As promised, here are the particulars of Duckworth Realty President and CEO Ted Duckworth’s update of the District at Eastover, a 640,000 square-foot mixed-use development at the site of the old Mississippi School for the Blind that will feature retail and restaurant space, a movie theater, a hotel and residential space built over two phases.
Duckworth is negotiating with the Mississippi Development Authority and Secretary of State Delbert Hosemann lease terms that have to be finalized before Duckworth can pursue financing for the $150 million project. The state owns the land, and instead of selling it, plans on leasing it to Duckworth, who in turn will develop the District at Eastover.
Long story short, some of the major parameters of the lease were defined in the legislation that made the land eligible for private development. Duckworth will pay the state rent equivalent to 10 percent of the land value, with the rent escalating 10 percent every five years. What is still unsettled is the payments to the state beyond that, an amount determined by the profits the project generates.
At first blush, this looks like a pretty good deal for the state. Duckworth has not asked for any state money up front. His company would be responsible for the $1.2 million it would take to demolish the existing buildings on the property and build a new executive director’s residence and a bus barn for the School, both of which were written into the legislation as mandatory before construction could start.
The land is currently non tax-producing and sits between Eastover and Woodland Hills, two of the most affluent neighborhoods in Mississippi. Duckworth provided population estimates that have 90,000 people living within a five-minute drive of the District, with those folks having an average annual income of $114,000.
Duckworth’s numbers also said that the project would generate $2.3 million in state sales taxes annually and $2.5 million in property tax revenue for Jackson. It would create 333 new jobs.
Duckworth said that “a lot of progress” has been made in the last couple weeks regarding the terms of the lease beyond the base rent agreement. Obviously, each side is angling to secure the best deal possible, with Duckworth seeking an agreement that would make it feasible for lenders to jump on board and make the project viable long-term. Hosemann and the MDA are trying to make the state as much money as possible as tax revenues continue to plunge.
Duckworth went to great lengths not to paint Hosemann or the MDA as an obstacle to the project getting underway. The biggest hindrance so far, he said, is that this is a brand new concept in Mississippi — the state leasing land to a private developer for a project of this magnitude — and a fairly new one nationwide. There’s not much of a precedent to guide negotiations.
“Somebody should acquiesce, and it shouldn’t have to be us,” Duckworth said, in what was about as pointed as his comments regarding the negotiations got during the two-hour meeting.
The sales pitch for the project touches on a familiar theme for new development in Jackson: new urbanism. Mississippi does not offer an urban lifestyle that many young professionals want, as evidenced in the 2000 Census that revealed a sharp drop in college-educated people in their 20s and 30s. (Magnolia Marketplace can name dozens of folks that age who have made a beeline for places like Nashville, Atlanta and Birmingham before the ink on their diplomas was dry.) Downtown Jackson has made some strides with things like Fondren and the soon-to-open King Edward Hotel, whose developer, David Watkins, was in attendance today along with other economic developers and members of the Legislature.
Magnolia Marketplace hasn’t been privy to the negotiations between Duckworth and the state, and Duckworth didn’t reveal whether they had taken a confrontational tone, but this deal makes too much sense not to get done. The land is not bringing in revenue. Even if a lease deal is struck and the development goes completely belly-up, what did the state lose? Like Downtown Jackson Partners President Ben Allen says all the time, “One hundred percent of nothing is still nothing.” And that’s exactly what Jackson and the state are currently getting out of the property.