Jackson City Council members finally got the details on a proposed convention center hotel Monday at a council work session, but some still had questions about the city's role in funding the project.
In June 2010, 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.
Under the plan, the city would partner with Transcontinental Realty Investors, or TCI, to build the hotel. Representatives from TCI said a convention center hotel will increase business at the Jackson Convention Complex and at downtown businesses.
"One thing we're trying to do is create enough synergy downtown so that it will be a destination," said Al Crozier, executive vice president of TCI.
In 2007, Dallas-based TCI purchased property along Pascagoula Street extending to Farish Street to build a convention center hotel and mixed-use development called Capital City Center. The original plans included condos, retail space and 1,500-car parking garage; however, TCI scaled back the plans to a $90 million hotel and skywalk to the Jackson Convention Complex, which was completed in 2009. The development stalled due to financing issues, and the city has been negotiating with the developers on finalizing a cost-sharing agreement.
If the council adopts the plan, the city and TCI will issue $70.1 million in tax-exempt Gulf Opportunity Zone bonds through the Jackson Redevelopment Authority and $22.5 million in taxable bonds to help pay for the project. Total funding for the project would be $96.1 million.
Bob Swerdling, managing director of Swerdling and Associates, said now is a good time to build the hotel, because the GO Zone bonds opportunity expires at the end of this year. Swerdling advises the city on financial matters relating to the hotel.
Construction costs and interest rates are also low due to the bad economy, Swerdling said, and 14 other cities have similar projects underway. Swerdling said Jackson needs more hotel rooms to compete with peer cities to bring in conventions. The planned hotel would have about 300 rooms.
Ward 1 Councilman Quentin Whitwell expressed concerns about the city guaranteeing the bonds and what would happen if TCI defaulted on its obligations, but Swerdling said that was unlikely. Whitwell also asked what would happen if the hotel did not do as well as they hoped.
"I just want to make sure we do look at worst-case scenario," Whitwell said. "... I guarantee it; you've already figured out that the first few years we're not going to make money. I mean, somebody's going to have to write a check somewhere. I just need to know. It's like I tell my wife: 'How big of a check am I going to have to write?'"
"She's going to get the checkbook," replied Council President Frank Bluntson.
Swerdling said a $6 million operating-reserve fund built into the project cost would be enough to cover a year and a half of debt service, even if the hotel made no money in the first few years.
Under the plan, the city would purchase land from TCI for $14.3 million. Either the city or JRA would then lease the land for the hotel to TCI to develop. Since the parcel of land is larger than would be needed for the hotel, the city could sell or develop the extra land around the hotel.
The city and the developer would share profits and losses for the hotel. A hotelier, such as Hilton or Sheraton, would manage it. Swerdling said several hoteliers are already making offers.
"I will never stand before a mayor or any council member and say there is no risk in the transaction, but I can suggest it is a manageable risk," Swerdling said.
Tom Black, vice president of Harrell Contracting, said his company would pledge to build the hotel within 18 months at the longest, but it would probably be completed in 14 months. Swerdling said construction will cost about $63 million.
Ward 2 Councilman Chokwe Lumumba said he wanted to ensure the construction company hired a certain percentage of minority-owned contractors and workers from Jackson to build the hotel. The mayor and Black said that could be monitored.
Read the JFP's previous coverage of the convention center hotel plans:
Convention Hotel Developers Owe County Taxes
City May Help Fund Convention Center Hotel
[Editorial] Sun Must Shine on Convention Hotel Deal
The Saga of the Convention Center Hotel
City Approves Convention Hotel Financing
[Editorial] The Convention Hotel Conundrum
Convention Hotel Waits on Financing
Waiting for the Convention Center Hotel
City Not Ready To Finalize Hotel Plans
JRA Hires Consultant for Convention Hotel
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