/Details emerge on how Clarksdale will manage its $52 million sportsplex project

Details emerge on how Clarksdale will manage its $52 million sportsplex project

CLARKSDALE — A $52 million planned sports and recreation complex will be managed by a newly formed urban renewal agency. According to Dwan Brown (the venture’s lead developer), the quasi-governmental entity will supervise the venture and prevent the city from playing a direct part in its development. Clarksdale’s government established the Quality of Life Commission to manage and oversee the development. Each commissioner and the mayor appointed one of five members to the board. They were Rosalyn Griffin, Adrian Allen, James Norvell Gooden (vice-chair), Jon Magnusson, Chad Robinson, and Adrian Allen. They cannot be compensated for their services, according to Mississippi law. At a March 19 meeting of the city government, the urban renewal agency was officially established. Minutes of the September 25, 2017 meeting of the Board of Mayor and Commissioners show that city leaders agreed to sign a Memorandum of Understanding (MOU) with the P3 Group, Inc., Larry Day, municipal advisor, and M3 Architecture Firm, PLLC. The city clerk and the mayor were the signatories. Mississippi Today obtained the Memorandum of Understanding through an open records request. It stated that P3 Group would be the development consultant for the project. The plan will include a calculation of feasibility, working with architects and other advisors, and searching for private developers to take on the project. P3 Group cannot be compensated for their services, according to the agreement. Brown, Melonie Dester, Deputy City Clerk and Espy signed the MOU document on October 11, 2017. Brown stated that the reason for providing these services at no cost was Espy’s relationship. Espy and Brown both mentioned on several occasions that they have been friends for a long time. They are both Clarksdale residents. The development agreement between P3 Group (and the commission) stated that P3 would receive a five per cent development fee for capital raised. This will be funded out of project costs. Hunt Companies, the co-developer of the project, was also obligated to manage and disperse all funds. Brown said that P3 Group is at risk, as they will provide upfront costs and manage the project. P3 Group could make money by finding developers, taking a 5% cut of the amount they pledge to the project (roughly $2.6 million, based on the price tag). Brown stated that the Quality of Life Commission’s role is to issue bonds and file paperwork for tax credits. They also create an Urban Renewal Plan. According to Mississippi law, the plan should include details about land acquisition, demolition, removal, redevelopment and improvements as well as rehabilitation plans to be implemented in urban renewal areas. Zoning and other planning changes will also need to be included. Federal law states that a municipality has the right to issue bonds to fund urban renewal projects, including principal and interest payments for surveys or plans. The law also provides that the municipality has the right to issue refund bonds for the repayment or retirement of bonds. It also stipulates that the resolution to issue bonds must be approved by the local government. The deadline for issuing bonds shall not exceed 30 years. Brown stated that revenue bonds used for financing this project are the obligations of the agency, and not the responsibility the city. The bonds will be reviewed by the city, but they are not subject to any liability. The redevelopment agency will pay the bonds back. It plans to lease the operation of the project to private firms, which would generate revenue to retire the bonds. “There is no way that an underwriter or note holder would undertake this type of project in anticipation that Clarksdale would support it. Clarksdale — anyone with any knowledge of finances knows that Clarksdale doesn’t have the bonding capacity for this project. Brown stated that this project does not have anything to do with Clarksdale’s ability pay. Brown stated that urban renewal bonds and market tax credits would be the main sources of funding for the project. The operation will be managed by an at-risk operator, who has not been identified at this point. Based on existing programs, the construction cost of $50 million and ongoing operating costs will be subsidized. Facebook clarification: He stated that “a private investment company will execute a 30-year lease, and take full responsibility for the operation and maintenance of the project.” “The urban renewal agency is leasing this project to a private investor group.” However, a glance at other similar developments in the state shows that questions remain about accountability for the project. The Jackson Redevelopment Authority (JRA), an agency for urban renewal, is currently in court to sell a lease to a private developer. He failed to fulfill his promises to