Though the Jackson Redevelopment Authority doesn’t expect any takers, the authority’s board agreed Wednesday to a 15-day advertising period for a developer other than Transcontinental Realty Investments of Dallas to partner with the city on a convention headquarters hotel.
The JRA board sees the action as a formality and a step toward moving a final deal between Transcontinental Realty and the City of Jackson closer to completion. Normally, this type of Request For Proposals period is 30 days but with the clock ticking down to a Dec. 31 deadline for Transcontinental to secure Gulf Opportunity Zone bonds, the JRA board shortened the period to 15 days.
Mayor Harvey Johnson has been negotiating with Transcontinental for several months on a deal that would have the city buy 3.4 acres between Pascagoula and Pearl Streets for the 16-floor hotel and auxiliary developments for around $14 million. The city would commit to paying off the $96 million in bond debt through lease payments from Transcontinental on the hotel.
If hotel revenues fell short, bond debt would be paid from the city’s general fund, city officials say.
While ostensibly the JRA and city are open to accepting new partnership proposals, the deal with Transcontinental is all but done. “We have reached a definitive agreement,” said Porter Bingham, an Atlanta financial consultant hired to advise the city on the partnership.
He added, however: “The dust is still settling on the terms.”
One term set by Transcontinental got the boot from the JRA board Wednesday. Transcontinental, also known as TCI, proposed that JRA commit to the approximately $14 million sale price for the hotel site. The board declined, choosing instead to seek appraisals on the parcels.
With Mississippi banks unwilling to lend on the hotel project, the tax-exempt GO-Zone bonds – which are to be quickly converted to Urban Renewal Bonds – are key to the project’s success, officials say.
Lucien L. Bourgeois, a Butler Snow lawyer assisting the city with the project, said the Mississippi Development Authority and Gov. Haley Barbour have set aside a portion of the state’s GO-Zone allocation for the hotel development. Congress re-authorized the GO-zone bond program, originally initiated as a post-Katrina recovery mechanism for the Gulf states, for one year last January.
Receiving the allocation and getting the bonds sold by Dec. 31 will require a “24/7” effort, Bourgeois said. “There’s an incredibly fast track to get this thing done.”
He promised to bring the JRA board more information “as we get this thing settled.”
City officials say TCI has leverage as the top partner candidate because it owns the land on which the hotel is to be built. At least three City Council members want the city to seek other potential developers. But with the land ownership, TCI is holding the best cards.
“They don’t have to sell that land,” said JRA board member John Reeves of TCI, which began partnership talks with the city during the mayoral administration of the late Frank Melton.
“They are going to be partner no matter what.”
It’s going to be “cheaper to keep them,” Reeves added.