By Jennifer Jacob Brown
Local hotel magnate Abdul Lala has given the City of Meridian a choice — but he hasn't made it an easy one.
A couple of months ago, Meridian's choice was between pursuing the Threefoot hotel project and, well, not doing anything at all. Now, the choice is between the Threefoot project and a brand new downtown hotel constructed by Lala.
The reason: Lala says he can't build his hotel unless the city foregoes plans to turn the Threefoot into a hotel.
With the Threefoot project, the city could take advantage of a proposal by developer HRI Properties to restore the long blighted Threefoot Building, which has a high sentimental value for many Meridianites. HRI would transform the building into a Courtyard by Marriott hotel designed to complement the conference facilities at Meridian's crown jewel of historic preservation, the MSU-Riley Center for the Performing Arts.
The Threefoot hotel would be part of a larger Urban Renewal Plan which would include a renovation of the Kress building - also of emotional and historic significance - into a 1,000 person capacity banquet hall and arts hall of fame sometime in the future. The plan also includes the transformation of the area between the Threefoot building and City Hall into a landscaped park, and there are even tentative plans for a possible new library and art museum further down the road.
Oh yeah - and on top of all that, you know the old dilapidated parking garage on 23rd avenue? With the Threefoot project, it will be singing its swan song to the tune of a wrecking ball. If constructed according to schedule, the hotel would open as soon as September 2010.
This all sounds great, but of course there's a catch. The city would have to contribute to the project a loan of up to $14 million in taxpayer money. And for the larger Urban Renewal Plan to be completed, the city would have to find private investors and organizations willing to jump on board. If the city decides not to pursue the hotel project and gets no other Threefoot development offers, it would have to spend $3 to $5 million non-refundable dollars demolishing the building.
The $14 million investment is supposed to be paid back by the project - but in the event the hotel can't make enough money and the project cannot pay the city back, the city takes over ownership of a profit-poor hotel.
Lala, through his hotel development company, Lala Enterprises, has given us another option, and one that requires no investment of taxpayer money. He wants to build a new, slightly bigger hotel just across from the Kress building on the west side of 23rd Ave. This hotel, a Hyatt Place franchise, would include a banquet room with capacity for 1,000 people that will open at the same time as the hotel, on site parking, and, Lala says, maybe even a gift shop, sundry store, and the Starbucks that Meridian has long pined for. Because Starbucks has a franchising deal with Hyatt Place, Lala said, Meridian won't have to wait for Starbucks to decide whether to build a store here - Lala will have the right to build one inside the hotel right away. If the project is done, it would take about 2 to 3 years to complete.
But guess what - this one has a catch, too. Lala said Meridian cannot support two downtown hotels, and that a go-ahead from the city council on the Threefoot hotel project would effectively be a no-go on the Hyatt. Lala has asked that the Threefoot building be renovated as "anything but a hotel" - but there's no guarantee that another opportunity to renovate the building will ever come. Lala would also ask that the city turn over the Brookshire building for demolition and cooperate with the hotel in camouflaging the current police station from the view of hotel guests.
While the city council has to make a definite commitment to nix the Threefoot hotel idea for Lala, there is no iron-clad guarantee that Lala's project will be completed. Lala has made a strong statement assuring the community of his commitment to the project; however, nothing is a guarantee. And if any problems do arise in that project, it would likely be too late for the council to change their minds about the Threefoot project, which depends on Katrina-related tax credits that expire at the end of 2009.
People in the know, including Meridian Mayor John Robert Smith and Lauderdale County Tourism Director Suzy Johnson, agree that downtown is in desperate need of a hotel. But not everyone can agree on which hotel would would be better. Here's a look at what both proposals are offering:
The Threefoot argument:
While Abdul Lala has said there isn't room at the time for two downtown hotels, HRI President Tom Leonhard has said there is.
Leonhard said one of the aims of the Threefoot project is to spur downtown development - and that includes other hotels. "We think it's great that he wants to build a 140 room Hyatt hotel in the city and feel that it would enhance our project with the Threefoot," he said.