redevelop Farish Street. The grantee was Jackson, so they had to repay money to the U.S. Department of Housing and Urban Development. This money helped the city purchase the land. JRA is currently the owner of the property. However, the developer retains the lease and plans for development are still in limbo. The Pascagoula Redevelopment Authority, Gulfport Redevelopment Commission and Canton Redevelopment Authority are all established urban renewal agencies in the state. Brown stated that federal and state incentives will help to pay a portion the $50 million Clarksdale project development cost. The solar farm will offset electricity costs while reimbursements from the state will offset operating costs. Brown noted that the project’s estimated construction cost has been reduced from $52 million to $39 million, which is a significant reduction to its original $52 million projection. Brown stated that $52 million was the worst-case scenario and that they don’t plan to deliver the project for that amount. Brown pointed out that they only borrow what they actually need, in this instance $39 million for construction. Brown stated that this does not include legal fees, administrative costs, and other capital expenses. Mississippi Today was not able to obtain a detailed source of funds statement. Brown stated that his company will present a sources of funding statement to the Quality of Life Commission before bonds are issued to show it has the funds to repay the bonds. ComCap Partners, a Memphis-based financial advisor, has been appointed as the representative of the city’s urban renewal committee. ComCap was the financial advisor to the FedEx Forum, Shelby County and Jackson Public Schools. They will be paid on an hourly basis. Brown stated that they are registered with Security and Exchange Commission. New market tax credit and urban renewal bonds Urban renewal bonds are issued in order to create economic activity and jobs in low-income areas. Brown stated that new market tax credits include a federal and state component, while urban renewal bonds do not. Urban renewal bonds are revenue bonds used in areas designated by local governments or municipalities as suitable for urban renewal projects. They do not guarantee the full faith or credit of the government. He stated that the only source of revenue will be the facility. If there isn’t any revenue, the bonds won’t be paid. In order to attract private investors to poor communities, new market tax credits provide a federal credit that allows them to invest in equity in Community Development Entities (CDEs). This is done to create more jobs in the region and lower interest rates for investors. This structure of finance, it’s no pie in the sky. These structures were created in Jackson, Miss. They have also been used on the Gulf Coast. They have been done in Atlanta, Ga.,” Espy stated. This is not a secret. It’s not a secret. Brown stated that the Butler Snow Law Firm will handle the structuring of the new market tax credit to make them monetizable. They will also serve as bond counsel for Quality of Life Commission. Editor’s Note: Tray Hairston is an attorney at Butler Snow and serves as a director on Mississippi Today’s Board of Directors. Brown stated that CORE Construction would be the at-risk construction manger. This means that they would provide the pricing and guarantee that the project would be delivered for the price. CORE offers building services including municipal, municipal, K-12 and solar. Chasm Architecture, based in Atlanta, will design the facilities. They have worked on projects that range from academic and aviation to corporate housing and student housing. Brown stated that they are under the Chasm Companies P.C. Mississippi. The civil engineering portion of the project will be handled by IMS Engineers, located in Jackson. According to their website, they specialize in engineering, consulting, technical, and many other areas. Piper Jaffray is now the managing bond underwriter. Piper Jaffray, an investment bank and asset management firm, is Piper Jaffray. They offer financial and advisory services in a variety of sectors, including agriculture, finance, energy, and finances. These companies provide services to both public and private clients. Brown stated that each entity is either contracted through Hunt Companies or P3 Group when Gooden, a commission member, asked about contracts. “The other parties don’t contract with the city – only developers contract for city, and we contract everyone else under our contract. They’re not working under contingency on the construction side, CORE, Chasm. Brown explained to the commissioners that they are being paid by the development team. He explained that Hunt must provide a guarantee of $50 million to the city or agency. Core will also provide payment and performance bonds to ensure that all contract workers get paid once construction begins. Part III will be available soon. You can read Part I here.