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Chawlas apply for $6 million rebate on luxury hotel in Cleveland


Brothers Suresh and Dinesh Chawla have applied for a tax rebate from the state that would account for nearly a third of the $20 million luxury hotel they are building in Cleveland.

The brothers, who own 17 hotels in the Delta, applied for the tourism rebate on Dec. 28 to defray costs on the Scion West End that will be managed, but not owned, by the Trump Organization as the first hotel in its new upscale Scion chain.

The brothers likewise will convert three of their existing hotels under the Trump brand called American Idea.

State law, 57-6-1 et seq, requires a minimum private investment of $15 million, and a per-guestroom investment of $150,000 to qualify for the rebate in Bolivar County, where Cleveland is located, and Lauderdale County, whose main city is Meridian.

The that per-room investment otherwise is $200,000, according to the law.

The Chawlas found out about the locality-specific language in the law “by accident,” Dinesh Chawla said in a Tuesday interview. Efforts to determine exactly how the language was included were unsuccessful as of time of publication.

The Mississippi Arts and Entertainment Center, or MAX, which will open to the public on April 29, is cited in the law as the reason for the special tweak in the legislation, just as the Grammy Museum Mississippi in Cleveland qualifies Bolivar County for it.

Mark Tullos, executive director of the MAX, said that “there are a lot of moving parts” in Meridian because of the $50 million project.

That activity includes the reclamation of the historic Threefoot Building by Ascent Hospitality Management of Coral Gables, Fla., which resurrecting the 16-story, art deco structure as a Marriott Courtyard property in a $22 million project. Efforts to reach the developer were not successful.

The Scion in Cleveland meets the minimum private investment of $15 million required by the state law.

The Chawlas were already thinking bigger after announcing a $8 million hotel on March 5, 2016, the day the Grammy museum opened, he said.

Suresh met Trump in Jackson several months later while the presidential candidate was on a campaign swing, Dinesh said. Gov. Phil Bryant arranged the meeting after he learned of an article in the Mississippi Business Journal about the Chawla brothers’ father being encouraged by Trump in 1988 when the immigrant was attemping to open a hotel in Greenwood.

Suresh said Trump told him and his brother to “think grand.”

Trump wasn’t “shifting our paradigm so much as validating what were doing on our own,” Dinesh said.

Regardless, the estimated cost of the Lyric Hotel and Spa project grew to about $15 million during the period when the project was “very fluid,” Dinesh said.

The brothers announced along with Trump sons Donald Jr. and Eric in New York City last June that Chawla Pointe LLC would be the first Scion property in the new chain.

The Chawla brothers also said they had agreed to be the first properties under the Trump organization’s American Idea flag by converting three of the Chawla’s existing hotels.

The Scion plan grew to $20 million. The complex on 17.5 acres will have the hotel with approximately 100 rooms, suites and extended-stay accommodations; a 6,000-square-foot spa and fitness center; a 5,000-square-foot event hall; two acres of outdoor festival space and multiple entertainment outlets including two full-service restaurants. Completion is expected in the fall.

The brothers applied for the rebate on Dec. 28. The project has been granted a waiver on city and county property taxes for seven years, Dinesh said.

The application with the Mississippi Development Authority shows a maximum rebate of slightly more than $6 million. It shows that the Chawlas are putting in $8.4 million in cash, using a $15.6 million bank loan, and will employ at 70 full-time and 80 part-time workers within two years of completion. The payroll by the second year would be $1.7 million, according to the application.

To get the full rebate, the Chawlas will have to generate revenue of between $90 million and $100 million over 15 years.

The economic impact on Bolivar County will be between $300 million and $400 million, Dinesh Chawla said.

President Trump has come under scrutiny by some news organizations, including The New York Times, which last week reported that the president might be running afoul of what are called emoluments, or favors.

One case was dismissed in a federal district court and another federal judge said he might hear a similar case.

Trump has put his far-flung real estate empire into a trust, which is run by his sons.

Whether or not the president is benefiting indirectly through business deals in which state and local government is “a matter of opinion,” which is in the hands of the courts, possibly even the U.S. Supreme Court, Dinesh Chawla said.

The Chawlas are “injecting about $15 million of our own money into this project,” Dinesh said. “We could be buying Amazon stock. We’re not only investing in Mississippi, we’re investing in the poorest part.”


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About Jack Weatherly

One comment

  1. Could not find Mississippi Law 57-6-1.

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