Jackson Jambalaya

 Note: Sorry for the delay in reporting this story. 

 The Madison County Board of Supervisors approved the sale of $48 million in bonds that will be used to fund a conference center.  However, this being Madison County, the project was not approved until the Supervisors slugged it out. 

 

The Supervisors approved a contract  with Hotel Conference Center Management SPE, LLC to manage the construction and management of the conference center.  The company is owned by Jackson developer Gabriel Prado.

The county agreed to purchase 13.4 acres from the Prado company for $9.78 million for the site of the conference center.  Mr. Prado will build a conference center hotel on an adjacent property he owns as well.  The estimated project cost is $63 million.  The developer said the conference center will seat a maximum capacity of 1,800 people.  

 Madison County will pay an annual management fee of 5% of gross revenue to Management SPE, subject to a $1 million cap. Mr. Prado must submit a proposed every operating budget by August 1 to a board comprised of representatives from Madison County, Ridgeland, and the Madison County Economic Development Authority.  Management SPE must submit an income statement by the 20th of each month.

Prado will pay the operating fees each month.  He will be in default if his company makes no debt service payments for a year.   He will receive two tourism sales tax rebate payments twice a year.   

 

 The Supervisors approved the sale of $48 million of bonds to finance the project. The term is 20 years.  

The Mississippi Development Authority approved Management SPE to receive a tourism sales tax rebate of up to $18 million.  Mr. Prado said he will forward the rebate to the County which will in turn use the funds to repay the bonds.  Attorney John Scanlon said he could not "ever recall a time where the developer has voluntarily given up those funds to be used for what's essentially a government project."  

 

Mr. Prado predicted the project will have a $200 million impact in Madison County."   He said the county and its residents have been asking for a conference center for twenty years.  

One clause drew the ire of Supervisor Trey Baxter. "A big point of contention with some of my constituents is when these bonds are relieved or closed out, why does he get to buy the conference center for $10 but say Rankin County owns their's outright," quizzed the Supervisor.  

The contract indeed states Mr. Prado can buy the conference center for $10 once the bonds are paid.  However, the developer had a ready answer for Mr. Baxter.  "Sir, we're not buying it for $10.  There something in the Mississippi statute called consideration.  Mississippi does not allow you to buy it for $10," said Mr. Prado.  The MDA alumnus added he is forwarding the entire $18 million sales tax rebate to the county and will cover any operational shortfalls. Mr. Prado told this correspondent his company will be making the bond payments.   

    

 Mr. Baxter asked the developer how he was financing the construction of his hotel.  Mr. Prado said Hall Structured Finance is the lender for the project.  Hall is also financing the construction of Prado Lofts in Jackson.  The total investment in the hotel project is $67 million.  

 The Supervisor said no one affiliated with the county had seen Mr. Prado's financial statements although MDA reviewed such documents when it approved his sales tax rebate.  The developer said such was private information but disclosed Wyndham will have a stake in the project. (54:00)  The county can place a lien on the property "that can go to the county if we do not perform" said Mr. Prado.  

Upon questioning by Mr. Baxter, the developer said he would continue building the hotel even if there was no conference center.  He said it will be next to the first Topgolf and Dave & Buster's in Mississippi.  

Upon conclusion of his questioning, Mr. Baxter said he needed to see the agreement with Wyndham and Mr. Prado's financial statements.  "This is a big deal," he said. "You don't have any skin in the game," charged Mr. Baxter as he claimed the $18 million sales tax rebate did not belong to the developer.  "Yes, it does, sir," replied Mr. Prado.  

The supervisor slogged forward.  "How much of your money" is invested in the project. "$67 million" answered Mr. Prado. He said MDA and a USM tourism study verified his projections.  Mr. Baxter wondered out loud why the county could not issue an RFP for the project and hire Wyndham to manage the conference center. Mr. Prado retorted if anybody could do it they would have done it in the last twenty years.  

Supervisor Casey Brannon said he voted for the project and the tax breaks but "I feel like a jungle explorer hacking my way through red flags trying to see the city of gold here."  He accused the Gang of Three of working on the project for three months while keeping him and Mr. Baxter in the dark.  The two allies complained they were not given the project package of over 200 pages of documents and contracts until late Friday afternoon on Labor Day weekend.  

