Strike two for Farish Street development — Two developers at odds on what unfolded but agree success can be achieved
by Ted Carter
Published: November 15,2013
Both John Elkington and David Watkins took stabs at transforming a downtown portion of Jackson’s historic Farish Street into an entertainment district.
Each of the developers hit dead ends, Elkington in 2008 and Watkins earlier this fall.
Neither has lost faith that the street can become the entertainment and cultural draw they set out to make it. Any success that does come, the two developers say, will hinge on a new effort that has genuine cooperation from the mayor and Jackson Redevelopment Authority — something both say they lacked during their years of trying to transform the rows of abandoned buildings into an entertainment destination.
Their room for agreement runs out right about there.
Watkins, a Jackson lawyer turned re-developer of historic buildings such as the King Edward Hotel and Standard Life mixed-use building, will tell you Elkington left him “a bankrupt development with $1.5 million in debt” and seven or eight Farish Street buildings with “less than $250,000” of value.
The Mississippi Development Authority appeared to be on the verge of foreclosing on the project after lending Elkington’s Performa Mississippi $1 million, according to Watkins. “That led Leland Speed, Ben Allen and Frank Melton to come to me and say, ‘Watkins, you’ve got to take this over,’” said Watkins, referring to the former head of the MDA, Leland Speed; Downtown Jackson Partners President Ben Allen; and the late Jackson mayor Frank Melton.
Elkington, the developer behind Memphis’ four-block Beale Street entertainment district, will say it is Watkins who owes him money from the hand-off of the Farish Street project and he has sued Watkins to get it. “He made several payments and then just stopped,” Elkington said.
The two give different accounts of the leases in place when Watkins took over in 2008. Watkins said the leases were unenforceable. Elkington said Watkins “ran off all of our leases.”
Watkins characterizes Elkington’s effort as one doomed by a misguided focus on bringing Beale Street to Farish Street.
Jackson, said Watkins’ son and project consultant David Watkins Jr., is “not just another stop between Memphis and New Orleans. It’s the stop.”
Elkington countered Farish Street success has “got nothing to do with being more like Mississippi.”
On the other hand, it’s got plenty to do with having a well capitalized developer with experience creating entertainment districts, said Elkington, a former lawyer whose Performa Entertainment Real Estate has 400,000 square-feet of entertainment space under lease and is now working on other projects.
“I don’t fault him,” Elkington said of Watkins. “He just had no experience. He was just a lost ball in tall grass.”
Obstacles of their own
The Farish Street history shared by Elkington and Watkins includes distinct barriers each had to confront.
For Elkington, it was a delay of a year-plus caused by then-MDA Executive Director Leland Speed’s insistence that Farish Street improvements include residential apartments. “We had worked out an arrangement for the MDA to fund 70 percent. Soon after the administration [of the MDA] changed, Leland Speed put in a requirement to build apartments. That was never part of the plan,” Elkington said.
“It took us forever to get the land to build the apartments.”
Next came a snag Elkington never dreamed an entertainment district would encounter: A ban on alcohol sales.
The problem came with the targeted Farish Street block’s proximity to the downtown campus of the Mississippi College School of Law.
“After they agreed we did not need to build the apartments, they said we couldn’t sell alcohol within 100 feet of a school.”
The irony there for Elkington was that he had been counting on the law school to supply a steady stream of customers to the entertainment district clubs.
Watkins’ first involvement with the project came with his recruitment to lobby state legislators for entertainment district legislation that would lift the booze ban. “That’s how David was brought in,” Elkington said.
Elkington said his communications with the Jackson Redevelopment Authority – the entity responsible for reviving the city’s urban redevelopment zones — sustained a setback in the project’s early days with the death of Jackson lawyer Frank Stimley, who had been a liaison between Elkington and the JRA.
The next loss of momentum, Elkington said, came with the JRA board’s firing of Willie Mott as executive director. “That was a huge problem,” he said.
In between was the succession of mayors – first Harvey Johnson, then Frank Melton and then Johnson once again.
“They just kept losing continuity,” Elkington said.
Watkins acknowledges he experienced a learning curve after taking over the project at the insistence of Leland Speed, Ben Allen and the Frank Melton, the late mayor.
“Nobody has ever written ‘How to Build an Entertainment District for Dummies,’” Watkins said.
Today, Watkins calculates his firm, Watkins Development, put in $4.5 million into the project, much of it, he said, spent redoing faulty water and sewer hookups on the first block and stabilizing buildings along the block.
A major despair set in, he said, with the discovery that the former dry cleaning business at Amite and Farish streets which was to house the B.B. King Club lacked a foundation, a problem estimated to cost between $1.4 million and $1.7 million to fix.
The unanticipated expenses forced Watkins to seek a co-developer or even a developer to take over entirely. Watkins said he was close to a deal with Yates Construction to buy out his share of the project and hire his company to run the district after its opening.
