Jackson Free Press

Melton told the Jackson Free Press that he plans to move ahead with an alternate group of investors for the King Edward Hotel renovation if work does not begin by June.

"I met with a business group from Dallas yesterday in my home that want to come in and redo the King Edward Hotel using no taxpayer money," Melton said. "They can do it from the ground to the top without any subsidized money from the public."

While acknowledging that devel-opers—including HRI, Inc. of New Orleans, local attorney David Watkins and New Orleans Saints running back Deuce McAllister—are moving ahead with plans for beginning renovations this summer, Melton said he needed a backup investor in case that deal fell through, and announced a "trigger date" for bringing in the second investor.

"You put private money up to do it, and you borrow money from banks or insurance companies, but you don't go to the public and get money for something that they're not going to benefit from," Melton said.

Melton could not recall the name of the alternate investor, stating that he gave the investor's card to Planning and Development head Jimmy Heidel.

Heidel was out of town this week, but Watkins believes the investor to be Gene E. Phillips, owner of Basic Capital Management, Inc., of Dallas, Tex. BCM is one of the largest privately-owned real-estate management companies in the U.S.

BCM has been involved in numerous business scandals. On Sept. 24, 2002, the Securities and Exchange Commission filed a civil complaint in U.S. District Court against Phillips and BCM alleging that they violated antifraud and stock accumulation reporting provisions of the securities laws.

Without admitting guilt, Phillips and BCM consented to pay a civil penalty of $850,000 in that case.

Phillips was also indicted in June of 2000 in an alleged scheme to bribe union officials in a proposed sale of preferred stock shares of a company advised by BCM. Phillips was acquitted of those charges in 2002.

Representatives of BCM would not confirm investment plans for Jackson.

Watkins said he was sorry to hear of Melton's impatience, but he is just as impatient to begin the process as Melton. Also, Melton does not personally own the King Edward, and, therefore, does not have the authority to hand out renovation contracts.

"If our development team decides they're tired of this, then the JRA (Jackson Redevelopment Authority) has to go out and advertise certain bids again. They can't just give it to somebody off the street. They have to go through the bidding process again," Watkins said.

HRI and investors have waited for the city to get its act together for years.

In August, Melton told WLBT that developers were holding up the process, and he gave them 30 days to get moving. Hours later, he recanted, saying that his administration still had a needed HUD application. He then gave his own administration a 30-day deadline, or he would have the King Edward demolished. City spokeswoman Carolyn Redd said the application was sent off days later.

In November, the JFP reported that the city had narrowly missed the HUD application deadline for the $2 million grant, but was saved by a HUD deadline extension related to Hurricane Katrina.

Then, in March 2006, the JFP learned that the city may have missed the extended HUD deadline by not filing all the required paperwork.

Watkins and investors then scrambled to take advantage of the state's legislative session, inserting an amendment that provided $2 million in interest-free loans to the JRA to redevelop the hotel. Watkins said he expects Gov. Haley Barbour to sign that bill this week.

Very recently, Congress passed the Gulf Opportunity (GO) Zone Act of 2005 (H.R. 4440). The bill creates tax incentives to help revitalize and rebuild communities in areas devastated by Katrina—like Jackson.

Councilman Ben Allen was quite pleased with that legislation. "Essentially, your construction and your building is tax-free for 32 years," he explained.

Watkins argued that investors have made every sacrifice in the last few years. "With every obstacle, we've come up with a solution along the way," Watkins said. "Now that we've got new opportunities, some additional incentives and benefits from the GO Zone legislation, these Johnny-come-lately types come along. I'm not happy about that."

Allen said as long as the renovations with HRI proceed, the council will continue to give its full support to the original investors. "Even if we had the authority, the council, as far as I can tell, would not consider switching investors at this time," Allen said.

Previous Comments

ID

65917

Comment

It's time to get that thing out of the locals hands and get over to Atlanta or up to New York and get big money and big ideas going for that building. If that had been in Atlanta it would have been renovated ten years ago. bought and sold and re-renovated again by now. Same for New York. It isn't where it's "who" about this thing. Same with those inquiries from Developers from New York about a new tower in DT Jackson. If the local developers want to hide up in Madison and deride Jackson then fine. Developers from New York and Atlanta know there is crime everywhere in the world. It hasn't stopped them.

