For a 12-story, 300-room hotel that has been empty for 37 years, the dilapidated King Edward Hotel in downtown Jackson has a knack for sucking up time and money.
After years of changing hands, well-intentioned promises and grand plans, it seemed the historic landmark would be the next significant renovation project for the Capital City last year when its owner, the Jackson Redevelopment Authority (JRA), struck a deal with a development company to move forward on restoring the historic building.
However, it was announced last week that negotiations had ceased. The announcement was made by Mayor Harvey Johnson Jr. August 9.
It is expected that other plans for restoring the King Edward will be reviewed.
Last week before Johnson’s announcement, JRA director Willie Mott declined to comment “because we’re in the midst of negotiations.”
“It’s not an easy project, and we knew that from the onset,” he said. “That’s all I can say at this stage. Anything else would be inappropriate to discuss.”
The King Edward Hotel, located on Capitol Street in the heart of downtown Jackson, opened as The Edwards House on Dec. 29, 1923. The property, which cost $1 million to build, closed in 1967. After years of changing hands, Hinds County Chancery Judge Stuart Robinson deeded the property to the JRA in March 2003. JRA immediately issued requests for proposals (RFPs) with an August 5 deadline.
Of the three teams that responded, JRA chose the Wyndham-Roberts-Denson Development Team, which includes Wyndham Hotels of Dallas, operator of resorts and historic hotels worldwide, the St. Louis-based Roberts Company and James Denson of Kenner, La. The team’s proposal called for a mixed-use development with retail on the ground level, hotel rooms, apartments and a TV station.
People close to the situation said that spending the money required — estimates range from $35 million to $45 million — to renovate a building valued at approximately $30 million was an extremely complicated matter with an unattractive rate of return on investment. Also, figuring out what to do with the hotel’s parking garage, built in the 1940s and plagued with structural problems, has perplexed developers.
“Getting tax credits and HUD loans and sorting through other financial options is very time-consuming,” said one developer. “This is not for the faint at heart or for folks new to this type of project.”
Mott pointed out that “all three teams submitted different proposals” last year.
New Orleans-based Historic Restoration Inc. (HRI), a real estate development firm that has renovated 54 buildings, including the Humble Oil Building in Houston, Blackstone Hotel in Fort Worth, Texas, and numerous apartments and office buildings in New Orleans, submitted a proposal that called for gutting the building and constructing 154 one- and two-bedroom apartments that would rent from $650 to $1,100 per month. The firm, which was established around the same time the 1984 World’s Fair was held in New Orleans, has a track record of going into a community with one redevelopment project and staying for six to eight years to partner on other projects until an area is restored.
“There are very few developers with experience strong enough to pull off historic restoration projects of this magnitude,” said John Lawrence, president of Jackson Downtown Partners. “In addition to assessing the traditional real estate market, they must understand the culture of the community, the significance of the property, engineering, construction and preservation … but it must all be done in the context of creating a profitable investment. Only a couple of companies, like HRI, have built their portfolio from doing nothing other than challenging projects like this all over the country.”
Earlier this summer, Franklyn Tate, deputy director of planning and development for JRA and manager of the city’s economic development office, said an environmental assessment and a structural analysis had been completed for the King Edward Hotel, and that Jackson architectural firm Dale & Associates was collaborating with the development team.
Even though no one involved directly with the project would talk on the record, several sources indicated an “innovative and creative” announcement was forthcoming.
It is unclear how last week’s announcement will affect the future of the redevelopment effort.
“However, the development team comes together, they will have to be prepared to go the distance with rallying public participation,” said Lawrence. “Since suburban land is so cheap and low-density construction costs are so low, historic restoration projects in urban cores are at a distinct disadvantage. But the economic impact they create is extraordinary. To be realized, a true public/private partnership will have to be structured.”
“We can’t forget, however, that this is more than just a real estate deal. This is a downtown icon, a symbol of historic Mississippi. This property deserves whatever the community can muster to ensure its revitalization. And it is going to take a great deal of assistance. The state, county and city will all have to step up to the plate to provide some level of gap financing. If this were a market-rate project, it would have been completed by now. But it is a community development project that needs public, private and philanthropic support.”
Among the uses mentioned in a blended team development: luxury office space in addition to apartments, a four-star restaurant and a Starbucks.
“Right now, everything’s so iffy,” said someone close to the situation. “Even if a new deal was struck tomorrow, it would take nine months to get the proper financing settled.”
Lawrence said, “Many of us feel strongly that the building should remain a hotel because it would ensure that the property operates as a public amenity, a central meeting place. But residential development is the key to long-term downtown growth and success. And honestly, this is the market segment with the most potential in downtown today. Hopefully, the lower levels could be programmed as retail, restaurant or commercial space to maintain that public element.”
Many observers believed that seeing construction begin on the King Edward Hotel would spur other redevelopment projects, such as the city-owned Standard Life Building, which has significant code problems. Developers have suggested various uses for the Standard Life Building after the Jackson Police Department (JPD) vacates it, including constructing 80 to 90 luxury apartments.
“The Standard Life is a true jewel that we are fortunate to have,” said Lawrence. “It lays out wonderfully for conversion and, unlike the King Edward, is in excellent condition. The deco architecture is wonderful. When renovation of the old JPD headquarters is complete, the Standard Life will be a likely candidate for private redevelopment.”
Developers have been attracted to redevelopment projects in downtown Jackson because land is relatively inexpensive and doesn’t come with superfund or environmental issues compared to cities like Atlanta. The crime rate in downtown Jackson has decreased at about the same rate it has increased in suburban areas like Madison and Ridgeland.
“Why should we, as a community, care? Think of Memphis without the Peabody Hotel,” said Lawrence. “Think of the jobs this project would create. Think of the blight it will remove. Think of the statement that will be made when train passengers from the City of New Orleans see Mississippi with a proud new face. Think of the collateral development it will inspire. Redevelopment … is priority number one.”
Contact MBJ contributing writer Lynne W. Jeter at email@example.com.