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Eastover negotiations come to halt

Negotiations between a Jackson developer and the state to build a mixed-use development on the Old Blind School site in Jackson have broken down.

Ted Duckworth said last week that he would seek to modify the legislation that outlines the terms that have governed negotiations between him and the Mississippi Development Authority and Secretary of State Delbert Hosemann. 

The sticking point, Duckworth said, is the part of the legislation that requires a minimum $100-million investment in the District at Eastover, whose plans include a hotel, movie theater, retail space and residential units.

The legislation was passed in the 2007 session, when securing financing for a $100-million project was easier than it has become since the credit markets tightened as a result of the recession. Duckworth hopes lawmakers will reduce the minimum investment number in the upcoming session, which starts in less than two months.

“That is our only option,” Duckworth said.

The legislation authorized the MDA to negotiate on behalf of the Department of Education. Hosemann would have to approve an agreement before it could be executed.

Duckworth was the only developer to submit a proposal in response to the MDA’s request for proposals.

The state would not sell the property to Duckworth. Rather, he would pay the state rent based on 10 percent of the land value. The proposal calls for no investment from the state.

Once he started negotiating with the MDA and Hosemann, Duckworth said several roadblocks emerged. The latest, he said, was Hosemann requiring the developer of the property have $20 million in liquid assets on hand, something that wouldn’t work for any developer, “not just me,” Duckworth said, adding that he’s spent $625,000 in site plans and legal bills. “We shouldn’t have reached an impasse because they had the flexibility to make a deal. They just chose not to be flexible.”

A spokesperson for the secretary of state said any comment from Hosemann would have to come in conjunction with the MDA, since that agency is the lead negotiator for the state. A Mississippi Business Journal reporter had not heard from either by last Thursday afternoon.

Sen. Walter Michel, R-Jackson, said the main modification the law needs is a reduction in the minimum investment requirement. He said a more realistic target would be in the $60-million to $70-million range. The site for the development sits within Michel’s district.

 “That’s a win-win,” he said, referring to the part of the law that requires the developer to build a new bus barn and new residence for the director of the Mississippi School for the Blind. “In no way is this like a normal economic development project where (state-issued) bonds are involved. This is land the state owns that is producing no revenue, and we’ve got a prospect to lease it (and generate tax revenue with the development).”

If the legislation is modified, the MDA would have to issue a new RFP, which could bring other developers into the fold.

Rep. Cecil Brown, D-Jackson, whose district includes the site for the District at Eastover, said the legislation was crafted in a way that was supposed to prevent the kind of hang-ups that have killed negotiations.

“This was not a slapdash kind of deal,” he said. “We had a joint committee of House and Senate members. We had presentations by developers. We spent several months on this, Republicans and Democrats. We had lots of people involved in this process. If it’s not working, we need to address (the legislation).

“I’m very frustrated we are where we are. It should have already been done. It’s been much slower than it ever should have been. This is a huge project for the state, the city and the school. We should already have this project well under construction by now.

“If this was some manufacturing company out of state, we would have been doing back flips, having a special session and issuing bonds and everything else. (Duckworth) hasn’t asked for anything. All he’s asked for is a lease.”

Jackson’s tax base has eroded over the years as residents and businesses moved to Rankin and Madison counties. Brown said he has gone to great lengths not to insert himself into the negotiations between Duckworth and the state, but said the sales tax revenue generated by the development would help the city and state in a time when each badly needs it.

“I understand they have to protect the interests of the state, but I’m very concerned about the way this has been handled. I want to get this project done. It’s important to Jackson to get these kinds of projects done.”

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