On a contentious 5-to-3 vote, the Pine Bluff City Council on Tuesday approved a resolution to take about $2.9 million in sales tax proceeds and put it toward a hotel that would be built next to the Pine Bluff Convention Center.
Working with the P3 Group, a real estate development company, the city received a proposal from Farmers State Bank of Alto Pass, Ill., to fund some of the cost of the $24 million 125-room Marriott Courtyard hotel that is planned for the location.
"I've been working toward this for five years," Joseph McCorvey, director of the Pine Bluff Convention Center, said immediately after the special called meeting adjourned. "But this is not for me. It's for the city of Pine Bluff."
McCorvey has lobbied vigorously for the hotel, saying his hands have been tied when it comes to bringing more business to the convention center because he doesn't have access to a hotel. Groups and conventions call with an interest in booking the convention center but take their business elsewhere when they find out there's not a hotel at the site, he said. The Plaza Hotel, the last iteration of an inn at the site, has been closed for years because of its deteriorating condition.
Grandon Gray, senior vice president of the P3 Group, said about 20% of the loan amount would come from the bank with the other 80% of the necessary financing coming from the USDA's Business and Industry Guarantee program.
The USDA loan will have to be applied for, but Gray said he was optimistic because Farmers State Bank is one of the leading banks in the country in making loans for convention center hotels, and officials at the bank believe the hotel will qualify for the federal loan.
Gray said other banks and loaning institutions both near and far were approached.
Many declined, he said, and others wanted to organize the loan in ways that were not in the city's best interest.
"This offer, is this fair?" he said. "Based on my experience, yes."
Gray said the interest rate on the loan would range from 8.25% for the first five years to 9.45% for years 21-32, adding that there would be opportunities for the city to refinance the loan if interest rates dropped. Once the loans are paid off, he said, the city would own the hotel and could sell it if it wanted to.
As part of setting up the hoped-for financing, the bank required the city to contribute $2,935,140 to the project. The money came from the Urban Renewal Agency, whose board met earlier on Tuesday to vote to give that amount of money back to the city. Urban Renewal is an agency that falls under the umbrella of Go Forward Pine Bluff, which operates on a five-eighth percent sales tax.
Most but not all of the angst the three council members had in opposing the resolution centered around the short notice they had received to go over the two-page proposed resolution and nine pages of supporting documents.
Council Members Steven Mays and Bruce Lockett said they needed more time to digest the details.
"I just got this about 20 minutes ago," Mays said. "This is not the way we do business. This is wrong."
Council Member Glen Brown Sr., however, had a number of problems with the resolution. He said when the subject of a hotel came up two years ago, it was said that no tax dollars would be used.
"I thought OK, let someone else take the risk," he said. "So what is this $3 million? I guess you can just tell me a lie."
Brown Sr. also expressed doubt that a hotel at the convention center site would be a success.
"How can we make a hotel work in downtown Pine Bluff?" he asked. "The movement is out toward Walmart and the [Saracen] Casino. The old [hotel] died and that was when we had a population of 56,000. So how can we make it work when our population is between 41,000 and 39,000? It doesn't make sense to me."
Dee Brown, CEO of the P-3 Group, who joined the meeting via Zoom, said Marriott had done a market study and determined that a convention center hotel would work.
"They must believe that the hotel would be successful," Dee Brown said. "This is being built by a credible firm in the hotel industry."
Gray said the P3 Group also feels strongly about the viability of the project and had contributed $1.2 million of its own money for the project.
"If we didn't believe it would be a success, we could take that money and go somewhere else," he said, adding that Beechwood Pinnacle Hotels, a privately held hotel development company that is also working on the project, had also contributed $500,000 to the project.
The newest members of the city council, Lanette Frazier and Latisha Brunson, both spoke in favor of the resolution with Frazier saying the city needed to step up financially for the project.
"No one will want to invest in something that you yourself are not willing to invest in," she said. We're talking about a Marriott Courtyard. That is huge."
On more than one occasion, Brown Sr. and Mayor Shirley Washington tangled with the mayor saying Brown Sr. was dominating the conversation, a point that he denied.
Washington said she supported the convention center hotel, adding that many sports tournaments and reunions book rooms in Little Rock and elsewhere because Pine Bluff doesn't have such a space.
"Families wanting to have reunions and those wanting to have school reunions call all the time asking when will that hotel be finished," Washington said. "Right now they're going to Little Rock and when they ask me to come there and welcome them, I don't go. I want those reunions right here."
Dan Askenazi, vice president of Municipal Capital Markets Group, which specializes in various types of financing and who is working with the P3 Group, said the resolution guarantees a step forward for the project but that city officials would be able to review the particulars once they are worked out.
The vote on the resolution was Council Members Brown Sr., Mays and Lockett voting no, and Council Members Glen Brown Jr., Lloyd Holcomb Jr., Steven Shaner, Frazier and Brunson voting for yes.