Mr. Brannon said it bothered him that they did not know how much the developer paid for the property he was selling to the county for $9.8 million.  (1:08:00). He called the sale of $48 million "absurd."  Mr. Prado said the sale price was determined by the averaging of two appraisals - one provided by the county while the developer provided the other.  

The Supervisor moved to table the vote but the motion.  However, Supervisor Gerald Steen moved to replace the motion with his own that approved the financing for the project.  Supervisors Steen, Banks, and Griffin approved the substitute motion.  An exasperated Trey Baxter protested: " You're replacing a Board member's motion? Are you a dictator? Are you Kim Jong-Un?" 

 Mr. Scanlon said the project is the first one he has seen where the taxpayers are not paying the debt service as they did in Jackson and Hattiesburg.  

Ridgeland Mayor Gene McGee spoke up for the project, calling it "visionary."  (1:28:00) Alan Hart said Ridgeland will spend $4.5 million to provide infrastructure for the project. 

Incoming Madison County Business League Chairwoman Deborah Martin expressed her strong support for the project.  She groused Madison County high schools were forced to hold their graduations in Jackson.  MCB holds key events in Jackson (CCJ) because there are no similar facilities in Madison County. The organization commissioned a study in 2014 (later updated in 2016) that documented the need for a conference center in Madison County.  Madison County lost business over the years because it had no place to host such events, said Ms. Martin. Copy of report.  

Mr. Baxter asked if an RFP was issued for the project.  Mr. Scanlon said Mr. Prado approached the county with the idea to build a conference center.  

The Supervisor introduced several motions that all failed: 

* Motion to remove the $10 conveyance clause and replace it with provision requiring future Board approval before selling conference center to Mr. Prado's company.

* Motion to delay purchase of conference center property until the developer obtains private hotel financing. 

* Motion for developer to be responsible for at least 25% of cost overruns and 100% for overruns caused by developer. 

* Motion to obtain an updated "independent appraisal of conference center property before purchasing it with bond funds.    

In the end, Supervisors Banks, Steen, and Griffin voted to approve the project and management agreement. 

Mr. Baxter reiterated his opposition on Facebook: 

The documents for it were delivered to us late last Thursday, immediately before the Labor Day weekend, exactly when you'd expect them to be delivered if you didn't want details scrutinized. These are lengthy, complicated agreements involving tens of millions of dollars in County-issued bonds and financial obligations that could remain in place for decades.

Supervisor Casey Brannon, the other Republican on the Board, and I asked the Board to slow the process down long enough to complete additional due diligence, independently verify important assumptions and address provisions we believed left taxpayers inadequately protected.

Unfortunately, Democrats Karl Banks and Paul Griffin, and Gerald Steen, who made himself board president by making backroom deals with the Democrats on the board, rammed a deal through that is at best a bad deal for Madison County taxpayers and at worst a financial disaster. Their lack of regard for legal and financial protections for people who work hard and pay taxes is staggering.

The same 3-2 majority also rejected every taxpayer-protection amendment we offered. As is all too often the case, Republicans demanding fiscal responsibility, transparency and real accountability were ignored.

The biggest risk is simple: if the conference center does not perform as projected, Madison County ultimately stands behind the bond payments.

The documents provide several sources before County money is used—conference-center net operating revenues, the hotel tourism rebate and the special levy on the hotel property. Those are real protections. But the bond indenture also expressly requires the County to pay any remaining debt-service deficiency and defines County debt-service payments as coming from any lawfully available County revenues, including the General Fund. (The statement is posted below in it's entirety.  

 while Mr. Prado celebrated the vote with his own statement.  

 

Gabriel Prado September 8 Press Release

Today, Madison County gave final approval to move forward with the Madison County Conference Center, a historic milestone more than two decades in the making for county residents and leaders. The conference center will be paired with a privately financed 250-room Dolce by Wyndham hotel at Prado Vista. Together, the two will create a full-service destination to drive overnight stays, restaurant spending, retail activity, tourism, and new economic opportunity throughout Madison County.

