A Mississippi Business Journal article reporting that the city of Jackson is "set to bet" $40 million from its general fund to own half of the long-proposed convention center hotel is misleading, city spokesman Chris Mims says.
No agreement is before the city council at this time. "Number one, I don't know where they got that number from, and number two, I can't see us ever pulling $40 million out of the general fund for any development," Mims said. "That's not what the general fund is for."
Earlier this month, the Business Journal's page-one article "A Wing and a Prayer" focused on the development, long stalled due to financing issues.
Jackson Mayor Harvey Johnson Jr.'s relationship with the developers of the convention center hotel resembles an arranged marriage. The late Mayor Frank Melton secured the deal with MJS Realty, an offshoot of the Texas-based real estate firm, TCI Investments, in 2006 to purchase the property from the Jackson Redevelopment Authority. Since Johnson took office in 2009, the city hasn't approved a cost-sharing agreement with the developers needed to make the hotel a reality. The hotel would enable the Jackson convention center to secure larger events and boost the city's economy, according to city and convention center officials.
In March, TCI Investment Executive Director Alfred Crozier presented the city with a draft of a cost-sharing agreement. The proposal requires the city to obtain 50 percent ownership of the hotel. The city would also designate four blocks of Pascagoula Street as an urban renewal area and extend the terms of a $7 million U.S. Department of Housing and Urban Development loan the city gave to the developers in 2007.
The proposal states that the developers have secured $84 million in GO Zone bonds to fully fund the project and calls for the city to "approve the bonds to be secured by grants and contributions from the general fund." Congress has extended GO Zone bonds, which were set to expire last year. The new deadline is Dec. 31.
The mayor and developers have had discussions over the past several months regarding the development, said City Attorney Pieter Teeuwissen. He has not reviewed an agreement for a legal opinion, however.
"(The Mississippi Business Journal) has assumed that this draft is what the administration and city council supports," he said.
The Business Journal also reported that the developers conducted a TCI-financed feasibility study determining that the hotel would need to charge $150 per night to be financially viable. Teeuwissen said that before a proposal is put before council, the city would likely conduct an independent market study or update the current study so it doesn't solely rely on the developer's numbers.
In June 2010, the Jackson City Council approved a non-binding resolution that called for the city to issue an unspecified amount of bonds to finance the hotel project. Original plans for the Capital City Center included a $200 million multi-use development with a 19-story Crowne Plaza Hotel, a Staybridge Suites Hotel, a 1,500-car garage, skywalks linking the hotels with the convention center and a 200-unit apartment building.
The Business Journal reported that developers have temporarily postponed the retail, residential, garage and Staybridge Suites portions of the development.
Mark Small, president of MJS Reality, had been the front man for the project; however, Teeuwissen confirmed that Crozier has now taken a dominant role in negotiations with the city.
In a February 2010 email to the city, Downtown Jackson Partners President Ben Allen wrote that "the developers may be near snake eyes" and suggested two alternate firms to take over the project: Dallas-based developers Garfield Traub and Missouri-based developers John Q. Hammons Hotels and Resorts.
Mims said that the mayor is still on board with TCI and that the city is not expecting anyone else to take over the project at this time.
"Johnson has said that he is more confident now that he has been in the past with this project," Mims said.
Crozier and Small did not return calls for this article.
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