The $11 million infusion needed to cover bond payments in default and restart improvements to the historic Roberts Walthall Hotel is on hold.
The Jackson Redevelopment Authority didn’t act Wednesday on a proposal to issue $11 million in development bonds.
JRA executive director Jason Brookins said he was concerned that hotel owners Mike and Steve Roberts couldn’t offer personal guarantees to cover their obligations in a proposed bond issue that would provide $8.5 million toward paying off Gulf Opportunity Zone bonds previously issued as well as $2.5 million to resume renovations to the 84-year-old hotel.
He said the GoZone bonds are in default. But he stopped short of saying some type of partnership to revive the hotel is dead.
“We want to do what’s in the best interest of the city,” Brookins said. “If a (workable) deal comes back to the board, we’ll consider it.”
The former Edison Walthall has largely been shut down since November 2010 because of water-pressure damage to most of the 206 guest rooms.
The Roberts brothers, who could not be reached for comment Wednesday, filed for Chapter 11 bankruptcy protection for the hotel in December.
The brothers, who live in St. Louis and bought the Walthall in 2008, have proposed JRA have first lien on the property should the deal fail. They reached out to the redevelopment authority after talks with the city of Jackson for a $15 million loan fell through.
In their request to the agency earlier this year, they said the repairs could be finished in four to six months, and the hotel could reopen as early as November if a deal could be struck with JRA.
But the bankruptcy filing and the lack of a deal put the hotel’s future into question.
Alan Smith, an attorney for bondholders in the development, indicated to JRA members that foreclosure at some point is a possibility but wouldn’t elaborate on that prospect after the meeting.
In an email, John D. Moore, an attorney for the Roberts brothers, says foreclosure couldn’t happen until at least July. But he hopes something can be worked out to prevent that.
“We intend to continue to pursue other avenues of financing on either a take-out or capital improvement basis,” Moore said.
A hearing on the matter has been scheduled for June 21.
The initial court filing from Roberts Hotels Jackson LLC in the U.S. Bankruptcy Court of the Southern District of Mississippi doesn’t specify the amount of assets or liability the company has, noting only it’s between $1 million and $10 million in each instance. The filing lists between 50 and 100 creditors.
Despite such troubles, JRA board member John Reeves said the agency shouldn’t yet walk away from trying to work some type of deal to revive the hotel, explaining the facility is too important for a downtown area needing more hotel rooms.
“I’m not hung up on personal guarantees if it’s a worthy project,” he said. “We don’t want to let it sit there and become blight.”
Moore says the Roberts brothers’ proposal can have more immediate impact and cost less than the city trying to find a developer to build a new hotel, noting years of failure to build a hotel across from the Jackson Convention Complex.
JRA general counsel Zach Taylor said personal guarantees from developers aren’t required but often become factors in individual negotiations.
Brookins said the agency’s projects committee, which reviewed the proposal, typically looks for guarantees from developers to cover their obligations.
The Walthall’s woes are the latest setback to the Roberts’ brothers various business interests.
Roberts Broadcasting Co., which owns WRBJ-TV in Jackson and TV stations in Missouri, Indiana and South Carolina, filed for Chapter 11 bankruptcy last year, citing more than $4 million in debt.
A judge ruled in December that creditors in that case can sue other Roberts-owned businesses not part of that filing to recover money creditors claim was transferred to other ventures from the TV stations.
Attorneys for the brothers have said they are putting together a plan to pay all creditors over the next four years.
Brookins said those troubles didn’t play a role in his personal-guarantee concerns.
Written by Jeff Ayres – Clarion Ledger
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