The 50,000-square-foot Madison County Conference Center will be the first dedicated conference center of its kind in the county and will accommodate up to 1,800 attendees. Designed for major conferences, corporate meetings, school banquets, trade shows, and regional events, the facility finally gives Madison County and the region the capacity to host large-scale gatherings that previously had to go elsewhere.

A defining feature of the public-private structure is a commitment to direct approximately $18.9 million, essentially 100 percent of the project's tourism rebate proceeds, back to Madison County to accelerate repayment of conference-center construction debt, rather than allowing those proceeds to be retained as a developer incentive. County and City leaders point to this structure as a model for protecting public interest while strengthening the project's long-term financial foundation. The combined investment totals approximately $120 million, with the conference center financed through an urban- renewal bond structure and the Dolce hotel financed privately by PraCon.

The adjoining hotel will carry the Dolce by Wyndham flag, bringing Wyndham's upper-upscale, design-driven meetings and resort brand to Ridgeland. Dolce's global portfolio includes destination properties in premier markets such as Versailles, France, and Miami Beach, Florida. The Ridgeland property will be the first Dolce hotel in Mississippi, introducing a new level of full-service conference hospitality to the state with elevated amenities and multiple dining venues supporting the conference center and the broader Prado Vista development, which is currently home to Topgolf.

County and City officials expect this project to set the standard for what's possible in Madison County - bringing more jobs, more visitors, and more investment that benefits our residents for years to come.

The Conference Center is a strategic, forward-looking project built with Madison County's residents and businesses at the center. The Board of Supervisors are proud to see this vision become a reality. The public-private structure shows what strong partnerships can accomplish across Madison County. The Madison County Board of Supervisors will continue to explore opportunities to strengthen the county’s future.” – Gerald Steen, President, Madison County Board of Supervisors

“Ridgeland is proud to be the home of the Madison County Conference Center. This project gives our city and county something we have needed for many years. It is meaningful to see this long-discussed vision become a reality and we look forward to welcoming the many people who will come for future meetings and events”.— Gene McGee, Mayor, City of Ridgeland

"This conference center changes the landscape of Madison County. It's not just a building; it's a recruitment tool that helps us compete for corporate relocations, conventions and investment we simply couldn't pursue before. This is exactly the kind of infrastructure that sets Madison County apart.” — Joseph P. Deason, Executive Director, Madison County Economic Development Authority

"Our business members have talked about a Madison County conference center for as long as I can remember. On behalf of the Business League, I want to thank the county, the city of Ridgeland, and all involved for stepping up with a plan that gets it done — and done right. Local restaurants, school districts, retailers, service providers, and more are going to feel the benefit of this project for decades to come." — Sam Kelly, Chairman, Madison County Business League & Foundation

"This milestone belongs to the people and leaders who believed Madison County could create a conference destination worthy of its growth and its future. I want to thank the State, the Madison County Board of Supervisors, the City of Ridgeland, and our partners across Madison County for the leadership and support that made this project possible. We are honored to carry that their vision forward at Prado Vista and to deliver a conference center and hotel that will serve Madison County for generations." — Gabriel Prado, CEO & President, PraCon Global Investment Group

"Prado Vista at Ridgeland is an exciting setting for Dolce by Wyndham, a brand built around bringing people together through distinctive destinations, thoughtful design and exceptional meetings experiences. We believe this hotel has the potential to become a signature hospitality destination for Mississippi and the broader region, pairing the strength of Dolce with a conference center designed to welcome major events and memorable gatherings." — Geoff Ballotti, President & CEO, Wyndham Hotels & Resorts

Kingfish note: It appears to be a good project.  The problem here is Mr. Steen acting as he usually does and dumping this on the other two supervisors on a holiday weekend three days before the vote. If the "Board President" treated the dissenters better, projects such as this one might not suffer such opposition.    

 Supervisor Trey Baxter Statement

The Madison County Board of Supervisors voted 3-2 today to approve the $48 million conference center proposal that could cost Madison County taxpayers for years.

The documents for it were delivered to us late last Thursday, immediately before the Labor Day weekend, exactly when you'd expect them to be delivered if you didn't want details scrutinized. These are lengthy, complicated agreements involving tens of millions of dollars in County-issued bonds and financial obligations that could remain in place for decades.

