A Jackson Redevelopment Authority board so eager to get a developer on board to build Jackson’s $96 million convention hotel met the day before Thanksgiving to issue a request for proposals with a reply period cut down from 30 to 15 days.
But when a second developer entered the picture — Journeyman Austin Holdings of Austin, Texas — board members got cold feet and decided Dec. 16 to bag proposals from both Journeyman Austin and Transcontinental Realty Investors, a Dallas real estate investment trust with which two Jackson mayoral administrations, including Harvey Johnson’s, have sought to negotiate a public-private development. Authority members say they needed more time to scrutinize the proposals and could not do so within the tight timeframe they were working under.
This time around, Johnson brought a deal close to completion only to see it scrapped in the late going. He vowed last week to renew efforts to get a deal done. “Getting a convention center hotel is still a priority for this administration and we will continue to work to make it a reality,” Johnson said in a statement issued by spokesman Chris Mims.
“The process has worked and we will move on to plan B.”
The Redevelopment Authority’s thumbs down on both proposals means a restart of the RFP process will have to be initiated early in the New Year. The Associated Press reported that Al Crozier, Transcontinental Realty’s executive VP, declined to say whether his company plans to re-apply to develop the hotel. TCI had proposed a 16-floor, 304-room hotel to be built on land next to the Convention Complex the company would sell the city. The city, in turn, would build the hotel and lease it to TCI.
Journeyman Austin proposed a 300-room hotel with a parking garage and neighboring retail. Bob Gallup, a VP with Journeyman, said his company intends to offer a new proposal, The Associated Press reported.
TCI has a trump card of sorts. It owns five acres fronting the Convention Complex and situated between Pearl and Pascagoula streets on which the city wants to build the hotel.
During the administration of Johnson predecessor Frank Melton Jr., the city sold the parcels to TCI in a bid to create a partnership for a convention hotel. Under Johnson’s arrangement with TCI, the city would regain ownership of the parcels for $14.3 million.
Now, it must either pry the parcels loose if it intends to go with another developer or find other land nearby on which to put the hotel. After Johnson briefed the City Council at a Dec. 19 meeting, members went into a closed executive session, presumably to discuss how to regain ownership of the land.
Taking the property through eminent domain would seem to be a lost cause under Mississippi’s new voter-approved constitutional limits on taking private property for private use. Should the city seize the land, it could not turn it over to a private hotel developer for 10 years.
In the weeks leading up to the demise of the deal, the city and TCI put the convention headquarters hotel project on a fast track in order to meet a Dec. 31 deadline for the developer to sell tax-exempt Gulf Opportunity Zone bonds. Participants had called the GO-Zone bonds, a post-Katrina recovery incentive, key to drawing a private developer into the deal. However, city financial advisor Porter Bingham of Atlanta has said that while GO-Zone bonds would make the project financing more attractive, their real value rested with the help they provided in the sale of urban redevelopment bonds.
Absent the GO-Zone bonds, the city will have to structure a new financing package in hopes of attracting a private sector partner.
City officials were prepared to proceed with the TCI partnership despite not having a market feasibility study done on its behalf. TCI said a market study performed for it by PKF provided assurances that hotel revenues could cover the hotel’s bond debt.
Now, however, city officials are saying the Jackson Redevelopment Authority was responsible for having the hotel market examined and determining whether a convention hotel could pay for itself. “We relied on JRA and its board to vet the deal,” Johnson said in the statement his office issued.
The JRA never commissioned a market feasibility study. The study for which it contracted with H.C. Johnson Consulting of Chicago assessed marketing opportunities and suggested market strategies, say representatives of both the firm and Redevelopment Authority.