Tuesday, November 17, 2015

JRA can't sell hotel bonds

The Mississippi Business Journal reported that the Jackson Redevelopment Authority could not sell the bonds that would fund the Westin Hotel project:


A failure to find a buyer for $9 million in bonds for construction of a downtown Westin Hotel is expected to force the Jackson Redevelopment Authority to ask the City Council to make the bonds more attractive to investors.

The $9 million loan to the Westin developer is the JRA’s contribution to a financing package that also includes a $20 million loan from the Hinds County Board of Supervisors. The remainder of the $60 million project cost is from private investors and a bank loan that would have a first lien on the 204-room hotel that broke ground in late summer at the site of the former Mississippi Valley Title building, 315 Tombigbee St.....

JRA attorney Penny Brown told the Authority board last week that an Oct. 9 deadline for responses to a request for proposals on the bond expired without a response from prospective buyers. At one point, the JRA added an addendum to the request for proposals in hopes of making the bond issue more attractive to investors. “We may have to go back to the City Council for another contribution agreement if we want to find a buyer,” Brown said....

Simpson said his lawyer has told him the JRA sought to lock-in interest on the $9 million bond issue for seven years and investors wanted five years..... Rest of article.

It might be an amortization problem that held up the sale but the Kingfish thinks there is something more basic: first lien position. Bondholders are vary wary of taking a second lien position. Can't imagine why they would hold dear to such an archaic ideal.

Kingfish note: Oh hell, I just can't resist.

42 comments:

Anonymous said...

Everyone involved in this project is so far out ahead of their skis, it's scary.

Kingfish said...

Too many lenders and they all want to be first. Can't really blame them.

Anonymous said...

Westin Downtown is right there with BB King's and the robot parking garage. Never gonna happen.

Cue the accusations of "Jackson hating" in 3..2..

Anonymous said...

Second is not a good position to be in. Too much leverage/not enough equity on the buyer/developer part, and this location is doomed anyway.

Anonymous said...

@10:56

The Westin Downtown is already under construction.

Kingfish said...

No one said it wasn't.

Anonymous said...

Have they thought about asking that man who is buying the Farrish street project? Hurry, he doesn't like to wait long.

Anonymous said...

Building the hotel two blocks over and behind the wonderful JPD complex seems ill-fated. It is only 201 rooms. Kind of small for a downtown convention hotel.

Anonymous said...

Just a thought... maybe they should listen to what the market is telling them. Too bad they have already broken ground on the stupid thing.

Anonymous said...

Jimmie and Sam R Hall say that Kingfish for bringing this story to the C-L's attention.

Anonymous said...

If you want private bond investors to toke on your pipe dream you've got to offer them better dope because they are going to need some damn good dope to combat the anxiety that will result from holding Jackustan debt.

Anonymous said...

I would love to see the BS proforma this project got green lighted on. The developers have zero hotel experience. Even with 3rd party management the market can't support it.

Anonymous said...

Look at the Shreveport convention center and the adjoining Hilton for your future. It's not pretty, except for high school graduations.

Anonymous said...

Nothing based on just sound business and banking will fly. It all has got to be backed with tax payer money so when it fails the tax payer takes the hit.If you are a taxpayer in Jackson do you want another failed deal to pay for.JRA should be should down before more harm is done.

Anonymous said...

Under construction?? When do you start building before you have the long term financing set up??

Anonymous said...

Detroit, here we come!

Anonymous said...

Ben Allen, president of Downtown Jackson Partners, said at the press conference that he has seen figures showing that, with all the residential development downtown in the form of loft apartments and condos, that in 10 years there could be as many as 25,000 people living downtown, tripling traffic on Pearl Street and Pascagoula Street.
-- Mississippi Business Journal
-- March 3, 2008

Anonymous said...

@1:26 - So everyone will start flocking there over the next 2 years. Wait...maybe that's where the refugees will go.

Budgetel said...

The whole thing has been a pig in a poke from the beginning. It will never be finished.

Anonymous said...

That SoDoSoPa bit cracks me up every time! The sad thing is that as true as it is to Jackson, it has to be common to many places, which is why South Park nailed it so well.

Everyone has these romantic notions of hip urban dwellers with high incomes walking or biking everywhere, but Jackson ain't NYC. Hell, Jackson isn't even Nashville or Austin or Louisville, and trying to force a template that doesn't fit this demographic is bad news.

