JRA dropped developer EDT after it insisted on $60 million public contribution
By TED CARTER
New Mayor Chokwe Antar Lumumba is not ready to call it quits on a convention center hotel after the demise of the Jackson Redevelopment Authority’s two-year effort to complete a deal for one.
A Sept. 27 Redevelopment Authority decision to drop Washington, D.C.-based Engineering Design Technologies as the preferred developer continued nearly a decade of frustrations for proponents of adding a 300-plus-room hotel to a convention complex that has under-performed without one since opening in 2008.
This marked the third time proposals brought forth by developers have hit a dead-end, going back to 2010, when the City and Redevelopment agency negotiated a deal to co-sign up to $50 million in loans for a $90 million hotel proposed by Transcontinental Realty International of Dallas.
The latest collapse came after Engineering Design Technologies, or EDT, recently surprised Redevelopment Authority commissioners with a demand for $60 million in public money to do the project. The developer won the request-for-proposals competition partly through a pledge to build a hotel without City funding.
In the past, the JRA has sought developers through a request-for-proposal process starting with ones authorized by Harvey Johnson, the late Chokwe Lumumba and most recently Tony Yarber.
Chokwe Antar Lumumba said he has not decided on an avenue for moving ahead on the hotel.
“We are going to explore the best alternatives to move this project forward,” he said in an email Friday night.
Lumumba said it’s hardly a sure thing that the City would put money into a convention hotel project. “To date, we do not know if public funding is in fact, the best alternative.”
Like his predecessors, Lumumba thinks the nearly 10-year-old convention complex will never make sustained use of its 330,000 square feet without a convention headquarters hotel. “In order to be competitive in terms of soliciting conventions to our city and other events, it is an important component to what we offer,” said Lumumba, whose late father championed an unsuccessful hotel deal with Tampa hotel developer Callen Robinson put together in the final days of Harvey Johnson’s mayoral administration.
However, Johnson had negotiated the Callen Robinson deal outside of the RFP process. The senior Lumumba insisted on an RFP that brought responses from Callen Robison and Texas hotel developer Journeyman-Austin.
When that process unraveled, Lumumba successor Tony Yarber authorized the most recent RFP that brought responses from EDT and Herndon, Va.-based Red Leaf Development.
Now Red Leaf and local partner Advanced Technology Building Solutions want an opportunity to make a hotel development deal.
“It’s their turn to take a bite out of the apple,” said Don Hewitt, managing member of Advanced Technology Solutions.
Hewitt said the JRA should give his team 120 days to deliver an acceptable development agreement. If it doesn’t deliver, “reset the play to zero,” Hewitt said.
He said the only public money Red Leaf’s proposal sought was from a tax increment financing district.
Red Leaf proposed building an $83.6 million, 302-room hotel with a 1,000-space garage. The proposal included a covered cross walk from the hotel’s Pascagoula Street location to the convention complex.
Engineering Design Technologies did not make a cross walk part of its proposal; further, it gave the option of either covered or surface parking for the 300 spaces it would provide.
The JRA parted ways with EDT on Sept. 27 with commissioners voting unanimously to stop further negotiations on a development agreement. EDT insisted the JRA would have to devote $60 million in public money to a project the developer had pledged to do without City funding, the JRA says.
EDT said it could do a smaller version of the hotel with fewer rooms for a $40 million public contribution, the JRA said.
In asking for the money, EDT blamed increases in construction costs since beginning negotiations with the JRA in February 2016. The 2015 proposal specified an eight-floor, $75.5 million convention hotel of slightly more than 300 rooms on land the City owns next to the convention center on Pascagoula Street.
On the costs side, EDT was to have put up $41.3 million and obtain a City/JRA-backed loan of $11.3 million. The project would also require $11.3 million in tax increment financing (TIF). This money would be rebated from a portion of sales taxes collected in a tax increment district that would be created for the hotel property and properties close to it.
EDT also planned to use $3.7 million in New Market Tax Credits and to invest $7.5 million of its own money, or about 10 percent of the project’s cost.
JRA Commissioner Jennifer Johnson had cited a $13 million funding gap from the start of negotiations and says EDT never explained how it would close the gap. When the gap grew to $60 million, she and her fellow commissioners no longer wanted to deal with EDT, she says.
“We could not even issue a note for that kind of money, and the City is not ready to back that,” said Johnson, an attorney appointed to the JRA by the senior Lumumba.
JRA Commissioner Kemba Ware Taylor said EDT’s insistence on changing terms to include massive amounts of public money made further talks on doing a deal useless. “They changed some items in their proposal that were fundamental to their response to the RFP being acceptable to the board,” Taylor said in an email.
“I would like for us to start the process again with Mayor Lumumba’s approval.”