Supervisor Casey Brannon, the other Republican on the Board, and I asked the Board to slow the process down long enough to complete additional due diligence, independently verify important assumptions and address provisions we believed left taxpayers inadequately protected.

Unfortunately, Democrats Karl Banks and Paul Griffin, and Gerald Steen, who made himself board president by making backroom deals with the Democrats on the board, rammed a deal through that is at best a bad deal for Madison County taxpayers and at worst a financial disaster. Their lack of regard for legal and financial protections for people who work hard and pay taxes is staggering.

The same 3-2 majority also rejected every taxpayer-protection amendment we offered. As is all too often the case, Republicans demanding fiscal responsibility, transparency and real accountability were ignored.

I am supportive of the concept of a conference center, but I could not support committing the County to this transaction without stronger protections for the taxpayers. Those two things are not mutually exclusive. The amendments we offered were not designed to kill the project. They were designed to make the project a safer deal for Madison County.

Casey and I proposed several important safeguards that Steen, Banks and Griffin ignored, siding with a developer with a thin resume over the taxpayers.

• Delaying the vote until the developer produced the documents necessary to verify his representations, his management partner confirmed the terms of their relationship, key developer-provided financial assumptions were independently validated, and the Board had adequate time to scrutinize a complex, long-term agreement with a developer whose record of completing comparable projects is limited to say the least.

• Requiring an updated appraisal of the actual 13.41-acre parcel the County is purchasing, given the age of the existing appraisals, inconsistencies in the acreage they valued, and a more recent nearby sale. There are legitimate concerns that the County could be paying roughly $1 million to $1.8 million above current market value. The developer acquired the property about a year ago but declined to disclose what he paid. That is his prerogative, but when he is asking taxpayers to enter into a long-term, multimillion-dollar partnership, the lack of transparency is concerning.

• Removing the automatic $10 transfer of the taxpayer-financed conference center and replacing it with a recapture or shared-appreciation structure so taxpayers retain some benefit from the value they helped create. Madison County is assuming up to $48 million in risk, yet under the current agreement the developer can ultimately acquire the facility for $10 once the debt is retired. Flowood used a different model allowing the public sector to retain ownership of the conference facility alongside a private hotel development. Madison County should have at least explored a similar structure before agreeing to give up a publicly financed asset for nominal consideration.

• Replacing the arbitrary 1% capital reserve with a reserve based on an independent lifecycle capital-needs study, so the County is setting aside enough money for major repairs, renovations and equipment replacement. It may sound like a technical detail, but an inadequately funded reserve could eventually leave taxpayers responsible for millions of dollars in capital costs – money that would otherwise be available for priorities such as roads and bridges.

• Requiring another Board vote before issuing the approximately $35.5 million Series B bonds, once the final interest rate and complete debt-service schedule are known. That may sound like another technical financing detail, but it goes to a basic principle: the Board should know the actual cost of the debt before committing taxpayers to it.

Every one of those protections was rejected 3-2 by supervisors Gerald Steen, Karl Banks and Paul Griffin.

The biggest risk is simple: if the conference center does not perform as projected, Madison County ultimately stands behind the bond payments.

The documents provide several sources before County money is used—conference-center net operating revenues, the hotel tourism rebate and the special levy on the hotel property. Those are real protections. But the bond indenture also expressly requires the County to pay any remaining debt-service deficiency and defines County debt-service payments as coming from any lawfully available County revenues, including the General Fund.

If the projections are wrong (which Casey and I wanted independently verified but Steen, Banks and Griffin were happy to take the developers word on), the tourism rebates disappoint (again not independently verified), or the special levy cannot generate enough cash when a bond payment is due, the risk does not simply disappear. Madison County taxpayers are on the hook.

At the same time, the private operator is entitled to a management fee based on 5% of gross conference-center revenue regardless of profitability. If the operator underperforms, the county has little to no recourse.

The agreements also ultimately provide for the developer to acquire the publicly financed conference center for $10 once the bonds are paid off. Those provisions made it even more important, in my view, to insist on meaningful taxpayer protections before approving the transaction.

I hope this project is tremendously successful. I hope the conference center exceeds every projection, the hotel thrives, and Madison County never has to contribute a dollar from its General Fund toward these bonds.

But hope is not a substitute for due diligence.