That died when the JRA and minority members of the Watkins partnership group approached Yates about a deal of their own. Yates has since washed its hands of the whole affair, Watkins said.
Not long after the JRA’s behind-the-scenes move to enlist a new developer, the agency terminated its 45-year lease with the Farish Street Group LLC of which Watkins is managing partner.
Elkington had his share of twists and turns in the several years he had the Farish project, but he is not entirely sympathetic to Watkins’ laments over the unexpected spending to stabilize the structure of the B.B. King Club.
Whatever problems were there, Watkins would have known about at the outset, Elkington said.
“All those buildings were tested. He knew exactly what the situation was. I think David couldn’t put it together and started making excuses,” he said.
For his part, Watkins said he relied on the structural reports that attested to the soundness of the B.B. King building.
He insisted he knew nothing of the structural deficiency until its discovery in June 2012.
The repercussions of the structural flaw went beyond the cost to fix it, according to Watkins’ lawyer Lance Stevens. The months of delay the problem caused contributed greatly to Watkins missing a “window of opportunity” to close on a $5 million New Market Tax Credit allocation, Stevens said.
Along with a mix of entertainment and culture rooted in the heritage of Jackson in general and Farish Street in particular, Watkins developed an operational plan that included consolidated food preparation and entertainment booking for the clubs. Watkins’ son, D Watkins, developed much of the operational plan through a separate business entity he created that included a host of Jackson restauranteurs and chefs.
“We’re going to have an essentially unified back-of-the house,” he said in an interview.
Coordinated entertainment programing, he said, would ensure “you are not having four acts that are doing the same thing. Those things are staggered so you are making sure you are hitting all of the demographics.”
He likened his concept to that of Disney and emphasized it provides a way to ensure the visitor “has a consistent experience.”
Elkington said he is not impressed. “It’s not Disneyland,” he said, and added you can’t centrally control how a tenant is going to operate.
“We have 38 businesses on Beale Street,” Elkington said. “Eighty percent of them gross over $1 million a year. We don’t control who they put in their clubs.”
Every business, he said, “needs to be itself.”
Watkins insists Watkins Development has spent $4.5 million on Farish Street, and combined with the $5.4 million from the MDA, the Farish Street Group has a nearly $10 million basis that will be essential to any future effort to secure federal and state historic tax credits for the redevelopment project.
Without the basis, any new partner must start from a zero basis, Watkins said, which would put the project financially out of reach.
Watkins said his firm’s spending in the project has been verified through at least three audits. Elkington said he is skeptical, nonetheless.
“There is no way they have spent $10 million,” said Elkington, calculating redevelopment costs at $150 a square foot for the 20,000 square-feet of buildings on the first block.
He said his $150 a square-foot calculation includes the expense of meeting stringent requirements for obtaining state and federal historic tax credits.
If not returned to the project, Watkins expects to be compensated for his expenses.
Not going to happen, Elkington said. “Nobody is going to pay David to do anything.”
While the two former lawyers turned developers have plenty to disagree about, they do agree Farish Street can be transformed into an entertainment destination.
Both reject Jackson Mayor Chokwe Lumumba’s idea of having several developers tackle the project.
“The reason Beale Street was a success is that you had one guy in charge,” Elkington said, noting he was that “one guy.”
Banks and their willingness to lend will be central to any revival of the project, he said.
They need to be gathered up and told Jackson “needs your help to get this project going,” he added.
The Jackson Redevelopment Authority must commit as well, Elkington said. “They’ve never had someone at the JRA who said, ‘We are going to get this done.’”
Ultimately, the project “needs a mayor who will say, ‘OK, I am taking over this project and bringing it forward.’”
To sign up for Mississippi Business Daily Updates, click here.
One Response to “Strike two for Farish Street development — Two developers at odds on what unfolded but agree success can be achieved”
FOLLOW THE MBJ ON TWITTERMy Tweets
Twang & Tourism: The Country Music Trail
Top Posts & Pages
- Officials set hunting dates for birds; expands dove season by 20 days
- REVVING UP — Motorcars of Jackson is preparing to open its first-ever showroom on I-55
- TECH 21 — Mississippi's most wanted in technology
- Mississippi judge dismisses lawsuit seeking to overturn Sen. Cochran's GOP primary win
- FLIPPING OUT — Flipping houses is popular in much of the country, but in Mississippi ...
- Judge expected to rule today on McDaniel's challenge of loss to Cochran
- Isle of Capri reports decreased in-state revenues; experiencing 'market pressures'
- Circuit clerks question how to get records to McDaniel's trial
- Chefs John Folse and Rick Tramonto are dotting every ‘i’ and crossing every ‘t’ in the development of Seafood R’evolution, which is set to open in November