Elephant in the Hotel Room

File Photo

The Jackson Convention Center lacks a hotel. The Jackson Redevelopment Authority will request proposals early in 2012.

by Valerie Wells
December 21, 2011

The Rev. Ronnie Crudup ended the Dec. 16 Jackson Redevelopment Authority's special meeting on a positive note. "We believe we are going to get a convention center hotel very shortly," he said, soon after the JRA board voted to decline all existing proposals on the table.

On Friday, Dec. 16, the JRA rejected in executive session the only two submitted proposals, one from TCI Investments, the Dallas-based company that owns the land across the street from the Convention Center, and the other from Journeyman Austin Holdings, also based in Texas. JRA and the city of Jackson will issue a new request for proposals in the first quarter of 2011.

Essentially, the board did not want to rush into making a decision without looking at the layers of complexity of the project and the financing. Crudup said that the board took into account the financial obligation to the city, the short time frame of the two-week submission period and a multitude of potential legal concerns that not even all the lawyers agreed on. It all resulted in the board saying no to both developers.

With Gulf Opportunity Zone bonds ending Dec. 31, many—including TCI representatives—wanted to take advantage of that public funding. Journeyman Austin, however, said that while it would like the benefits of such a program, its proposal wasn't contingent on GO Zone bonds.

Journeyman Austin offered three different sites and options in its proposal. One includes an unoccupied City Centre tower at 200 S. Lamar St. that Parkway Properties owns. All three Journeyman options had plans for 300 rooms, parking, retail space, extended convention meeting space and local involvement.

"This is our mainstay business, delivering convention center hotels," said Robert Gallup, vice president of Journeyman Austin. The developer has built 10 convention center hotels in the 12 years. He mentioned some examples of completed projects: the Austin Hilton, Austin Hilton Downtown, Denver Hyatt, San Antonio Hyatt and hotels in Omaha, Neb., and Vancouver, Wash.

Journeyman is also involved with developing a convention center hotel in Savannah, Ga. That city's convention complex is across the river from its downtown with not much else happening in the vicinity. "Every time I go to Savannah, walk in the convention center—and no one is there," Gallup said. "It makes me sick. It is sitting there."

Gallup said the funding for the Jackson project should involve private investment. The company is not asking for 100 percent financing from the city. At least 10 percent would come from private sources.

Don Hewitt represented Advance Technology Building Solutions, a Jackson-based firm working with Journeyman. His company is renovating the old Regions building downtown, the Jackson Free Press reported in August. Hewitt said Journeyman's hotel project would include as much local participation as possible. He stressed that Journeyman has criteria for hiring minority subcontractors.

One of the board members asked if it was necessary to have GO Zone bonds.

"It is not a deal killer," Gallup responded. TCI, on the other hand, says it needed the GO Zone bonds to proceed. Hewitt pointed out that other bonds would be available from state agencies, including the Mississippi Business Finance Corp.

Alfred Crozier represented TCI at the meeting, but wasn't prepared for a formal presentation. In his impromptu address, he said he had given a presentation already to a committee the day before and didn't have all his consultants on hand Friday. He stressed that TCI has been working on the project for years, even before the 2008 economic dip. The company assembled parcels equaling four city blocks across from the convention center.

"We've gone through the gambit to massage this to a level we find comfortable," Crozier told the board.

He said that TCI is in final negotiations with Sheraton to become the "flag" hotel. It's the same mixed-use plan TCI had presented before.

"We are prepared to close by the end of the year to utilize GO Zone," Crozier told the board.

JRA board member Beneta Burt asked Crozier: "If you don't get the GO Zone (funds), will you move forward?"

Crozier talked around her question, at which point she interrupted. "That would be a no," she said.

Before the board went into executive session, Crudup commented on a story in The Clarion-Ledger that examined connections several JRA consultants on the project had with TCI. The story mentioned Malachi Financial Products, law firm Butler Snow, law firm Chambers and Gaylor, and Swerdling and Associates, a hospitality real estate firm. The article said that TCI gave Porter Bingham, CEO of Malachi, $65,000 in retainers and that Malachi could make $1.57 million in fees.

Crudup, who is chairman of the JRA board, said he found it "most worrisome" that the story in the paper might leave readers with the suggestion that JRA board members had done something wrong.

"That is absolutely not so," Crudup said. "None of us receive a dime. This whole issue of liability is an elephant in the room. It should not reflect on personal integrity of board members."

After he made the comments, the board voted to go into executive session to discuss the two proposals. When they reopened the meeting, they voted down both developers. The fifth floor meeting room in the Warren Hood Building slowly cleared.

In the elevator going down, Gallup said Journeyman Austin would definitely submit another proposal. "We are competitive," he said.

When the elevator door opened, Crozier from TCI was standing in the first-floor lobby with his legs crossed and arms folded, but he turned and walked away without commenting on his company's future plans.

Want the history? Go to http://www.jfp.ms/hotel for details.

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