Our capital city wants to go into the hospitality business by co-signing a $96 million loan for a 16-floor convention headquarters hotel. Yet Jackson taxpayers — the exact same ones who’ll have to make up the difference if the hotel lands in the red — know few of the details of the deal and even less about the consequences to their wallets if revenue projections are off the mark.
Yes, you could be forgiven for thinking that pledging nearly $100 million in city tax dollars to back a hotel deal is an odd priority for a city with a sinking tax base and a water & sewer system living on borrowed time. But you just might be willing to withhold judgment until you learned more about the exact details of the deal and the players involved. Don’t count on that happening, however.
The City of Jackson’s pending hotel partnership with Transcontinental Realty Investments of Dallas is trying to beat a Dec. 31 deadline for selling tax-exempt Gulf Opportunity Zone bonds. As a result, transparency has not been a priority.
Mayor Harvey Johnson has answered interview questions about the deal on several occasions, but it’s difficult to ask the right questions if you are limited in what you know going in. Much of what the Mississippi Business Journal learned about the deal outside of the mayor’s comments came after a 10-day struggle with City Hall last summer to release the information under the state’s Open Records Law.
The issue will soon be before the City Council, where players in the hotel deal will be in a hurry-up mode. The council knows the rush is on and has indicated it has a truckload of questions of its own.
Accordingly, it must call a time out for however long it takes to shine a light on the ins-and-outs of this incredibly complex deal. The time must also be used to thoroughly examine the risks any debt default by the developer would pose to taxpayers and the future of other city priorities such as a modernized utilities system and miscellaneous infrastructure needs.
Equally deserving of a close look is whether the convention hotel could force down hotel room rates citywide should it fail to meet its occupancy targets and react by steeply discounting rates to draw lodgers.
A public forum is in order. The mayor, his advisors on the deal and the principals of Transcontinental Realty should be willing to detail the project and its intricacies from A-to-Z.
Representatives of PKF Consulting, a hospitality research firm hired by TCI for a market feasibility study, should also be on hand to explain their findings. Among questions they should be prepared to answer candidly: Is it typical in a public-private partnership for the public party to rely solely on a market study done on behalf of the private party?
Councilman Tony Yarber tried to stage a forum in Ward 6 in mid-November. Residents settled for hearing from a couple of the mayor’s specially hired advisors after TCI sent word it had other deals in other places to work on and could not make it to Jackson.
If urgency is indeed attached to this project, it lies in the urgent need to let go of the GO-Zone bond obsession.
These post-Katrina recovery bonds have driven a lot of foolish development spending in the private sector the last half-decade. And they are not necessarily critical to this project, according to city financial advisor Porter Bingham, who says the bonds are desired more for their ability to “facilitate” the bond sale than lowering the cost of borrowing.
What the city actually needs to facilitate is an understanding by Jackson taxpayers and city hoteliers of what they are about to become a party to.
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