Author

ATLExile

Date

2006-04-20T11:45:15-06:00

ID

65918

Comment

Excuse me...Dallas is just as relevant as a sourse of new ideas and action. Those are the developers that Jackson needs. Guess you can tell I'm T-Oed....about this.

Author

ATLExile

Date

2006-04-20T11:48:23-06:00

ID

65919

Comment

Adam... Great article, HOWEVER, I must again have been in too big a hurry with my comments concerning the tax advantages of GOZONE depreciation benefits if you understood me to say that "Essentially, your construction and your building is tax-free for 32 years." That is NOT the case. GOZONE legislation allows for qualified construction projects, and the K.E. is one, to take a 50% depreciation write-off the first year that the building is constructed, WITH loss carryover. This can represent a P and L "tax-free" environment for a structure, but the length of this "environment" will change depending on the scope, expense and cash flow P and L of the project. Heretofor, and "normally", large building structures can be depreciated over a 32 year span. In layman's terms, a $32,000,000 project could "depreciate" (write-off) $1,000,000 / year for 32 years. With GOZONE qualified structures, a $16,000,000 "depreciation" (write-off) is allowed with loss carryover for subsequent years. This can be a HUGE incentive for development as cash flows are very attractive. Ad Valorem and school taxes will be collected as normal, unless these property taxes are "pledged" for infrastucture needs (parking lots/ water/sewer/etc) through bonds such as "Tax Increment Financing" JPS will receive around $850,000 per year from the K.E. alone, irrespective of GOZONE. Please read that again. Sorry for my "misquote". My bad.

Author

Ben Allen

Date

2006-04-20T13:23:05-06:00

ID

65920

Comment

BAllen "my bad". What's that suppose to mean??

Author

jada

Date

2006-04-20T13:37:40-06:00

ID

65921

Comment

In my neighborhood, jada, it means "my fault".

Author

Ben Allen

Date

2006-04-20T14:05:37-06:00

ID

65922

Comment

ATLExile, I appreciate your obvious desire to get the KE project going . . . . but you need to get a f*%^ing clue. This paper has given excellent details of the delays in this project -- and I don't think anyone in the know, including Councilman Allen, would tell you that the fault is anywhere other than the mayor's office up to this point -- first with former Mayor Johnson, for political reasons, then with Mayor Melton, for sanity reasons. Indeed, the current mayor has not only not been NOT helpful, he has caused serious problems, including ATTEMPTING TO KILL LEGISLATION that would save the King Edward project (rumor has it that this incited a shouting match between Councilman Allen and Melton in the capital halls) and generally slandering developers who want to inject $55M into downtown Jackson. So maybe one should look to Atlanta, etc. for guidance -- but not for developers but instead a chief executive who might actually help . . . or at least get out of the way. Also, you should do your homework about the developers. Try googling Historic Restoration Incorporate. Better yet, check out their website www.hrihci.com You may have heard of New Orleans -- it's been in the news some of late.

Author

Jaydub

Date

2006-04-20T14:43:47-06:00

ID

65923

Comment

Alright now, Jaydub, disagree nicely please.

Author

DonnaLadd

Date

2006-04-20T14:53:59-06:00

ID

65924

Comment

OK, Donna, you are right. This project makes me emotional too, especially knowing all of the dirty little antics that have gone on behind the scenes. ATLExile - sorry. You've written many a good, thoughtful post about downtown redevelopment, particularly the KE. Please keep them up. But do know that the principal developer involved, HRI, enjoys as fine a reputation as anyone in the country for downtown redevopment.

Author

Jaydub

Date

2006-04-20T15:10:36-06:00

ID

65925

Comment

Yes Jaydub, I know who HRI is and I do suppose that they are somewhat occupied in their own backyard for the present...but jiminey christmas...how many mud pies have to be made of this project before we get a real pie we can eat? We've seen starts and stops for 20+ years now. I cannot imagine the frustration that Watkins, Lawrence, Harvey Johnson, Melton, Allen and the battalion of them must feel about this thing right now. It seems so simple when I transplant it in my mind to Atlanta or New york....."Big"....."Grand"..."Historically and Architecturally" Significant (putting it mildly).....a major social statement and stage for a new and racially mature city........gee....... And if you haven't gone to Watkins new site on this thing, you must. If that Ballroom ceiling has even partially survived it can be restored completely. That room would be the most spectacular thing between Atlanta and Dallas. It looks like it was the same calibre of design as the ceilings in the Mississippi Senate and house Chamber. as always thanks for your eyes and comments......

