NATCHEZ, Miss. – City officials are discussing various steps with Eola developers for Natchez to help finance the closed hotel’s renovation.
Natchez Mayor Dan Gibson said “bonding strategies” are being planned with owner Rob Lubin like what the city has done in the past to accommodate the Grand Hotel and Holiday Inn Express.
Gibson noted he and aldermen plan to meet with Lubin and other Eola developers in private talks to discuss the details, but the mayor said he wants a timetable to be made public soon for completing the long-stalled project.
“It is our hope that … we will soon be seeing a timeline formed and public talking points that can then be shared with the public,” he said Tuesday while meeting with the Natchez Board of Aldermen. “I expressed to Mr. Lubin that it is our desire to get more information out into the public very soon.”
The Eola hotel on Main and Pearl streets was constructed in 1927 as Natchez’ tallest commercial building. The hotel closed in 2014 and has since severely deteriorated as its renovation has been held up while developers seek funds and plan its designs.
The costs have been estimated to be about $32 million – up from the $24 million originally projected in 2021 for the Eola’s renovation.
Gibson noted city officials have opted not to crack down on the Eola’s owner for having blighted property that could be deemed a public nuisance. While the Eola’s redevelopment is a private initiative, “the city is very much involved here,” he said.
As the city has done for other commercial developments, aldermen could back a tax-increment financing (TIF) measure for refurbishing the Eola. This would involve borrowing money through a bond issue. The local property and sales tax revenues generated by the Eola’s reopening would be used to repay the loan. Such public-financing tools don’t add to the city’s debt.
Aldermen have also endorsed a sales tax-rebate incentive for the Eola hotel’s restoration through a state program for encouraging tourism development.
There are plans to tear down the city-owned Fry building adjacent to the Eola and configure the site for parking.
Eola developers and Gibson unveiled grand plans in 2021 for restoring the vacant building as a hotel. The Eola’s developers have involved Lubin, New Orleans restaurateur Dickie Brennan and the MMI Hotel Group, a Mississippi-based company whose portfolio includes hotels in Mississippi, Alabama, Tennessee, Georgia and Florida.
Natchez native Marjorie Feltus Hawkins and her Nashville-based design firm are also involved in the Eola’s restoration.
“Deconstruction is underway, and FH Design will be bringing new life to this old beauty,” she wrote in a recent Facebook post.
A fair reading of the Tax Increment Financing (TIF) law will show that The Grand Hotel should never have definitionally qualified for TIF. It was not a run down area, nor is the Eola, although at the rate it is deteriorating, neighboring property owners should be concerned. Or, maybe the entire city is, since we have at last check a 36% poverty rate against state average of about 20%. Earlier, Mr. Lubin’s plan was to sell US citizenship to foreign investors for $250,000 each in some species of condominium or townhouse scheme. I see no way this can be done without accounting for the lack of parking garages and coupling it with renovation, whether hotel or mixed development. And, at the same time, river cruisers reduce heads on beds and are packaged to keep the money on the boats. Same thing happened in Venice, with the ecological and environmental disaster the boats brought, while hammering the local hotels and restaurants. Folks, think it through and be very careful. And, maybe do something, for a change, for local business owners who get no subsidies or contrived financing.
No one wants the Eola to be restored and operating more than me but this does not sound like a very good deal for the city. I’m not sure how the repayment of the TIF bond works if it is based on local property and sales tax revenue when the city is also offering a sales tax rebate incentive. Plus, the hotel must be successful for the project to have a chance of working. If one looks back through the years, Mr Lubin does not have much of a track record of following through on his promises. This does not sound like a financially stable project for the city to pledge taxpayer dollars.
It would be hypocritical of the city to enforce any blight law against these owners considering the numerous other buildings in disrepair around downtown alone. It’s a bit embarrassing actually. IMO there are so many hotels already, the Eola needs to be multi-purpose; hotel, condos, and retail. The retail and condo dues would help offset the building maintenance and provide off-season revenue.
Mr. Lubin has allowed the Eola property to deteriorate for ten years, to the point that it’s an eyesore and a danger. This shows just how much he cares about downtown Natchez. Let him prove that he deserves the financial favors he is asking for by securing and cleaning up this blighted building before anything else is done for him.
The Democrat earlier reported that Lubin intends the renovated hotel to have 70 rooms. With a budget of $32 million, the cost averages to about $460,000 per room. That’s an outrageously high renovation cost that logically would only be spent for an ultra-luxury property in a desirable location, which the Eola clearly is not.
I think Lubin and his partners paid something like $4.5 million for the property. Does he seriously think he can invest $32 million and have a building in downtown Natchez worth $36.5 million? Fantasy.
The average room rate in Natchez is about $140. Occupancy in Natchez runs about 55-58% (national occupancy rate is above 60%.) Using those numbers, the 70-room Eola will gross less than $2 million per year. And from that he plans to repay loans, pay staff salaries (he claims he will employ 75 persons full-time), pay taxes and cover all operational supplies and costs? To begin with, 75 jobs at $15/ hour is about $2.3 million per year not counting payroll taxes, insurance etc., so it’s obvious the numbers on this project do not make sense.
The city should stay way clear of getting involved in this.