Firm ‘completely surprised’ by supervisors’ vote on Old Capital Green
by MBJ Staff
Published: July 20,2012
Tags: city, Commercial Real Estate, community development, county government, developer, downtown, economic development, mixed-use development, municipal government, municipality, office space, real estate, residential real estate
JACKSON — Full Spectrum, the master developer of the proposed mixed-use project in downtown Jackson called Old Capital Green, reports the firm was surprised by a recent Hinds County Board of Supervisors vote that puts the project in doubt.
The Hinds County Board of Supervisors voted July 16 to not support the development of the parking garage on 1822 Square at Old Capitol Green (OCG). According to Full Spectrum, the supervisors had previously approved three resolutions in support of Old Capitol Green, and on each of these occasions, Full Spectrum was invited to be present and address any concerns they may have had. However, on July 16 the firm was neither invited to be present nor told of the meeting and the impending action.
“Full Spectrum was completely surprised at the board’s action. Full Spectrum was not notified in advance that there was a critical vote of the supervisors scheduled on OCG financing, nor were we notified of the result of the vote. We had viewed this as a public/private partnership in which each partner should be notified of actions by the other,” says Carlton Brown, founding partner and COO of Full Spectrum.
“The Full Spectrum team, including the financing team, was in the process of scheduling a meeting with the supervisors to discuss details of financing and to meet with Blake Wallace, executive director, Hinds County Economic Development Authority and the Jackson Redevelopment Authority’s (JRA) executive director to negotiate final terms of all financing going into the development. Now we find out that, on May 23, 2012, without talking with us, the Hinds County Economic Development Authority recommended to the board that it not secure the Mississippi Development Authority’s loan that had been authorized by the state Legislature three years ago.”
In a statement, Full Spectrum said it “is perplexed as to why the Board of Supervisors would refuse to approve a development deal for the City of Jackson that would create 1,696 temporary construction jobs, 426 new permanent jobs and $42,000,000 over a 20-year period in ad valorem, sales, and school taxes, at no risk to the county. The development team has continually committed to hire and train construction workers recruited from the highest unemployment and poverty sectors in Hinds County, and has made arrangements with the union to pay union scale wages for those trainees, therefore providing far-reaching economic benefits for often-excluded segments of the metropolitan area.”
“When we made the decision to invest in Mississippi in 2006, we felt confident that the downtown Jackson Central Business District would be a good location to build our new state-of-the-art, mixed-use Executive Business & Healthcare Complex,” says Corbett L. Scott Sr., Ceva Green Development, LLC, administrative partner. “We carefully reviewed the development plans for Old Capitol Green presented to us by Full Spectrum South and were comfortable that their company had the talent, capability and financial partners to not only support their projections but also assist the other private developers and property owners located in the Old Capitol Green area with any development ideas and potential challenges that they might encounter as they moved forward. We never envisioned that this master development, as well as our project, would meet with such incredible resistance from the people that, by design, are supposed to be there at the city and county levels to help you.”
On May 25, Full Spectrum said it submitted 200-plus pages of documents to the board attorney and to the county’s economic development authority including financial statements, letters of interest from tenants (office and retail tenants), financial pro formas and letters of conditional commitment for New Market Tax Credit (NMTC) financing, bond financing, FHA housing financing and AFL-CIO Investment Trust Fund. The county had asked for proprietary working spreadsheets from Full Spectrum and its consultants, and even though Full Spectrum was legally permitted to only provide the static spreadsheets it submitted, it offered to have its consultants run any type analysis the Hinds County Economic Development Authority requested, at Full Spectrum’s expense. Since that submission and its subsequent offer to provide other analysis, Full Spectrum has had no feedback or formal communications from the Hinds County Economic Development Authority.
Full Spectrum reports it was invited to address the Authority after a letter had already gone to the president of the board of supervisors that recommended the board not secure the loan.
On June 29, Full Spectrum says Jackson mayor Harvey Johnson sent a letter to the president of the board of supervisors, stating that JRA has agreed to purchase the garage from Full Spectrum and Hinds County at the end of the seven-year New Market Tax Credit.