So why does he think two hotels in such close proximity won't harm each other's profits? For one thing, the number of rooms in both hotels combined would be only 280. For another thing, "Just go down to the interstate and see all the hotels one block from each other," he said.
"Downtown, more is better," he said, because more than one hotel would bring more people downtown and generate more demand for other businesses.
The Threefoot hotel would be an approximately 120 room Courtyard by Marriott with a stabilized average room rate of $140 a night. Amenities would include a pool, a restaurant/lounge, a fitness center, and valet parking (guest cars would be parked in the arts district parking garage, just across the street from the proposed entrance).
Meridian Mayor John Robert Smith said that the overall Urban Renewal Plan is dependent upon the renovation of the Threefoot building into a hotel. The plan would go beyond just bringing a hotel into downtown, Smith said, by tying to together numerous historic structures that will be "working in unison to create a special destination."
The Threefoot hotel, the renovated City Hall, and the Riley Center, he said, would be the "anchors" of the Urban Renewal downtown.
Smith believes the Threefoot project, in combination with the Kress renovation, will provide the same essential services as Lala's hotel, but with the added bonus of preserving two historic landmarks in Meridian.
A downtown hotel and banquet facility "not only can be done but can be done in historic structures and can be beautiful and important additions to downtown," he said. "You're not building a hotel ballroom that you can find on any interstate highway, you're building something special. We create something that no one else has in this region... We're not the place you stop to break a long trip. We become the destination."
Smith said the Threefoot project has been in the works for the past seven years, and that his talks with numerous developers during that time have convinced him that no developer would be willing to consider renovating the Threefoot building as anything other than a hotel, meaning that nixing the hotel plan would leave the city with "a 16 story empty deteriorating hulk."
"I do think that the demolition of a block and a half of historic property downtown that assures the destruction of the Threefoot building is wrong," he said.
As for the financing of the rest of the urban renewal plan, Smith said, "I have been told that if we do two significant pieces (City Hall and the Threefoot building) then others will finance the rest." He said he cannot yet reveal who those "others" are.
Leonhard said the Threefoot needs to be restored from its current state in order for downtown to thrive. "It's a landmark building," he said. "It's a unique building in the state of Mississippi. It's an architectural gem that's in (a bad state)."
And while it's in that state, he said, "It's a real impediment to the development of downtown."
"We just encourage the city to do (Lala's) project," he said. "But if they have to make a choice I think it's a no-brainer to choose Threefoot."
Leonhard said that if Meridian is going to save the Threefoot building, the time is now. If the city council waits until next year to move forward, it will likely be too late. HRI is allotted a certain amount of historic tax credits, he said, and will have probably found some other project to use them for by then. If HRI did by chance agree to do the project after the expiration of the tax credits, it would require a larger investment on the city's part.
HRI has had numerous successes with downtown renovations that spur development, but there have been problems with a $200 million hotel in downtown St. Louis, which is in danger of foreclosure. But Leonhard said that, while HRI developed that hotel, they did not manage it and that comparing the St. Louis project with the Meridian one "is like comparing apples with pumpkins".
He said the hotel's profit failure occurred in part because it was constructed shortly before 9/11, which caused problems for the convention business. He said HRI has the option to walk away from the St. Louis project completely, but has chosen to work with bondholders to restructure assets. "We did everything that we promised to do and more," he said, adding that the $80 million investment made by the city of St. Louis has resulted in billions of dollars in private downtown investment.
As for the projections on the Threefoot project, he said, "I think the way we've structured the financing has been very conservative... We're being very realistic in our forecast."
Smith added that, while Abdul Lala will still have to acquire property, get approval from archives and history, work out any environmental issues with the location, and get his financing in place, all of those steps have already been completed on the Threefoot project.
"This is an opportunity for Meridian to make the right decision, not just for today or tomorrow, but for many years to come."
The Hyatt argument:
Abdul Lala is making a big offer with big strings attached. He has proposed the construction of a $30 million, seven to eight story, $140 room rate, 135-140 room hotel complete with 1,000-person banquet hall, on-site parking, even the Starbucks that Meridian has long pined for. Quite a package.
