Full Spectrum surprised at Hinds County Board of Supervisors

July 19, 2012 in News, Top Stories

Special to The Mississippi Link

The Hinds County Board of Supervisors voted July 16 to not support the development of the parking garage on 1822 Square at Old Capitol Green (OCG).
Full Spectrum is perplexed as to why the board of supervisors would refuse to approve a development deal for the City of Jackson that would create 1,696 temporary construction jobs, 426 new permanent jobs and $42,000,000 over a 20-year period in ad valorem, sales, and school taxes, at no risk to the county.
The development team has continually committed to hire and train construction workers recruited from the highest unemployment and poverty rates in Hinds County, and has made arrangements with the union to pay union scale wages for those trainees, therefore providing far-reaching economic benefits for often-excluded segments of the metropolitan area. “The City and the county need this and other catalytic developments like Old Capitol Green to grow the tax base and bring the middle class back to Jackson. It is good not only for the City, but for the region,” said Malcolm Shepherd, Full Spectrum South Development director.
“The Full Spectrum team, including the financing team, was in the process of scheduling a meeting with the supervisors to discuss details of financing and to meet with Blake Wallace, executive director, Hinds County Economic Development Authority and the Jackson Redevelopment Authority’s (JRA) executive director to negotiate final terms of all financing going into the development,” stated Carlton Brown founding partner and chief operations officer of Full Spectrum. “Now we find out that, on May 23, without talking with us, the Hinds County Economic Development Authority recommended to the board that it not secure the Mississippi Development Authority’s loan that had been authorized by the State Legislature three years ago.”
The Hinds County Board of Supervisors had previously approved three resolutions in support of Old Capitol Green, and on each of these occasions, Full Spectrum was invited to be present and address any concerns they may have had. However, on July 16, Full Spectrum was neither invited to be present nor told of the meeting and the impending action. “Full Spectrum was completely surprised at the board’s action. Full Spectrum was not notified in advance that there was a critical vote of the supervisors scheduled on OCG financing, nor was Full Spectrum notified of the result of the vote. We had viewed this as a public/private partnership in which each partner should be notified of actions by the other,” said Brown.
On May 25, Full Spectrum submitted 200-plus pages of documents to the board attorney and to the Authority including financial statements; letters of interest from tenants (office and retail tenants); financial pro formas and letters of conditional commitment for New Market Tax Credit (NMTC) financing; bond financing; FHA housing financing; and AFL-CIO Investment Trust Fund.
The county had also asked for proprietary working spreadsheets from Full Spectrum and its consultants, and even though Full Spectrum was legally permitted to only provide the static spreadsheets, it offered to have its consultants run any type analysis the Hinds County Economic Development Authority requested, at Full Spectrum’s expense. Since that submission and its subsequent offer to provide other analysis, Full Spectrum has had no feedback or formal communications from the Hinds County Economic Development Authority.
Full Spectrum was invited to address the Authority after a letter recommended against securing the loan had already gone to the president of the Board of Supervisors.
On June 29, Jackson Mayor Harvey Johnson sent a letter to the president of the Board of Supervisors, stating that JRA had agreed to purchase the garage from Full Spectrum and Hinds County at the end of the seven-year new market tax credit. “This is a firm commitment of Johnson’s administration to grow the City of Jackson, in which we still expect Hinds County to be a partner. Partnerships in which state government, city government, county government and private sector are completely engaged is the only way to move the City of Jackson forward. Other state capitals like Raleigh, N.C.; Little Rock, Ark.; Nashville, Tenn.; Richmond, Va.; and Columbia, S.C. have already discovered that this is the best way to grow the regional economy. We applaud Mayor Johnson for his leadership and vision,” Brown added.
The commitment of the mayor and the board of JRA to purchase the garage after the seven-year NMTC period removed 100 percent of the risk of owning and operating the garage from the county.
After investing more than $3 million of its own money and six years into the development, Walter J. Edwards, chief executive officer of Full Spectrum, said he intends to continue to move forward with the development of 1822 Square and bring this first phase of OCG across the finish line, but must carefully evaluate its options with both private and public partners at the table.
“Full Spectrum has been frustrated by the absence of process. After submitting the documentation the director of Hinds County Economic Development District requested, we never received a written notification that the information had been received and reviewed; nor did we ever receive any type response. We heard rumors of district board meetings in which questions were raised, but never received any notification of what the questions or concerns were. In fact, we became aware that there was going to be an OCG agenda item only when the agenda was posted for the Board of Supervisors’ meeting on July 16, which was the day the vote was made. We heard about the vote and the refusal to follow through with the State Infrastructure loan through the press.  This is a unique way for an economic development agency to deal with an investor who has committed resources to a major new development. As opposed to rolling out the carpet, the process more effectively pulls the rug from under a business committed to reinvesting in Jackson and its people,” said Brown.
On June 30, Full Spectrum took site control of the state-owned property where OCG will be developed by executing a long-term lease with the State of Mississippi on Hal and Mal’s and the 2.74 acres known as B South, where Full Spectrum is to build the garage and commercial and residential buildings during the first phase of the project. The financing structure requires that the garage not be built until the financing for the office building is in place. The office financing and the garage financing will close simultaneously when the building is 70 percent leased. This is a requirement of the NMTC financing and it provides enough cash flow to cover debt service on the garage loan and the office building, thereby eliminating all risk to the county during the first seven years of the NMTC financing period-after which the City will purchase the garage.  Brown further stated, “The action of the Hinds County Board of Supervisors in refusing to accept the loan approved by the State Legislature to support infrastructure development of Old Capitol Green is a huge disappointment.”
This unexpected action by the Hinds County Board of Supervisors jeopardizes approximately $52 million of private investment in the City of Jackson committed by Full Spectrum’s investors, as well as the pre-commitments (letters of interest) for retail and office tenants who, prior to this action by the county, had committed to 94 percent of the office and 96 percent of the retail.  Those commitments include new and expanded retail business, and cultural businesses in downtown Jackson and a commitment from the GSA to move new jobs to downtown Jackson.
“The commitment from GSA (the U.S. General Services Administration) is huge for Jackson, in terms of economic generation and credibility,” said Shepherd. “GSA recently signed an agreement to occupy more than 270,000 SF at One World Trade Center in New York, bringing that building to 55 percent leased, two years prior to its completion.
“However, what saddens me more is that we could lose native Jacksonians like international jazz recording artist Cassandra Wilson, who was moving back to Jackson to launch her new label in offices at Old Capitol Green,” said Brown.  “She told me she is having second thoughts if this latest action by  county leadership is indicative of how it will support its own residents who are returning to Jackson to invest and grow the community. She is very disappointed in the Board of Supervisors.” It also jeopardizes Full Spectrum’s commitment to contribute up to $2 million in the project’s revenues over ten years to Jackson State University (JSU) to contribute to the next generation of the creative class leaders.
The action of the Hinds County Board of Supervisors also jeopardizes Full Spectrum’s commitment to JSU’s School of Urban and Regional Planning and the School of Engineering to incorporate interns in the planning and development of Old Capitol Green as a living laboratory to train students in the best practices of sustainable development.