Jackson Free Press

The city council met behind closed doors Tuesday evening to discuss a possible cost-sharing agreement with developers of a $200 million mixed-used development along four blocks of Pascagoula street that would include a convention center hotel. The JFP Daily reported online Tuesday that TCI-MS, the LLC that owns the property, has not paid property taxes for 2009, and is linked to a controversial developer.

The Hinds County Tax Collector's website showed that TCI-MS owes $120,463.34 in property taxes for all its investments in Hinds County and $16,990.36 for properties associated with the hotel, due Feb. 1.

Jackson Mayor Harvey Johnson Jr. said Monday that he was unaware of the tax delinquency. "We want to make sure that the property, that all the taxes are paid and that we are satisfied that all this will be taken care of, but you're telling me something that I didn't know," Johnson said when the Jackson Free Press asked him about the overdue taxes.

In 2006, Mark Small, president of MJS Realty in Dallas, formed TCI-MS, a limited liability company, as a partnership with the publicly traded Transcontinental Realty Investors, also based in Dallas, to purchase the property located between Pearl, Mill and Pascagoula streets in downtown Jackson for $1.5 million.

The proposed development would consist of two hotels, residential, retail and office space. The current plan entails a 19-story Crowne Plaza Hotel with 300 guest rooms, a 175-room Staybridge Suites Hotel, a 1,500-car garage, skywalks linking the hotels with the convention complex, a 200-unit luxury apartment building and a 150-unit independent senior living complex.

A recent public-records request to the Jackson Redevelopment Authority revealed that TCI-MS was the only entity to submit a bid proposal for the project in 2006.

Prior to the closed meeting on Tuesday, city attorney Pieter Teeuwissen said the meeting was being held in executive session because the state's open meetings law exempts discussions concerning the purchase, sale or lease of property, and relocation of a businesss or industry from public meetings.

Michael Cory, an attorney with the Danks, Miller, Hamer and Cory Law Firm representing Small and TCI-MS, said Tuesday that he did not know about the unpaid property taxes but said he would look into the matter. "That was something I was unaware of, but they will certainly be brought up to date," Cory said. "Certainly, we want to see the city get their taxes and see them paid properly."

Cory said that TCI-MS and TCI are not the same entity, but are partners in the Capital City Center development.

TCI is closely connected with Basic Capital Management founder and former CEO Gene Phillips, who former Mayor Frank Melton championed for high-price development in Jackson. The JFP previously reported that Phillips has a history of controversial business involvements. His company, Phillips Development, filed bankruptcy in 1973, showing $30 million in debt. A second company that he chaired, Southmark Corp., went bankrupt in 1989 during the high-profile savings-and loan-scandal and had assets of more than $8.5 billion, according to the U.S. Department of Justice.

In 2010, Phillips' ownership and role in the companies he and his family created and manage are more convoluted than in the past. In 2008, the SEC reported that he represents his children's trust, which now owns Basic Capital, and according to the SEC and TCI-MS' attorney Cory, Phillips advises TCI and its developments, including TCI-MS. His children's trust owns Realty Advisors Inc., and Phillips himself owns Syntek West. Those two companies, in turn, own Prime Income Asset Management Inc., the sole member of Prime Income Asset Management LLC. That LLC is the contractual adviser to TCI. TCI is located 1800 Valley View Lane, and MJS is located at 1750 Valley View Lane in Dallas.

The federal government indicted Phillips in June 2000 in an alleged scheme to bribe union officials in a proposed sale of preferred stock shares of a company advised by BCM. The FBI's "Operation Uptick" indicted 120 people in the scheme, including members of several organized-crime families. Phillips was acquitted of those charges in 2002. According to The Wall Street Journal, after the indictments, Phillips stepped down from his prominent role managing day-to-day operations of BCM.

Phillips' family owned a company that tried to purchase the Tulsa, Okla.-based American Reserved Life Insurance Company in 1999. Despite warnings from state officials, Oklahoma Insurance Commissioner Carroll Fisher approved the purchase. An Oklahoma House of Representatives' committee investigated Fisher in 2004 for allegations of bribery. Fisher was found guilty of bribery for accepting gifts from Phillips and sentenced in 2009 to six months in a lock-down facility in Tulsa. Phillips, however, faced no charges and has denied bribing Fisher, who authorities said refused to cooperate.

Cory defended Phillips Tuesday, pointing to his achievements. "All you have to do is look at his track record, what he has done in the last 10 to 15 years. He has done huge projects in the United States and other countries; he has been a very successful developer," Cory said.

"I don't think it would be fair to look into the fact that he was acquitted of charges as an indication of his competence and expertise as a developer," he added. "There are people that are wrongly charged, unfortunately, in this country everyday, and those who can afford to defend themselves frequently, or ultimately, are found not to have done anything wrong, and I think that was the case with Gene."

Gene Phillips' website shows that his, his real estate management company Prime Income Asset Management manages more than $3.54 billion in assets.

Phillips is also the founder of Prime Income Asset Management, a real estate and energy management company with over $3.54 billion in managed assets. PIAM is currently constructing a 425-acre resort called Port Olpeniz in Germany. Phillips is also the chairman of Balkan Energy Company LLC, a privately owned energy company that conducts power projects in developing countries.

MJS lists several current and complete hotel projects on their website, including an Extended Stay Hotel in St. Thomas, the Ritz Carlton in San Franciso, the Centura Hotel in Dallas, and Hyatts in Texas and Colorado.

Mark Small did not return calls for comment.