Jackson Jambalaya

Note: This is the actual write-up of the meeting and decision Friday. The post on Friday was an attempt to publish the videos as fast as possible.

The Jackson Redevelopment Authority voted Friday to reject all proposals for the construction of a convention center hotel. Chairman Ronnie Krudup said a request for proposals will be published in January. Journeyman Austin LLC and Transcontinental Realty (TCI) submitted the only proposals for the project. Austin Journeyman proposal, TCI proposal

The room was overflowing with attorneys, developers, and the media as the board struggled to reach a decision. WJTV, the Clarion-Ledger, and the Jackson Free Press covered the meeting. Journey Austin made the first presentation:

The proposals provided three options to the City. Austin projected either of the first two options to cost $75.5 million, substantially lower than the $90 million bid by TCI. Austin representatives said Go Zone bonds could be used but were not an absolute necessity as interest rates were low enough that there was little difference between the two types of bonds due to an "anomaly" in the markets. The proposal was based on 304 "keys" and presented three options. The options are (p.10-11 in proposal):

1. 1.84 acres of area bound by Farish, Lamar, Pascagoula, and Pearl streets.
2. Firestone property and the parking area to the south. Main problem with this option it is in the path of planned expansion of the convention center.
3. Re-use and expand the 12-story City Centre South Tower (old Skytel building). Cheaper than other two options since structure is already in place.

The owner of Austin provided a personal guarantee. Austin said it constructed 12 similar hotels in the last ten years. Austin also said its financing would include 10% from private equity.

Alred Crozier made the presentation for TCI. Mr. Crozier said the deal would not work without Go Zone bonds when asked directly if they were essential to close the deal. The bonds have generated some controversy as the deadline for Go Zone is December 31, 2011. The looming deadline caused several attorneys to back away from approving the deal for JRA, including long-time Zach Taylor of Walker Jones as well as leading bond lawyer firm Balch & Bingham. The TCI deal used the sale of $90 million in Go Zone bonds to finance the project.

The TCI proposal required the city to purchase the land from TCI and then lease the hotel to the company for ten years. The city sold the land to TCI in 2007 (Melton administration) and provided HUD financing to TCI for the purchase.

What was interesting was (15:56 in video below) was the questioning of TCI finances. Mr. Crozier said 85% of TCI was owned by one company, calling it a family trust. At first he would not provide the name. He said "we believe our stock price does not totally reflect the capitalization of the company and that due to accounting standards, the "value of the company far exceeded the shareholder price." The board member asked "who is it that owns that (meaning the 85% share or the family trust)?". Mr. Crozier said "well, its one company and there's family trusts, I couldn't tell you exactly, we've had our CFO here numerous times, he's gone over it with Porter.." Porter Bingham finally answered the question and said Gene Phillips was the majority owner. It is unknown why Mr. Crozier would not provide the name upon direct questioning by the board.

This is not the first time Mr. Crozier has used evasive language to answer questions about TCI finances. Mr. Crozier told councilman Quentin Whitwell in September TCI's future was "bright" when asked about the company's financial condition. In reality, TCI has lost over $50 million this year, $76 million last year, and $82 million in 2009. It has only turned a profit (small ones at that) three times in the last ten years. The company is leveraged at nearly 100%: assets of $1.2 billion and liabilities of $1.1 billion. Earlier post about TCI financial statements

Here is the TCI presentation. It starts at 1:15.


JRA attorney Zach Taylor (Walker Jones) informed the board he would not approve the deal with TCI and recused himself from the matter (See 27:11 of the above video and then the start of the video below. Very interesting discussion.). However, attorney Lucien Bourgouis (Butler Snow) told the board he would issue an opinion stated they had complied with the law and that the bonds have been "validly issued". The board then went into executive session and discussed the two proposals.


The board voted unanimously to reject both proposals (see video below). Board member John Reeves withdrew his recusal and voted with the rest of the board. Mr. Crudup said due to the "magnitude", "complexity", and "time frame", it would "reissue" a request for proposals in the first quarter of 2012.



Mr. Crudup took issue with a story printed that morning in the Clarion-Ledger reporting several "advisers" received substantial fees from both the city of Jackson and TCI. The newspaper reported:

"Several firms advising the city of Jackson on a convention-center hotel deal have been paid for various services by a development company that's been attempting to build the hotel for years.

Those firms have been paid at least $124,000 by Transcontinental Realty Investors of Dallas, Texas, according to emails obtained by The Clarion-Ledger.

The Jackson Redevelopment Authority today is expected to choose either TCI or a second developer to build a hotel across from the downtown Jackson Convention Complex. The deal would then require the city, through JRA, to issue nearly $90 million in bonds to fund the hotel project that is seen as essential to the revitalization of downtown.

At least one of the advisory firms has been selected to receive a personal services contract worth $1.6 million should the bonds for the deal be issued." Article