And there's NO place that needs taxpayer-funded robot garages.

Anonymous said...

3:25 is on target. Jackson is so desperate it jumps into the laps of any snakeoil salesman who shows up. 3:25 is also right that the JRFA is tryhing to force a template that doesn't fit this demographic and it is bad news. And we have spawned a cottage industry of players who get down on bended knee with their snouts in the trough. The same names keep popping up. Yes, JRA needs to be dumped and Ben allen sen thome to do whatever. Everyone take a deep breath and say to the Hadacol salesmen: "Whoa. If this thing is so good, why do you need public money to make it work?" And while we are at it, let's tame the Mississippi Development Authority. They have a spotty track record of achievement.

Toopath Patel and Son said...

Mr.Patel has his eye on the prize and will have plenty of backers for this new hotel. The diversity demanded by the new world order will snap this place up in a mili-second. Just you Jackson-Haters wait and see.

Anonymous said...

It was intended for a minority group to gain control of this project to begin with. They certainly couldn't have done this on their own without the smokescreens. Remember the two minority brothers who bought the Walthall? Just wait, you will see.

Anonymous said...

"Jackson: The City-est Part of Mississippi". City streets. City restaurants. City people. City services and amenities. All just steps away from your City apartment. All made possible by extremely City leaders.

(Watch SoDoSoPa in its entirety, and it'll make sense.)

Kingfish said...

Where you can mix with people of all economic classes and contribute to the local economy while having a quality experience.

Anonymous said...

Eventually it MIGHT be a Motel 6 available for hourly rentals.

Anonymous said...

I believe one of the reasons for that location and the small size is the location of the Federal Court House. The group put together for this effort is a case of strange bedfellows.

Anonymous said...

Lampton/Owen/Ergon pulled out of downtown at the same time Primos did. They went out to Rankin. DGuaranty, Irby, Ridgeways and McRaes sold out. ButlerSnow and C-Spire left. Only WatkinsEager, Winter's New Orleans group, JSU, State of Miss & Speeds elite club are left. It ain't enough to even look like a capitol much less a big city.

Anonymous said...

People, Jackson is Mississippi's Capitol and many statewide events are held here.

More rooms and venue space in close proximity to downtown is needed not less , for those who don't want a Motel 6 and want to be close to the event or meetings.

It's not all about the events held at the Convention Center ( though it would behoove some of you to get a list of the events held there).

A variety of statewide organizations meet in Jackson.

I would remind all of you that Mistletoe , the State Fair, the Nutcracker, the St Paddy's Day parade, the Mississippi Marathon, the Dixie Rodeo, the Ballet events, the Museum of Art events, to mention a few and a variety of competitions take place in Jackson and movies that are being filmed in Jackson.

And, if you simply are planning a large wedding, currently it's hard to find nice space that isn't already booked well in advance.

And, how many cases are being held at the new court building each day and where are the parties and witnesses staying? They don't want to drive in from County Line Rd everyday!

It's about convenience and being able to park and walk or have the event people shuttle you!

And, it not just rooms. Not everyone wants a Motel 6 and more than you might imagine will pay and expect to pay more than $79 a night for a room! That's the problem. The King Edward is a Hilton Garden Inn and frankly, the Marriot is a hybrid that is dated. We need more rooms that are updated and have some measure of luxury and comfort! Right now, we have the King Edward, the Old Capitol Inn and two bed and breakfast options. It's not enough!

And, apparently, many of you are years behind and have no friends in the State of Michigan or else you'd know Detroit is experiencing a resurgence after having far worse problems than Jackson has ever had as it didn't have the anchors of a capitol city!

One of the things Detroit has done is condemn and obtain abandoned houses in targeted residential areas, sold them for a $1 to home building contractors with legal requirement that they completely remodel/restore the home in a set period. As a result, residential neighborhoods are coming back, one neighborhood at a time. It's a win/win! That's a program the City Council should adopt! Currently, it is impossible to hold property owners that are letting their property go to hell as accountable as they should be!





Anonymous said...

It's not all about the events held at the Convention Center ( though it would behoove some of you to get a list of the events held there).

No, not really. It wouldn't behoove us at all.

Anonymous said...

