A private firm has been brought on to help Jackson clean up a $7 million, decade-old mess.
Recently, the Jackson City Council approved bringing on Hunden Strategic Solutions for $72,000.
Hunden will help determine the best use for property that was formerly purchased by the city for the construction of a convention center hotel.
Jackson had to bring on the firm as part of a deal with the U.S. Department of Housing and Urban Development (HUD).
The city used nearly $7 million in HUD loans to purchase the property, located across from the Jackson Convention Center on Pascagoula Street, to build a hotel.
Plans were for the city to pay back the loan by 2028, but HUD called the loan, because Jackson had not developed the site, Planning Director Mukesh Kumar said.
“It was a 15-year-loan, which has to be paid back by 2028. However, HUD was concerned because we were not doing anything (with the property).”
The idea was Jackson would use the loan, a Section 108 loan, to purchase the property, and then repay the debt with proceeds from the development.
However, numerous efforts to develop the site have fallen through.
Shortly after Mayor Chokwe Antar Lumumba took office, his team began negotiating payback terms with the federal agency.
Under terms of the new agreement, Jackson must pay back the loan in installments over the next four years.
The first payment of $250,000 is due this year, Kumar said.
Jackson also must complete a market study of downtown, conduct a feasibility study of potential projects for the convention center hotel site, and then issue a request for proposals (RFP) to develop the site, he said.
The market study must be completed by March, and the city must issue the RFP by August.
“We expect that proceeds from a development will cover all or part of the loan,” Kumar said.
The evaluation will determine if Jackson needs a convention center hotel or whether other projects would be suitable for the site. City leaders have argued for years that a hotel is needed to attract larger events to the downtown corridor. However, with the recent opening of the Westin, Jackson officials want to determine if a convention center hotel is still needed.
Convention Center General Manager Al Rojas told the Sun in December that a hotel was still needed, even with the Westin.
“One of the key things an (event) organizer looks for is hotel rooms, whether they’re close, adjacent or connected. When you look at different types, the connected (ones are) the most important,” he said.
Event organizers prefer connected hotels because it cuts down on transportation costs for events, such as shuttle services. Connected hotels also ensure that those coming to a convention have the easiest time possible getting to meetings and events.
The city must report to HUD on its progress at least three times a year.
For years, the city has worked to bring in a convention center hotel, but all plans have fallen through.
In 2008, then-Mayor Frank Melton entered into an $11 million “gentlemen’s agreement” with Texas-based developer TCI to build a hotel and parking garage at the site, which is bordered by Pascagoula, Pearl, Mill and Lamar streets.
Looking north from the convention center, the property in question is the western half of the paved areas, Kumar said.
The eastern half of the property is owned by the Jackson Redevelopment Authority (JRA).
The city issued millions in HUD loans to purchase land for TCI, with the understanding TCI would retire the debt.
Plans fell through in 2011, when JRA rejected the firm’s proposal because of the financial risk it would have placed on the city.
According to previous reports in the Sun, TCI had asked the authority to issue between $90 million and $95 million in bonds to pay for the project’s construction. The firm wanted Jackson to essentially backstop the project, meaning if TCI was unable to pay the bonds, the city would take up payments.
In 2013, under former Mayor Harvey Johnson, the city agreed to buy back the land from TCI. Under terms, Jackson paid the company $3.7 million and assumed payments on $6.7 million in HUD loans.
Then, in June 2013, shortly before leaving office, Johnson announced that he had struck a deal with the Callen Group to build a $60 million, 305-room hotel on the property.
That deal fell through because of state law. State statute required Jackson and JRA to go through a bidding process before selecting a proposal. However, no RFP had been issued before Callen had been selected, officials with JRA previously told the Sun.
The council approved bringing on Hunden on a 4-2 vote, with Ward One Councilman Ashby Foote and Ward Six Councilman Aaron Banks voting against it. Ward Seven Councilwoman Virgi Lindsay, as well as Councilmen De’Keither Stamps, Melvin Priester and Charles Tillman voted in favor.
Ward Three Councilman Kenneth Stokes stepped out for the vote.
The motion initially died for a lack of a second, but was brought up for reconsideration after a request from the mayor.
“I think what we’re faced with is, if we don’t execute this agreement, we’re faced with having to pay the piper with HUD, which we may be faced with anyway,” Lumumba said.
Council members were concerned, because a local firm wasn’t chosen for the work.
“I have a problem with doing (this) with a firm out of Chicago that I’ve never heard of. We have business schools … who have professionals (that) I think would enjoy the opportunity to do a market analysis,” Foote said. “We could pay them $90,000, and they would do just as good a job.”
“We have a lot of talent in this city who could do this,” Lindsay said.
Hunden was chosen through the RFP process. The city received four proposals, which were evaluated by a group that included Jackson’s manager of economic development, a real estate person, a representative from HUD and a representative from Downtown Jackson Partners, Kumar told the council.
Of the four proposals submitted, Hunden had the lowest cost, followed by C.H. Johnson Consulting, which offered the services for an amount not to exceed $88,000, according to city documents.
If negotiations don’t pan out with Hunden, the order approved by the council allowed the administration to begin discussions with C.H. Johnson.
Said Kumar, “We selected the two (firms) that demonstrated the best understanding of what we (want) to happen in this case.”