By TED CARTER
A Herndon, Va., company that specializes in public-private development partnerships is proposing an $83.6 million, 302-room Jackson convention center hotel with a 1,000-space garage.
Red Leaf Development says it can do the project without direct contributions from the City or Jackson Redevelopment Agency, though $41.8 million in borrowing will be necessary, either through a conventional loan backed by the project or urban renewal bonds issued by the Jackson Redevelopment Authority.
“We will not ask for a contribution agreement,” one member of the development team said.
Red Leaf would put up $8.8 million of its own money and fund the remaining development costs through a tax increment financing loan of $25 million and New Market Tax credits of $7.9 million.
Also, a 30 percent share of the hotel’s 1 percent tourism tax on lodging and restaurant sales would go toward development costs, according to the proposal.
Red Leaf says it has a lender that believes the financing meets preliminary guidelines for funding.
Other developers responding to a JRA Request for Proposals were EDT Development Co. and Mississippi Developers LLC; and Mississippi Block Development. Hertz Investment Group, which owns many of downtown Jackson’s office buildings, did not submit a proposal but offered to buy the Redevelopment Authority’s master lease for the planned site of the hotel across Pascagoula Street from the Convention Complex.
Hertz said its development team could not come up with an economically viable plan for the hotel. It offered $3.5 million for the lease.
Red Leaf provided its proposal after a request from the Mississippi Business Journal.
With a November start, Red Leaf says it can open the 236,070 square-foot, eight-floor hotel in September 2017 on land adjacent to the Jackson Convention Center it would buy from the JRA. The developer is considering Starwood Hotels & Resorts and InterContinental Group Hotels to operate the hotel as either a full-service Sheraton or Crowne Plaza.
“We are known for innovative construction and financing strategies,” says Red Leaf, whose projects include a $30 million partnership with Gulfport to convert the former Markham Hotel into a mixed-use building with restaurant and retail space on the ground floor and more than 100 apartments on the upper floors. Red Leaf’s Mississippi projects also include a $22 million senior living center in Natchez.
Red Leaf’s proposal comes in response to a Request for Proposals the Jackson Redevelopment Authority, or JRA, issued in late March. Red Leaf, which has partnered with Jackson’s Advanced Technology Building Solutions LLC and its managing member Don Hewitt, provided its proposal at the request of the Mississippi Business Journal. The JRA has refused an MBJ request to release the other proposals, insisting framers of the development proposals must have an opportunity to remove commercially protected content before the public can examine the proposals.
Hard costs in Red Leaf’s plan include $40.2 million for hotel construction, $12.3 million for garage construction, $6 million for furniture, fixtures and equipment and $1,050,000 for sidewalks and streetscape improvements. A contingency fund of $2.9 million will also will be included in what Red Leaf proposes to be a guaranteed fixed-price risk arrangement by which it covers cost over-runs.
Red Leaf is offering two site scenarios. One would have the entrance to the hotel facing the Convention Center with a convention center courtyard. The second site scheme is a more conventional urban approach with the hotel entrancing fronting Farish Street and hotel function space fronting Pascagoula Street across from the convention complex.
The second option “would lack the courtyard but might be more conducive to other retail/residential uses on the balance of the parcel,” Red Leaf says.
Red Leaf added that the building would reflect “what is happening within.”
Hotel conference facilities would be “clad primarily with stone at the ground level, as well as masonry, thin-shell concrete panels or other materials to achieve a high level of aesthetics,” the developer said.
Function space, including a grand ballroom and junior ballroom, would cover 21,000 square feet within a ground level footprint of 45,000 square feet, Red Leaf says, and adds restaurant space would cover 2,540 square feet and bar & lounge space 1,500 square feet.
Five meeting rooms on the second floor would account for 5,000 square feet. The second level would also house a fitness center and pool.
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