CORRECTION: This is an updated version of the story referencing the law firm of Balch and Bingham. In an earlier version, we had the firm's name incorrect. We apologize for the error.
With a Dec. 31 deadline looming for acquiring federal GO Zone bonds, the Jackson Redevelopment Authority faces another hurdle in issuing bonds for a proposed convention center hotel. After one lawyer questioned the legality of finding a developer for the project within 15 days as opposed to waiting the usual 30 days, JRA sought legal advice from Balch and Bingham in issuing GO Zone bonds for the hotel. But now Balch and Bingham won't represent JRA, either.
"We were asked to represent, and we declined," Chris Waddell, an attorney with Balch and Bingham, told the Jackson Free Press Tuesday. He did not explain why.
The JRA board voted Friday, Dec. 9, to issue the bonds as long as a lawyer approved the deal. The Jackson City Council would also have to approve the terms.
"It has complexities," John Reeves, vice chairman of the JRA board, told the JFP Tuesday. Reeves said the first lawyer had backed away from the project and that the second lawyer (from Balch and Bingham) didn't want to get involved. He did not say if another lawyer was working on the deal. Jason Brookins, JRA executive director, did not return calls before this issue went to press.
The terms of the deal outline that the JRA will issue $89 million in bonds to the developer and the developer's parent company would guarantee payments. If payments aren't made, the city will sue the company. In a worst-case scenario, the city could force the developer into bankruptcy and sell the hotel to someone else.
The Jackson City Council and the city attorney's office now have thick stacks of documents to review detailing the deal the JRA worked out to build the hotel. If the City Council approves the terms, the city will back the requested $89 million in bonds to build the hotel. The city's credit rating will lower the interest rate enough to make the hotel deal feasible, the terms say.
"This is a deal that involves some risks," Mayor Harvey Johnson Jr. told 16 WAPT News. He explained that proceeds from the hotel would pay the debt, but if the proceeds were not enough to cover the debt, then the company would pay. If the company couldn't pay, the city would sue.
The city has been between a rock and a hard place regarding the hotel project. The Jackson Convention Center needs the hotel, its advisers say, to attract more conventions and to make a profit. TCI, the Dallas, Texas-based developer tied to the project for years, however, owns the land.
While earlier deals called for the city and developer to split responsibility for profits and losses on the hotel, city adviser Porter Bingham of Malachi Financial Group told the council Monday that state law does not allow that kind of partnership. JRA reworked the deal so that the developer must cover all payments and shortfalls. If the developer does not pay, the city can force them into bankruptcy.
The developer for the project would likely be TCI, which bought the land where the city wants to build the hotel during Mayor Frank Melton's administration with his blessing. JRA has sent out a request for proposals to other developers. The deadline to submit proposals was Dec. 13. JRA is expected to vote on a developer Dec. 16.
WAPT reported Dec. 13 that another developer did submit a proposal by the deadline, but that officials had not released the name.
Bob Swerdling, managing director of Denver-based Swerdling and Associates, is advising the city on the hotel deal. He said he has not found any other developer other than TCI willing to take full recourse for the project.
"In my opinion, TCI is captive in the deal ... and therefore will give full recourse and will give you the best deal," Swerdling said. If the city did find another developer, however, Swerdling said he thinks TCI would sell the land to the city.
The JFP reported in 2009 that TCI provided a timeline to the Mississippi Development Authority to secure its GO Zone funding eligibility. GO Zone funds will not be available after Dec. 31.
The Jackson City Council will have to vote on the deal before issuing the bonds.
See http://www.jfp.ms/hotel for full coverage of the convention-center hotel saga.
Comment at ww.jfp.ms.
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