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The end of Eastover?

Question of whether to lease or sell property could force developer to abandon $150-million mixed-use development

 

Late last year, negotiations between a Jackson developer and Secretary of State Delbert Hosemann broke down after the two could not reach an agreement over lease terms for the development of the Old Blind School property in Northeast Jackson.

Now Ted Duckworth, who wants to build the District at Eastover, a $150-million, 64,000-square-foot mixed-use development on the site, says there is a possibility he will pull out of the project if one of two pieces of legislation still alive at the Capitol is signed into law.

After last week’s deadline that required a bill to be passed out of committee to remain alive, two bills that took different approaches to getting the District at Eastover moving remained.

The Senate bill, authored by Public Property chairman Jack Gordon, D-Okolona, would authorize the Mississippi Development Authority (MDSA) and the Department of Finance and Administration (FDFA) to work out a lease with a developer. A companion bill in the House, authored by Rep. Cecil Brown, D-Jackson, whose district includes the Old Blind School property, would authorize the MDA and DFA to sell the land to the developer.

Duckworth says his involvement in the project hinges on the outcome of the sell-versus-lease conundrum. Operating under the law passed in 2007 that called for the land to be leased, Duckworth and Hosemann reached an impasse over lease terms, with negotiations breaking down late last year.

Duckworth said last week that he wants to keep pursuing the project, but if the state insists on leasing the land instead of selling it, he almost certainly would have to abandon that pursuit.

 

Current language in a House bill would add a sale covenant that would require the property be turned into a mixed-use development that would spur additional growth in the area and provide revenue to the state in the form of property and sales taxes.

Current language in a House bill would add a sale covenant that would require the property be turned into a mixed-use development that would spur additional growth in the area and provide revenue to the state in the form of property and sales taxes.

“We’re convinced that the project can’t go forward on a ground lease. It’s going to have to be a sell. The state cannot or will not subordinate additional financing, so a lender can’t have a lien against the property. Then, you add the complexities of a mixed-use development on top of that and then factor in the economy. You add all the complexities of a ground lease and no (lender) is interested. If a ground lease passes, we’re not going to pursue it. I’d hate to say we’d forget about it but we’re certainly going to keep pushing for a sell in the next session, because I don’t believe anything is going to happen on that property if somebody has to lease it.”

 

Brown agrees with Duckworth. His bill would authorize the MDA and DFA to work out a sell agreement with a developer. There would be restrictions attached, though. Current language in Brown’s bill would add a sale covenant that would require the property be turned into a mixed-use development that would spur additional growth in the area and provide revenue to the state in the form of property and sales taxes. It also can’t interfere with the operations of the Mississippi School for the Deaf and Blind. If those conditions are not met, the state reserves the right to buy back the property.

Brown said last week that language would have to be “firmed up” with an amendment once the bill hits the House floor.

“I’m working on that now,” he said. “The more issues that were raised about leasing it, the more it became obvious that the state was not in a position to be a lessor. We don’t have the mechanics set up to do that. The way you fix that is sell it with restrictions and covenants on the sale so that you’ve got some control over the ultimate use of the property.”

 

Ted Duckworth, who wants to build the District at Eastover, a $150-million, 64,000-square-foot mixed-use development on the site, says there’s a possibility he will pull out of the project if one of two pieces of legislation still alive at the Capitol is signed into law.

Ted Duckworth, who wants to build the District at Eastover, a $150-million, 64,000-square-foot mixed-use development on the site, says there’s a possibility he will pull out of the project if one of two pieces of legislation still alive at the Capitol is signed into law.

Don and Clare Rush live on Berlin Drive in Northeast Jackson, almost within shouting distance of the site of the proposed development.

 

“I think it would be great for the community,” Don Rush said. “Clare and I would definitely spend a lot of time at a place like that. We normally drive to Madison because of the Renaissance and the theatre. We are big supporters of the Jackson community and it would be great to keep that money in Jackson.”

Gordon’s bill would also grant the MDA and DFA negotiating authority on the behalf of the Mississippi Department of Education. The major difference, though, is Gordon believes the property should be leased to a developer, not sold. Gordon compared the Old Blind School property to 16th Section Land, which is leased by school districts to generate revenue.

“It’s to the benefit of the state, and I just don’t think we ought to sell it. Ted’s a friend of mine, but I just disagree on the sale of it,” Gordon said. Both bills will eliminate the provision that requires Hosemann to sign off on a deal.

That lease-versus-sell issue is the next hurdle the District at Eastover will have to clear before any serious moves are made toward its development. Duckworth says he has no gut feeling about which side will eventually emerge victorious.

“Everybody has their own agenda. By holding on to it and doing a ground lease, they’re just trying to exert some control which, in effect, keeps it from being developed,” he said.

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