By TED CARTER
The Jackson Development Authority has put the dormant Farish Street redevelopment on the agenda of a special meeting at 10 a.m. Wednesday.
The action follows a Hinds Chancery judge’s order for Development Authority lawyers not to impede consideration of a possible deal on redeveloping the two block portion of Farish Street.
The trial lawyer for the JRA insisted he has made no effort to waylay a new development proposal.
The agenda for the Nov. 18 special meeting lists only “Farish Street” as the topic. But the emergence of the issue after two years in exile makes it a safe bet the agenda item pertains to a proposal from Denver-based LCS Development. LCS principal Leroy Smith says he has lined up investors ready to invest $100 million to help revive the one-time African-American shopping and entertainment destination and wants to get started right away. Smith said he also plans to put some of the money into projects elsewhere in Jackson.
Farish Street’s redevelopment landed in a limbo – or, in Mayor Tony Yarber’s words, “parked out behind the house” — after the JRA terminated a development contract with developer David Watkins and his Farish Street Group in October 2013. It might have stayed there without the intervention Judge Thomas.
Thomas ordered all parties, including trial lawyers representing the JRA in a lien dispute with Watkins, not to take “any action to preclude, frustrate or impede either the agreement of a date and time or the actual presentation of such a plan.”
LCS Development is uncomfortable progressing further into a deal without first removing the prospect that a lien of $4.7 million from Watkins and one of $300,000 from Dale Architects will be revived through an appeal to the Mississippi Supreme Court.
Among the offers LCS Development’s Smith will make to the JRA is $1.6 million to cover a restitution demand by the U.S. Department of Housing and Urban Development. HUD made the demand after concluding the JRA was never certified to receive the $1.6 million in HUD money used to acquire the two blocks of Farish Street.
In exchange, Smith wants title to the property. “That is the crux of the proposal,” he said in a statement late Thursday afternoon.
“Our group is prepared to close on this transaction in 10 days,” he added. “Once we have title to the property, our team will immediately resume construction of the entertainment venues and will have five venues open for business in one year.”
Added Smith: “We welcome the news that Judge Thomas has ordered a meeting of the JRA to hear our proposal. We believed they will be relieved and excited.”
Smith said his investment group wants him to acquire the Farish Street property and its development rights before the end of the year. Otherwise, they will look will look for other secondary and tertiary markets in which to invest, he said.
Hearing that Farish Street is on a special meeting agenda for Nov. 18, Smith said “it’s amazing how things are moving so fast now.”
LCS Development has already put extensive time into the deal, according To Smith. “I have been working for over a year to take over the development of the stalled Farish Street entertainment district,” he said.
Meanwhile, the JRA is eager to settle up with HUD, having been suspended from further involvement in HUD-funded projects until it meets the repayment demand.
HUD provided the $1.6 million at the outset of efforts to convert the street into an entertainment district early in the last decade but did not order the repayment and suspension until fall 2014.
Watkins put a $4.7 million lien on the two blocks of buildings after the JRA booted him from the project in October 2013. Watkins, a lawyer-turned-real-estate developer, claimed the lien equals the amount of money he put into the project.
Judge Thomas voided the lien in late July. But Watkins can appeal the decision to the state Supreme Court if unable to get a settlement with LCS Development.
Acting on a report from Watkins, Thomas said in an order Tuesday a “disconnect” between JRA’s Jones Walker trial counsel and JRA general counsel Penny Brown has “resulted in a viable development plan being withheld from the board.”
Mark D. Herbert, the Jones Walker attorney handling the lien litigation, said in an email Friday he has “never taken any action whatsoever to try to prevent any proposal, and in particular any proposal from an entity named LCS Development, from going before the JRA board.”
In a memorandum of understanding dated Sept. 22, LCS’ Smith said he is willing to settle Watkins’ claim as well Dale Architects’ claim.
With those claims out of the way, Watkins would transfer the two blocks of Farish Street to LCS Development.
The JRA never responded to the proposed memorandum of understanding, according to Smith.
He proposes converting the two blocks of Farish Street into “an authentic, historically significant, diverse, economically feasible and sustainable development.”
Components would include entertainment, retail, housing, film production, innovation centers and a multi-purpose arena.
To fund the conversion, Smiths wants a $25 million JRA-backed bond issue similar to the ones the JRA awarded the under-construction Westin Hotel and the Iron Horse Grill, a restaurant and entertainment venue that opened a couple of years ago.
Smith also wants tax increment financing as well as eligibility for the state’s Tourism Tax Rebate program. With that eligibility, he could receive a rebate on a portion of sales taxes collected within the Farish Street to help cover development costs.
New market tax credits would be part of the funding, as would federal and state historic tax credits. Mississippi’s historic tax credits have been depleted and legislators have not decided whether to replenish them.
Smith said the $100 million the investors want to spend includes projects on Farish Street, elsewhere downtown and in West Jackson, near Jackson State University.
But Farish would be the priority and target of $25 million in spending in the first 8 months of the revitalization project, he said.
Smith is willing to let the JRA have some control in the project – but it will have to put some of its own money into the deal for that to happen.
Smith’s insistence on JRA skin in the game likely stems from the dead ends hit by the previous two developers, Watkins and John Ellington, the developer behind the revival of Memphis’ Beale Street who left the Jackson project over frustration with the JRA in 2008.
The JRA can have “some control over the property, even after we buy it from them,” Smith said, but added: “We will agree to some controls provided that the JRA/City match our private investment, dollar for dollar, up to $25 million,” he said.