Author

ATLExile

Date

2006-04-20T16:20:18-06:00

ID

65926

Comment

neat web site!.....HRI...yea, I believe they could pull this off quite nicely...maybe even put a "Sonesta" in the 152 room hotel part......now "get it done"......

Author

ATLExile

Date

2006-04-20T16:37:18-06:00

ID

65927

Comment

From today's C-L. "On Tuesday, Gov. Haley Barbour signed a piece of legislation that will allow the city of Jackson to apply for a $2 million, interest-free loan to aid in funding the renovation of the King Edward Hotel. Watkins said workers should begin the extensive environmental cleanup of the hotel in June and finish the renovation project by spring 2007." This SHOULD be the final hurdle for the city and the state. It's all up to HRI now. I don't have any reason to believe they won't come through, but I'll be saying my prayers for the old gal. And, as is usual for the C-L, they went out of their way to find somebody that is entirely skeptical about downtown's future: "Still some business owners are taking a wait-and-see attitude. Steve Long, owner of Steve's Downtown Deli and Bakery, said he sees more mom-and-pop stores like his, but many buildings are still empty and major residential development seems a ways off. "I'm not that optimistic about it. It's going to be a lot to get the ball rolling," he said." Pathetic. In what most papers would make a positive story, the C-L has to try and find somebody that will say just the opposite. Like the dude they found on the street a few months ago that said the King Edward would serve Jackson better as a damn parking lot...

Author

millhouse

Date

2006-04-20T17:35:54-06:00

ID

65928

Comment

And, as is usual for the C-L, they went out of their way to find somebody that is entirely skeptical about downtown's future: Uh, yeah, that's the fake objectivity part. They make this sound like Barbour did this. I can't tell you the back story, but trust me when I say that there are some good people in this city who want the King Edward project to go forward. And it has nothing to do with political party. Someday.

Author

DonnaLadd

Date

2006-04-20T17:38:33-06:00

ID

65929

Comment

Sonesta? That's the first I have heard of a flag for the King Edward. If so, that would be a good flag for the project. If you have any details, please tell more. The plans are remarkably thorough and should work out well.

Author

tombarnes

Date

2006-04-20T18:00:31-06:00

ID

65930

Comment

For some people, everything is about politics. I've never understood that. Cheers, TH

Author

Tom Head

Date

2006-04-20T18:04:30-06:00

ID

65931

Comment

(Er, that was in reference to Donna's post, Tom, not yours. I'm working in another window...)

Author

Tom Head

Date

2006-04-20T18:05:35-06:00

ID

65932

Comment

ATLExile As one of the local developers for this project, I guess I should speak up. I have to admit that I'm a bit offended by your post. I trust that it was made out of a lack of information, rather than any malicious intent. While I am just a Mississippi boy, I have been to New York, Atlanta and even Dallas. I agree that they are great cities. But, I live in Jackson by choice, Fondren to be precise, and am proud of that fact. Moreover, I'm not naïve enough to think that those great cities have a monopoly on good ideas, good people or good living. I'm also not ashamed to say that I don't mind learning (i.e., "stealing ideas") from the developers and entrepreneurs in those great cities. For the record, though, you should be aware that our development team consists of HRI (a pre-eminent historic restoration company in N.O. that started the development in the Warehouse district and the revitalization of New Orleans back in the 1980's), Deuce McAllister and David Watkins. We have been working diligently for 3 years on this project. Yes, THREE years. Most development projects have a pre-development shelf life of no more than 6 months. The simple fact is every other developer on this project for the last 20 years or so has, for one reason or another, taken a walk, whether they were from Madison, Wisconsin, St. Louis, Missouri or even Atlanta, Georgia. (I don't recall any of the "big money" folks from New York trying). You may not realize it, but, at the end of the day, I know of NO investor/developer who will knowingly embark upon a project like the King Edward if the data suggests on the front end they will lose millions of dollars. Even those folks in New York and Atlanta with, as you say, "big money and big ideas" are only going to do a deal if it makes economic sense, period. Before now, the deals just didn't make economic sense. Today, it is different, partially because of the work that we have quietly done in the background over the last few years.

