Ellington

Sept. 26, 2011

Developers of a proposed convention center hotel said they could move forward on a $96.1 million project now that the Jackson City Council has approved a cost-sharing agreement for the development.

After more than an hour of questioning, council members voted 5 to 0 to approve a resolution (PDF) that outlines the city's involvement in a deal with Transcontinental Reality Investors and its subsidiary TCI-MS. Ward 2 Councilwoman Margaret Barrett-Simon and Ward 3 Councilman Kenneth Stokes were absent from the meeting.

In 2007, Dallas-based TCI purchased property along Pascagoula Street extending to Farish Street to build a $200 million convention center hotel and mixed-use development called Capital City Center. The original plans included condos, retail space and 1,500-car parking garage; however, TCI scaled back the plans to a $96.1 million hotel and skywalk to the Jackson Convention Complex, which was completed in 2009. The development stalled due to financing issues, and the city has been negotiating with the developers on finalizing a cost-sharing agreement. Because TCI owns the land, the city's options were limited. It could either buy the land back from the developer and start the entire process over, or sign on to share the cost and facilitate construction.

Ward 1 Councilman Quentin Whitwell said that before the city "married" TCI he wanted to know what consequences the city would face if the developers did not hold up their end of the deal.

"We not are marrying them (now)," Jackson Mayor Harvey Johnson Jr. said. "We married them about four years ago. We have been trying to reconcile the relationship since that time. We can resolve the matter but that means we are going to have to take some lumps and bumps in this process. We aren't necessarily estranged but we are sleeping in separate beds. We are going to have to try and pull this deal together as best we can." 

The resolution adopted specifically requires the city to finance the cost of the hotel by entering an agreement with the bond issuer to contribute funds to pay shortfalls, establish a reserve fund of $6 million to pay debt service at the closing of bonds and facilitate construction efforts. In June 2010, the Jackson City Council approved a non-binding resolution that called for the city to issue an unspecified amount of bonds to finance the hotel project.

The agreement also requires TCI to finish paying a $7 million U.S. Department of Urban Housing and Development loan the city allocated to the developers in 2007 to purchase the land. 

To finance the project, TCI plans to obtain $70.1 million in tax-exempt Gulf Opportunity Zone bonds through the Jackson Redevelopment Authority and $22.5 million in taxable bonds to help pay for the project. Go Zone bonds, however, expires on Dec. 31.

Ward 2 Councilman Chowke Lumumba added an amendment to the resolution which would require the developers to commit to a 25 percent minority-participation agreement for construction and other jobs related to the project. Council members approved his amendment. Lumumba also said he wants to make sure the developers will hire at least 50 percent of its employees locally.

Whitwell asked TCI Executive Vice President Al Crozier if his company had ever filed for bankruptcy.

Crozier replied that his TCI has never filed, but its subsidiaries have.

"I think if you look at any real estate company in the United States right now, the downward trend is common," Crozier said. "... We have liquated a lot of our assets to keep our company viable and healthy. I think our outlook is very bright."

City spokesman Chris Mims said that the agreement is one step in the financing process. Developers will return to the council with a more specific financing-structure agreement when bonds are issued for the project.

Before the vote, Council President Frank Bluntson asked for any final objections. "If anyone here knows why these two parties should not be joined together, then speak out now or forever hold your peace," Bluntson said.

Also see: "Council Gets Hotel Detail Finally"

"Waiting for the Convention Center Hotel"

"The Saga of the Convention Center Hotel"