Yes, TCI owns the land and will continue to make payments on their loans and annually on taxes. They would make payments on property where they will never recover their initial investment and the annual cost of maintaining the property. The city should seek out a new developer experienced with this type of project who can either purchase the land from TCI to rid them of their albatross, or come into the deal as a partner with TCI instead of the city investing the money to make it happen. TCI doesn't have access to funds and the city is paying for it with a large empty lot where they should have a convention center hotel. And with a lot of missed opportunities for conventions here because we don't have the hotel rooms.

onewhoknows

Aug 11 2011

If TCI can't do the hotel deal they will still own the land and probably sit on it. Meaning Jackson will be stuck with a huge empty lot in the middle of what should be a prime location. Blame Frank Melton (and the folks who propped him up all those years). He created this mess, and now the city is left to deal with it. I suspect it's fair to say that they wish someone would come along and buy the property and do a convention center hotel, but TCI would have to sell, and it might be hard to find the buyer right now. Fingers crossed. I am sitting here trying to resist saying TOLD YOU SO about Melton or the TCI family. But we did.

DonnaLadd

Aug 11 2011

Everyone else has said it well -- the way I understand it, Melton rounded up the sellers to help his buddies at TCI get the land. Now we're stuck unless TCI decides to sell. It should have been bought by JRA and controlled by the city so that we could pick and choose developers to partner with. I don't know if the city is looking around the convention complex for an alternative option... maybe even putting the hotel in the JCC footprint or behind the JCC somehow, but that might be on thought. At least have some pretty renderings done...

Todd Stauffer

Aug 11 2011

There is a solution to this problem that no one has addressed. The city should approach the Choctaw Noatin about building the convention hotel and a casino in Jackson. Now that the Dept. of Interior has freed the Indian tribes to build casinos on non tribal this might be the perfect solution. If the city of Jackson and the Hinds County board of supervisors vote to approve a casino it will not have to go before the Gaming Commission for approval and the legislature will have no say over it. If the city maintains a small equity interest in both the casino and the convention hotel this would be a tremendous revenue stream for Jackson.

wellington

Aug 14 2011

^^ Problem is that state law does not allow for a casino in Jackson or anywhere else in the state that's not on the Mississippi River or Gulf Coast (Indian reservations are exempt from this, as they are under federal jurisdiction). Unless you know of any Choctaw-owned land in Jackson, good luck.

golden eagle

Aug 15 2011

I am sitting here trying to resist saying TOLD YOU SO about Melton or the TCI family. But we did. Just do it...letting it out is healthier.

golden eagle

Aug 15 2011

Check out the new Interior Dept regulations. There is nothing to stop the Choctaw's from buying land in Jackson or the city selling/leasing them city owned land. The state has no say in this. It would be totally up to the city and possibly Hinds County government.

wellington

Aug 15 2011

If it's as simple as you say, then I'd like to see it happen. However, why would the Choctaws build a casino in Jackson? They get a good amount of traffic as it is from the Jackson area with the Silver Star and Golden Moon in Philadelphia. If another tribe were to build it, then I could see it happening. Also, how much would Jackson actually benefit as far as revenue is concerned? Are the reservation casinos required to pay taxes to local governments? What about the restaurants, hotels, and other amenities that would be a part of such a development? Would the city be able to collect taxes on those amenities? Again, I would favor a casino in Jackson, but is it the answer to our economic prayers?

golden eagle

Aug 15 2011