Author

Pops

Date

2006-04-21T00:01:42-06:00

ID

65933

Comment

continuation of response to ATLExile After 3 long years of tackling one obstacle after another, I can understand why so many other developers (yes, even from "out-of-state") have left in frustration and/or anguish. Our team has likewise been quite frustrated by the delays and other countless challenges to the development - not of our own making - and we have stayed in the game. We intend to make this project happen for one primary reason: our absolute, unequivocal commitment to the revitalization of downtown and of the entire City of Jackson. Deuce McAllister and I are Jacksonians and are of one mind on this. Our team has also put our money where our mouth is; we have not just talked about commitment but have demonstrated commitment by investing hundreds of thousands of dollars on this project already. We believe in it and we are confident that we will succeed. It's just too important not to. I won't bore you with all the details about how what kind of challenges we have faced and what we have done to continue to keep the project alive, in spite of those challenges. You can read the articles in the archives of the JFP for that. Let me just say this. We have almost everything going right for the development, for the first time ever: a good team, a good plan, solid fundamentals, an improving downtown market, community acceptance, new tax incentives from the GO Zone legislation, new state historic tax credit legislation (which didn't happen by accident), special legislation for an MDA loan to the JRA to replace the lost $2 million BEDI grant, solid support from the JRA, the City Council, and even the Mayor, and a clear vision of what we intend to accomplish. And, finally, we are unrelenting. We will not quit. The word is not in our vocabulary.

Author

Pops

Date

2006-04-21T00:03:22-06:00

ID

65934

Comment

continuation Revitalizing the King Edward is not a task for the faint-hearted. It is serious, serious heavy-lifting. There are many good reasons why the building has been vacant since 1967. We started 3 years ago with a known $13 million market gap. After 3 long, hard years of work, we now have the tools to fill that gap and make this project viable. But know this: when we start the project this summer, it will have an immediate and dramatic impact on all other development in downtown Jackson. It will send a message far and wide that Jackson, Mississippi is alive and well and is coming back, better and more dynamic than ever before. We are a "can do" city. You suggested that the whole problem with the project is the "who," being the development team. In all sincerity and modesty, I will tell you that what is different this time and what will make the project succeed this time IS the "who," being the development team we have assembled. We will start work on the project this summer with the environmental remediation (i.e., removal of asbestos, lead, pigeon droppings, and other toxic substances), which will take 3-4 months. In the meantime, we will be working on the plans and specifications and reassembling a construction team to begin the actual rehabilitation work, hopefully, by the end of the year. We anticipate a grand opening of the new and glorious hotel to be in the spring of 2008, just in time for the debut of the new convention center. It is a great time to be a Jacksonian. You should all sit back, fasten your seatbelts and enjoy the ride of a lifetime that you're getting ready to witness. Look what's happening and going to happen in Jackson, almost as you read this blog: the King Edward Hotel revitalization, the Standard Life renovation, two new downtown office buildings being planned, the explosive growth of Jackson State, the JSU-Airport parkway, the Bailey Medical Towers project, the phenomenal success of the University Medical Center and the medical community, the revitalization of Fondren, Belhaven, the Medical Mall, the potential for new life for the Metrocenter and Highway 80 redevelopment, the Lefleurs Lakes Project, the Electric Building, the Plaza Building, Fondren Place (old Duling School), Entergy's Old Capitol Green project, all the new restaurants in downtown Jackson, the new City Centre development, the Telcom Center, the Convention Center, the new Mississippi Museum of Art facility, a light rail system for the city, and the list goes on. The commercial, retail and residential redevelopment of downtown Jackson is happening and is exciting. I am doing everything in my power to make this city an even better place for my two grandchildren to live in and to want to stay. If you really think about it for a few minutes, you will realize that we are in the midst of something really special and really exciting. Reach out and grab some of it. There's plenty to go around. David Watkins

Author

Pops

Date

2006-04-21T00:05:28-06:00

ID

65935

Comment

Thanks, David, for posting on this. And for your efforts.

Author

DonnaLadd

Date

2006-04-21T11:08:59-06:00

ID

65936

Comment

absolutely David.....if anything, my post has drawn some very informative "fire".....The center of that city is really a national treasure, and that's not from me that's from a friend of mine who works for Cooper Cary (the firm here that did the downtown plan of late). It will be a great thing to see the entire area rise and realize it's full potential. My Mother and Father had their wedding reception in the Ballroom of the King (1955) and I spent my young years in that hotel lobby and up on the "Patio Club" pool deck when my Grandmother owned and operated the Rightway Travel Agency in the lobby. When those boards come down on the doors facing Capital street (to be replaced with new), her name is on one of them (facing, far left door). Thank you for your time and comments they mean a lot to this post.