7:58 - Obviously the market does not feel the same way about downtown Jackson's rosy prospects; otherwise, the bonds would have been purchased. Pretty much speaks for itself.

Anonymous said...

@7:58 AM if downtown Jackson needs "more rooms that are updated and have some measure of luxury and comfort" then the private sector can build them. Period.

Anonymous said...

Hey, 7:58, without getting into whether what you say is true or not, do you understand why, if it is true, "...Detroit is experiencing a resurgence ...?" It's called Chapter 9 Bankruptcy. It took a bankruptcy court vested with complete autonomy over the assets of, and political functions of, Detroit, thereby supplanting and negating an incompetent, fool-bedazzled elected political "leadership" structure, and replacing it with an accountable, competent, non-aligned, independent overseer who answered to the bankruptcy judge, to bring about meaningful reform. Until the incompetent idiots in jackhole are usurped through a Chapter 9 filing, your comparison is stupid. The only solution for da bol new sittay is Chapter 9. Elections will not solve the problems for obvious reasons. I predict Chapter 9 will eventually happen.

Anonymous said...

8:19 These are "JRA" Bonds - but, they are backed by the city. According to the C.L. article today, Don Hewitt dropped his challenge to the bonds, so it seems that the bonds can't be contested. In other words, they are the same as General Obligation Bonds, guaranteed by the taxpayers.

The bottom line: If you can't sell a relatively small $9 million GO bond backed by the largest City in the State, then somebody totally screwed up on this one. I haven't seen the structure of the deal, but my guess is the JRA bond lawyer tried to get too cute and overplayed his hand, typical for the JRA and their lawyers. After all, they know everything and are always right. If you don't believe them, just ask them.

But, there's hope, right? Perhaps now that the JRA is adding yet another unidentified lawyer to its army of lawyers (along with Pernila Brown and Zach Taylor), they might have enough lawyers to figure out how to screw in the light bulbs at JRA HQ. Of course, it will probably cost them about $50,000 a month. A bargain at any price, don't you think.

I feel sorry for Jackson and all those folks trying to do something (like Ben Allen), but I'm sure glad as hell I don't live there anymore.

Anonymous said...

There are rules/laws about a lawyer being part of management of a clients business. Zack has been over the line for many years and if there was anyone left in Jackson that cared , his butt would be on fire.

Anonymous said...

Wannabe developer 101, inflate project cost to cover your own skin in the game. No way 60 mil is being spent on this site.

Anonymous said...

@10:54

How much public money has Hinds County ($20 million), the JRA ($9 million), the State ($16 million)put in? and what other "government incentives" are in the financing package? I can't imagine a 205 key hotel costing more than $40-45 million. I guess the extra $20 is the developer profit, over and above a regular developer profit.

Since the taxpayers are footing the bill for most of this project, has anybody ever seen the financing for this deal published anywhere? And, how much in developers fees and other project costs were paid out of Hinds County funds before the first shovel of dirt was moved?

I guess the old adage of it's not what you know, but who you know that counts.

Anonymous said...

@10:54 this project is likely getting the MDA tourism credit as well. JJ what if a proven local developer could guarantee a turnkey for this hotel not to exceed $40 mil, would the city be interested?

Anonymous said...

Dont forget the 1.75 million dollar TIFhttp://www.co.hinds.ms.us/pgs/boardminutes/docs/August%2019%202013%20.pdf

Anonymous said...

@1:40 You'll have a hard time selling this to any proven local developer, assuming you can find one that would be half-way interested in doing business with the City (or the JRA). Also, even a $40 million hotel project in Jackson (which is what the Westin really is) will be hard, if not impossible to do, without some significant public support. The economics right now simply don't support that kind of investment.

Anonymous said...

There is no public support. Only forceable taking from Jackson and Hinds taxpayers. Put these boondoggles up to a vote and they'll fail every time after the public is shown the huge ripoff that has taken place from the bait-and-switch pulled on the red-ink drowning convention center.

Letap said...

It will end up as an off-brand with $79 rooms. That's what conventioneers pay.

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If you get tired come relax at the Fox News Tent. To gain admittance to the VIP section, bring either your Republican Party ID card or a Rebel Flag. Bringing both will entitle you to free drinks.Get your tickets now. Since this is an event for trolls, no ID is required, just bring the hate. Bring the family, Trollfest '07 is for EVERYONE!!!

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