It's been a little over a month since the Jackson Redevelopment Authority passed a resolution to issue up to $95 million in bonds for the proposed convention center hotel complex, but the project's developers are still trying to get a financial structure in place for the development to move forward.
In 2007, JRA, a quasi-government entity that manages and develops city property, sold four blocks of property along Pascagoula Street to TCI-MS, a limited-liability company formed by Mark Small, president of MJS Realty based in Dallas, Texas, with close ties to controversial businessman Gene Phillips. When finished, Capital City Center, a $200 million multi-use development, will include 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 and a 200-unit "luxury" apartment building.
The non-binding resolution nails down a specific amount that the city will allocate in bonds, but until the developers finds a financial entity to buy the bonds, JRA and the city will not enter into a final agreement.
Mayor Harvey Johnson Jr. told the Jackson Free Press during a Sept. 29 editorial board meeting that the resolution authorizes the developer's application for Gulf Opportunity Zone financing and gives support for financial backing from bankers. He said the city has already provided a generous amount of financial resources for the development and wouldn't speculate whether the city would provide additional support if the developers were unable to secure financing.
"I think that the city has made a very significant and firm expression of its willingness to participate in this deal, and to go beyond that at this point is not only speculation but is maybe a little challenging," Johnson said. "We will have to wait and see what happens if the developer isn't able to secure financing."
Johnson added that this wouldn't have been his ideal project, but now that his administration is responsible for carrying it out, he is committed to seeing it through. Late Jackson Mayor Frank Melton was largely responsible for securing the deal with the Dallas developers.
"I didn't craft the deal, but I'm the guy who has to make sure we consummate it. We are working hard to do that," Johnson said. "We are working with the developer and potential financing sources. Not only is it a business deal with a lot of resources at stake, we have a lot of skin in the game. We truly believe that a convention center hotel will be a great benefit to the convention center."
The resolution also states that JRA will reimburse the developer for all "eligible costs and expenses incurred by the redeveloper with respect to the project." This means that after JRA receives money from selling the bonds, JRA will give the developer those funds to build the project, and TCI will then make the bond payments.
JRA Executive Director Jason Brookins said the agreement also has language referring to the former Firestone Tires site and the old Barefield Furniture property on the corner of Roach and Pascagoula streets that TCI purchased separate from site of the proposed convention center hotel and multi-use development. TCI-MS bought the property from private owners for an undisclosed amount in an earlier deal and agreed to place the title in JRA's name. Once the city crafts a final deal, that agreement may allow for the city to reimburse the developers up to
$1.75 million for the property.
But Brookins said the reimbursement doesn't mean the city is handing over cash; instead, it could serve as credit. In 2008, the city loaned $7 million to TCI-MS through the U.S. Department of Housing and Urban Development for the development of the hotel. In June, the city passed a resolution calling for the TCI-MS to repay $2 million of the loan to the city in January 2011 and repay the remaining loan's principal by
Jan. 1, 2013.
Brookins said the city plans to use the vacant buildings to expand the convention center. "We asked the developer to purchase the property—Firestone and Barefield—and place it in the name of JRA," he said. "That was a precautionary move. If the development didn't go through, the property would be retained by the city of Jackson."
But the specifics of the agreement won't be nailed down until JRA has the project's financing in place.
"The city has a very strong desire to see that property made available right now for the future expansion of the convention center hotel. Either the city will own (the property), JRA will own it, or the convention center will own it. Someone other than the developer will own that property in the very near future," Brookins said.
Johnson said that the developers are not beholden to deadlines, but he expected financing decisions to come into place in the near future. Small said in mid-October that TCI has secured GO Zone bonds through the Mississippi Development Authority.
"We have submitted proper paperwork with MDA," Small said. "... The GO Zone bonds have been assured for the project. Now we are just trying to get the paperwork in place so we can sell the bonds."