Author

ATLExile

Date

2006-04-21T19:06:46-06:00

ID

65937

Comment

POPS wrote...."If you really think about it for a few minutes, you will realize that we are in the midst of something really special and really exciting. Reach out and grab some of it. There's plenty to go around". Sounds like a plan to me......if the cards fell in place for me here on Friday I would be in Jackson on Monday. You never turn your back on home and Please keep up the very good work. Done Right, the King Eddy will be the most important restoration since the New Capitol. And by the way....what's with the Supreme Court Building? It's in reverse now and looks like a really nice classical building had a really bad addition added to it in the 70's.

Author

ATLExile

Date

2006-04-25T16:19:39-06:00

ID

65938

Comment

In the event that readers may not be familiar with the HRI/Watkins proposal, vhere's the link. The plans look great.... http://www.watkinspartners.com/King%20Edward%20Development%20Project%203-3-6%20short%20general_files/frame.htm

Author

tombarnes

Date

2006-04-26T01:11:49-06:00

ID

65939

Comment

So... Will the potential retail spaces be facing the street or the indoor lobby? I'm hoping the former.

Author

Dent May

Date

2006-04-26T13:48:48-06:00

ID

65940

Comment

"So... Will the potential retail spaces be facing the street or the indoor lobby? I'm hoping the former." Our project is a restoration of the King Edward, according to the 1923 plans and the requirements of the Dept. of Archives & History. Consequently, we will have some retail space on the first floor with entrances from both the street and the lobby; some probably only from the lobby. We also plan to convert the old parking garage into retail and/or other commerial use (e.g., office space), depending on the demand as we get into the pre-construction sales and marketing activities this summer.

Author

Pops

Date

2006-04-26T13:57:24-06:00

ID

65941

Comment

Sounds great. and exciting. Thanks.

Author

Dent May

Date

2006-04-26T15:08:09-06:00

ID

65942

Comment

POPS wrote: Our project is a restoration of the King Edward, according to the 1923 plans and the requirements of the Dept. of Archives & History. Is the ceiling still intact in the Ballroom? Long ago I was told that Dumas Milner had a layin installed under it rather than try and restore it (Similar situation to what they found in the Govenors office in the New Capitol when they pulled done the layin). The photo on your site indicates a very fine room for it's day. Also I believe the oval rail on the Mezzanine and the overlook was floored in and that escalator installed (so very modern for it's day!). My memory is not real clear but it is strange what I do remember about that building. I do remember the marble stair that went up from the lobby to the meeting room level. The last time I saw that stair the railing had been removed.

Author

ATLExile

Date

2006-04-27T10:50:18-06:00

ID

65943

Comment

We are told that because of leaks and damage to the original stained glass ceiling in the ballroom, that a new ceiling was installed in the 50's under the original arched ceiling. Our contractors/architects were in the building on Monday (July 17th) and confirmed our plan to pull the old ceiling down and restore the original. We discovered that the original arches are made of steel reinforced concrete. Though there is some deterioration, we believe that it can be repaired. Unfortunately, the floor of the in the ballroom IS unstable and will have to be rebuilt before we can work that room. The oval atrium has been floored in, though that will come out with the restoration. Just so you know, our team officially begain work on Monday, with a crew of about 9 contractors, architects and managers from St. Louis and New Orleans, on site here in Jackson, sorting through the various tasks and prioritizing our timetable. Next week, we will have more teams in for inspections and plan to begin moving some debris out the following week. We still have a number of subcontractors to hire for the environmental abatement and debris removal work. August will be a very busy month for the King Edward! David Watkins King Edward Revitalization Company

Author

Pops

Date

2006-07-19T16:11:16-06:00

ID

65944

Comment

Thank you so much for this post David....It will be one of the most remarkable renovations in the South. And when you consider the downtown, with the restoration of the King, many of the major buildings that were built in the center of Jackson from 1839 through 1930 are still standing. Once the King comes back on line it will be like a complete set! Now of course we have lost alot of grand old residential but most of those were doomed based on economics and were not going to be able to be saved. The point now is to save everything that is left and concentrate on good and "historically sensitive" infill. Also, Jackson still has more than most and the context is in tact. You have done a good thing........................

Author

ATLExile

Date

2006-07-19T16:26:20-06:00