The mayor's recent proposal to dissolve the Jackson Redevelopment Authority and use the savings to reduce the city's $4.3 million budget deficit may do little to address the city's budget woes.
Melton proposed last week to eliminate the Jackson Redevelopment Authority, rather than issue cuts to every city department, saying the money intended for JRA could instead funnel back into the city. Melton told Council President Ben Allen and others that his idea would free up $3 million.
JRA Chairman Brent Alexander said dissolving the quasi-autonomous agency, established through a legislative decision, will put very little money back into city coffers.
"All we are is a flow-through mechanism that allows the city to acquire property and get it back on the tax rolls. We're not sitting on a pot of money," said Alexander, who, like other board members, serves on the board as an unpaid volunteer. "There is no $3 million. We get about $2.3 million a year (from the city of Jackson), and most of that money goes to pay debt load or pay off our share of federal or state matches that have done things like finance Union Station and the King Edward acquisition. These payments will still be necessary with or without us."
Melton's call to disband JRA comes weeks after the agency raised concerns on a $209 million project proposal from Dallas developers, including businessman Gene Phillips, for construction of hotels, residential, retail and office space at the new Capital City Convention Center.
Phillips is owner of Basic Capital Management, Inc., of Dallas, Texas. BCM is one of the largest privately owned real-estate management companies in the U.S., but it has a history of legal trouble. In 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. Phillips and BCM agreed to pay a civil penalty of $850,000 in that case, without admitting guilt. Phillips was also indicted earlier, in 2000, in an alleged scheme to bribe officials in a proposed sale of preferred stock shares of a company advised by BCM. Phillips was acquitted of those charges in 2002.
Several sources say BCM's $209 million development offer was insufficiently detailed on what it actually intends to build, which prompted JRA to put a hold on the proposal.
"Obviously the JRA has some hesitation and (is) making sure that the needs of the city are met with this proposal, and I'm glad the JRA is exacting due diligence in this matter in being sure that the priorities of our city are being followed," Councilwoman Margaret Barrett-Simon told the Jackson Free Press.
JRA Chairman Brent Alexander would not comment on BCM's bid to develop convention center properties, but he explained that JRA has a commitment to promote development through an established process.
"The only thing I'll say is it's a matter of policy," he said. "This is the people's land we're working with. We have a way to create property that is lawful and coherent, to create large-scale projects downtown, and in order to do that we have to have commitments from the people who are developing that property, to make sure that what they're doing is consistent with the vision of the city of Jackson, Downtown Partners and the Convention and Visitors Bureau."
Melton, who is from Texas and still files his homestead exemption there despite being mayor of Jackson, has close ties with Phillips. When the city stalled re-development of the King Edward Hotel by failing to mail a grant application to Housing and Urban Development in 2005, Melton said he had another developer lined up to take over the hotel project, blaming local developers for the delays. Melton later confirmed that Phillips was that developer. Melton also publicly offered to turn over the development of the Farish Street Entertainment District to Phillips last year, though Memphis-based Performa Entertainment has a solid lock on the development contract. A majority of council members determined that Melton, as mayor, did not have the authority to break city contracts in the case of either the King Edward or Farish Street.
Phillips did not return calls for comment. Neither Melton nor his attorney, former Mayor Dale Danks, returned calls for comment.
Council President Ben Allen said he didn't believe that the mayor's plan was intended to punish the JRA. "The mayor had a briefing with a couple of people, and it looks like they're going to accept (Phillips') proposal, so I don't think it's a punishment thing. I think it's a frustration thing. JRA moves slower than Melton wants to move, but they have laws that they have to adhere to," Allen said.
City Attorney Sarah O'Reilly-Evans put JRA's "notification of intention to accept" the $209 million proposal on the May 8 council agenda, but Barrett-Simon said council members still must review the proposal.
The mayor will first need council approval to disband the JRA. Councilman Marshand Crisler said it is too early to gauge council support. "Anything I say right now would be speculative," Crisler said. "If we do consider the abolishment of JRA, do we have the legal authority to do so? I just think any comment would be premature, because (the proposal) hasn't been presented in any form or fashion to the City Council."
"Dissolving the JRA would just be a drop in the bucket," Alexander said. "I think everybody from JRA, to the office of the mayor, to the City Council is concerned and passionate about economic development, and I think that once the mayor has a more sophisticated understanding of JRA's role in this process, then he'll change his position on this issue."
If the city does abolish the JRA, some other organization will have to fill its role.
Crisler said the mayor is considering tapping Downtown Jackson Partners, a private non-profit created in 1996 by corporate leaders and elected officials to promote development in the downtown area, to take on JRA's responsibilities.
Downtown Jackson Partners Vice Chairman Ted Duckworth said he sympathized with the mayor's concerns. "I understand his frustrations," he said, "because the track record of (JRA) has been slow to act and very bureaucratic. A president or director-type person needs to be organized or focused on where the organization wants to go, but there's no director and no focus on where they're going or how they're supposed to get there, whereas the Downtown Partners is a very strong, vocal organization mostly consisting of downtown property owners."
It is unclear whether state law would allow a private non-profit to manage government money. Attorney Zack Taylor, who has represented the JRA since the 1970s, said he did not know if a private non-profit like DJP could assume the duties of the JRA.
Taylor warned, however, that it may not be legal to dissolve JRA at all until it has "discharged both its debts and its responsibilities," he said, citing a 1978 opinion from then-Attorney General A.F. Summer.
Barrett-Simon said that the JRA is still charging more debt and assuming new responsibilities, however.
"Before you can disband the JRA, it has to have completed its task. It has to have no outstanding debt, and the JRA fits into neither of those categories. We used it just recently to acquire another piece of downtown property," Barrett-Simon said.
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