Full Spectrum says the commitment of the mayor and the board of JRA to purchase the garage after the seven-year NMTC period removed 100 percent of the risk of owning and operating the garage from the county.
After investing more than $3 million of its own money and six years into the development, Walter J. Edwards, CEO of Full Spectrum, said he intends to continue to move forward with the development of 1822 Square and bring this first phase of OCG across the finish line, but must carefully evaluate its options with both private and public partners at the table.
“Full Spectrum has been frustrated by the absence of process. After submitting the documentation the director of Hinds County Economic Development District requested, we never received a written notification that the information had been received and reviewed nor did we ever receive any type response. We heard rumors of district board meetings in which questions were raised, but never received any notification of what the questions or concerns were. In fact, we became aware that there was going to be an OCG agenda item only when the agenda was posted for the board of supervisors’ meeting on July 16, 2012, which was the day the vote was taken. We heard about the vote and the refusal to follow through with the State Infrastructure loan through the press. This is a unique way for an economic development agency to deal with an investor who has committed resources to a major new development. As opposed to rolling out the carpet, the process more effectively pulls the rug out from under a business committed to reinvesting in Jackson and its people,” said Brown.
On June 30, Full Spectrum says it took site control of the state-owned property where Old Capitol Green will be developed by executing a long-term lease with the State of Mississippi on Hal and Mal’s and the 2.74 acres known as B South, where Full Spectrum is to build the garage and commercial and residential buildings during the first phase of the project. The financing structure requires that the garage not be built until the financing for the office building is in place. The office financing and the garage financing will close simultaneously when the building is 70 percent leased. This is a requirement of the NMTC financing and it provides enough cash flow to cover debt service on the garage loan and the office building, thereby eliminating all risk to the county during the first seven years of the NMTC financing period — after which the city will purchase the garage.
Brown added, “The action of the Hinds County Board of Supervisors in refusing to accept the loan approved by the state Legislature to support infrastructure development of Old Capitol Green is a huge disappointment.”
This unexpected action by the Hinds County Board of Supervisors jeopardizes approximately $52 million of private investment in the City of Jackson committed by Full Spectrum’s investors, as well as the pre-commitments (letters of interest) for retail and office tenants who, prior to this action by the county, had committed to 94 percent of the office and 96 percent of the retail, according to Full Spectrum. Those commitments include new and expanded retail business, and cultural businesses in downtown Jackson and a commitment from the GSA to move new jobs to downtown Jackson.
“I was moving back to Jackson to launch my new label in offices at Old Capitol Green,” said Cassandra Wilson, recording artist and president/CEO of Ojah Media Group, in a statement. “I am having second thoughts if this latest action by the County leadership is indicative of how it will support its own residents who are returning to Jackson to invest and grow the community. I am very disappointed in the board of supervisors.”
The board action also jeopardizes Full Spectrum’s commitment to contribute up to $2 million in the project’s revenues over 10 years to Jackson State University (JSU) to contribute to the next generation of the creative class leaders, according to Full Spectrum.
The action of the Hinds County Board of Supervisors also jeopardizes Full Spectrum’s commitment to JSU’s School of Urban and Regional Planning and the School of Engineering to incorporate interns in the planning and development of Old Capitol Green as a living laboratory to train students in the best practices of sustainable development.
“There has been a lot of misinformation and disinformation about the financing of OCG circulating in Jackson. Among the first things we must do before we move forward is get all of the public and private partners in the same room to map a strategy forward, with no hidden agendas,” Brown said
To sign up for Mississippi Business Daily Updates, click here.
FOLLOW THE MBJ ON TWITTERMy Tweets
Top Posts & Pages
- Mississippi no longer has highest unemployment rate in nation
- McDaniel cites Gunn's challenge in his attempt to overturn loss to Cochran
- Payday lender, fired executive exchanging blame for lender’s regulatory woes
- Grain buyer’s bankruptcy could take steep toll on Delta farmers
- Outside group files arguments supporting McDaniel
- UPDATE — David Watkins says JRA left him in dark about HUD's Farish St. involvement
- Mad Genius, Eyevox owner acquires Mississippi Film Studios
- Once the bane of only Southerners, kudzu is migrating north and west
- SouthGroup Insurance named to 'Best Practices' study