A decision by Jackson City Council Monday (Dec. 19) to build a 16-floor, $96 million convention center hotel will hand Mayor Harvey Johnson a signature victory but a thumbs down from the council will give him a serious setback.
The city put the deal on a fast-track to enable proposed development partner Transcontinental Realty Investments Inc. to meet a Dec. 31 deadline for selling about $70 million in Gulf Opportunity Zone bonds. The post-Katrina recovery bond program expires at midnight on the last day of the month.
Johnson has insisted for weeks that a deal he has reached with Transcontinental in which the city would back the nearly $100 million in bonds needed to build the hotel represents the best chance for keeping the city’s 3-year-old convention complex viable. But in the weeks following a preliminary green light the council gave the project and its bond funding some council members have begun to question whether Transcontinental, a Dallas real estate investment trust, is the most suitable partner.
One council member who voted in late summer to allow the city to pursue the bond sale now questions whether taxpayers’ money should be put at risk. Noting his district pays “50 percent” of the city‘s taxes, Ward 1 Councilman Quentin Whitwell said in a November interview his constituents are uneasy about the risk. “They aren’t interested in buying a hotel right now,” he said.
The proposal specifies the city to build the hotel and lease it to TCI.
The Jackson Redevelopment Authority is to select a Request for Proposals for the hotel project Friday, although the authority’s legal counsel says the agency’s board acted illegally in trimming the customary 30-day RFP period to 15 days in a vote Nov. 23. Authority approval of the TCI proposal will clear the way for a vote of the council Monday.
Johnson conceded the hotel deal carries risk for the city’s general fund should hotel revenue fall short of covering the debt. He added, however, that he is comfortable with the developer’s projection that the hotel would operate in the black. Debt costs are to be split evenly between the city and developer.
Without the 303-room convention headquarters hotel, the city’s convention complex will never reach its business potential and blight will beset the area around the complex, Johnson has said in recent interviews.