[quote]Sale of $90 million in bonds OK’d by Jackson board, but action not final[/quote]
Jackson Redevelopment Authority members on Friday offered conditional approval to fund a long-delayed hotel project, but not without heated debate and questions concerning its legality.
Board attorneys must sign off on the board’s actions before the measure can move forward. It also must get approval from the Jackson City Council, which will discuss the matter on Monday.
Longtime general counsel Zachary Taylor on Friday recused himself from all future dealings related to issuing nearly $90 million in bonds to build a hotel across from the Jackson Convention Complex.
The board also hired several companies for personal service contracts related to the deal, which raised concerns among some members.
Taylor challenged whether last month’s decision to shorten the typical 30-day requests for proposal period to 15 days was legal.
Much of the $89.6 million in bond financing would come from Gulf Opportunity Zone bonds that have to be sold by Dec. 31. Based on the traditional process, developers would not have been able to meet that deadline.
Taylor would not comment on the issue after the meeting, citing attorney-client privilege.
“We’ve got differences in opinions from our attorneys,” JRA board chairman Ronnie Crudup Sr. said of Taylor’s actions.
To protect the board’s interests, JRA on Friday hired the firm Balch & Bingham to review the actions related to the hotel deal and make sure they were legal.
“This particular deal is a deal that there has been a lot of disagreement in it,” Crudup said late Friday..
Jackson City Council President Frank Bluntson said a council vote could come by Dec. 19.
“It’s important. It gets us one step closer,” Lucien Bourgeois, an attorney representing the city in the deal, said of JRA’s vote.
If the GO Zone bonds are sold on time, construction could start as early as January, with the 309-room hotel opening in summer 2013, says Bob Swerdling, a Colorado-based hospitality-industry consultant involved in the deal.
But Bourgeois said there are other important steps to be finalized, including fielding other proposals to develop the hotel.
When asked Friday if other companies had submitted formal proposals, Crudup would say only, “Other people have expressed interest.”
The agency is scheduled to meet Friday to award whichever proposal it deems best.
Texas-based Transcontinental Realty Investors had been the lone company to this point working to build the hotel, taking the lead this year from a subsidiary. Company officials could not be reached for comment Friday.
However, even without a developer in place the board on Friday voted to approve several personal service contracts, including a construction manager.
JRA executive director Jason Brookins late Friday said several contracts to handle issuing the bonds had been approved by the board Friday.
He was driving and said he did not have the names or dollar amounts of the companies awarded contracts readily available.
“All of this is contingent; the bonds have to be purchased,” Brookins cautioned.
Board members John Reeves and Matthew Thomas had a heated discussion about the personal service contracts, especially Thomas’ effort to hire AJA Inc., owned by Andrew Jenkins, as construction manager.
Reeves, who serves as board vice chairman, said late Friday that he objected to an effort to hire a construction manager for $2 million before the project had been funded and without vetting the applicant. He said Jenkins’ company was hired in a 3-2 vote.
Reeves objected and then recused himself from any further dealings related to the hotel project.
Crudup, who voted for Jenkins, said Jenkins’ firm has handled jobs for the city, county and state.
“There are established percentages in terms of the way things are paid,” he said. He added the finance committee would review the contracts to make sure they are within industry standards.
The hotel was originally to open in 2009 to coincide with the launch of the convention complex. Complex officials have said the lack of a connected hotel has cost it millions of dollars in business.
Under a preliminary agreement with TCI, the city would buy the hotel property for $14.3 million and lease it back to hotel developers over a 10-year period. But the purchase amount could change, Bourgeois said. A new appraisal is being done.
That price change, plus “budgeted items” that didn’t qualify for bonds, caused the bond amount to lower from $96 million to $89.9 million, Bourgeois said.
Bluntson said council members have a better sense of how the deal will work than when the agreement-in-principle was announced in September.
“We still have some concerns … we’re not going to put the city in a (risky) position.”
Under the tentative agreement, TCI and the city would equally share responsibility for covering any debt service shortfalls.
Whatever dollar value the new appraisal puts on the hotel land, Swerdling said the value will increase as the project is developed.
Written by Jeff Ayres | Clarion Ledger
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