In return for his $30 million investment in downtown, Lala is asking the city to nix a long-contemplated historic renovation project and turn over several other historic buildings for demolition. Lala Enterprises is aware that that is a big thing to ask, so they have issued a statement in hopes of showing that, when they say they want to build this hotel, they mean it - that once the city council nixes Threefoot, Lala Enterprises will not simply change it's mind about completing the promised project.
"The public announcement of our intention to build this downtown Convention Hotel illustrates our commitment to Meridian," the statement reads. "Our success or failure in delivering this project will be taken into consideration for every future project and franchise agreement we pursue in this region. If we are successful in helping catapult Meridian's tourism market, it opens new doors for our company in the region. We feel that we can be the key to Meridian's future tourism success and Meridian can be the key to our future development success in the region. It's a win-win."
The statement goes on to say that investor interest in the project is higher than in any project they have pursued in years, and that they are currently working with property owners to purchase the land needed. "Excitement about this project has even inspired the other major hotel chains that we have relationships with to try and convince us to place their upscale hotel flag in Meridian," the statement reads.
While the Threefoot project, along with the Urban Renewal Plan, requires a large amount of city involvement and investment, Lala said he will purchase the privately owned land on the proposed site, complete the private financing, and develop and manage his hotel himself.
Lala said he already has verbal agreements with the tenants of buildings on the proposed site, and that the landowners have not only agreed to sell, but have expressed interest in investing in the hotel.
Another key difference between the two projects, Lala said, is that the Hyatt Place will have on-site parking. Today's hotel guests expect on site parking, he said, adding that the single female traveler, especially, has a strong preference for on site parking when traveling at night.
Along with a Starbucks, Lala hopes to include in his hotel a "Made In Mississippi" or comparable gift shop that features Meridian tourism items such as the miniature carousel horses sold as a fundraiser by Hope Village.
He believes the Hyatt Place franchise is superior to Courtyard by Marriott because it has sleeper sofas in each room, 42-inch flat screen televisions with "plug panels" for DVD players and the like, and large 370 square foot rooms.
Project Manager Dede Mogollon and Lala both said that having two hotels downtown would be a terrible idea. "To open competing hotels and take a chance on them closing would do more damage than never opening them," Mogollon said.
Lala also said he wants this hotel to be a part of the mayor's environmental plan for Meridian and will work with the environment in mind.
The building is planned to be of a brick construction similar to that of the arts district parking garage. It will be either seven or eight stories high, depending on whether or not the old M&F; bank building on the corner of 23rd Ave. and Sixth Street is demolished.
Lala said he is not out to destroy the Threefoot building, but to offer Meridian a plan that he truly believes is better and more viable — a plan that will add new life to Meridian's tourism industry. He said his hotel will be designed specifically to complement the Riley Center, that the hotel and Riley Center will each enhance the other's business as well as the business of Meridian's many interstate hotels, of which Lala owns five and is constructing a sixth.
"We truly believe Threefoot is the jewel in our crown and it needs to be saved," Mogollon said. She said some of the architects working for Lala Enterprises have said it would not be that hard to find investors to renovate Threefoot into something other than a hotel, and that others have suggested to her that the building be used for condominiums. Smith said a plan to renovate the building into condos is not viable because condos are not eligible for the tax credits that would be used for to help finance the hotel project.
Mogollon said that choosing the Threefoot project over the Lala Enterprises project could have a negative impact on the future of downtown. "We truly feel like our tourism future is at stake," she said. "We haven't even scratched the surface on our convention market, and to do that we need a fabulous hotel and a banquet space."
So Meridian is left with a choice between a no monetary risk offer that gives us something shiny and new, but which some preservation enthusiasts have referred to as "a historical shot in the foot" - or an offer to take a dying city landmark and make it into something useful and hopefully profitable, but with the risk of costing the taxpayers up to 14 million dollars.
And with only a short window of time left to take advantage of the tax credits needed to fund the Threefoot Project, it's a choice the city won't get much time to sleep on.
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