The future of a planned hotel project in Starkville is in question.
Cotton Mill Marketplace developer Mark Nicholas could soon receive about $900,000 worth of tax increment finance reimbursements once completed infrastructure improvements associated with his retail storefront are platted and dedicated to the city, Starkville officials confirmed on background Tuesday.
That funding could be crucial in solving apparent financial issues after a public notice of a foreclosure sale, one involving his Cotton Mill Hotel Group LLC, was recently published in local media outlets.
A legal notice signed at the end of August and published throughout September specifically deals with the 2.03 acres east of the completed storefront, which lies adjacent to Chick-fil-A and Buffalo Wild Wings, that Nicholas previously said would be home to a 117-bed Holiday Inn hotel.
A notice published last week scheduled a public sale of the potential hotel property from 11 a.m. to 4 p.m. Tuesday at the steps of the Oktibbeha County courthouse.
The Mississippi Secretary of State’s website lists Nicholas as the registered agent of the hotel group, and he, along with Elizabeth Thomas of Gulfport, are listed under the group’s officers and directors.
While Mayor Parker Wiseman confirmed the city is aware of the ongoing situation, other officials — who wished not to be named — said Nicholas could possibly resolve the foreclosure issue before the property comes up for sale.
Calls to Nicholas and attorneys listed in the public notice were not returned by press time.
“We’re working to make sure that all public infrastructure is properly dedicated prior to the issuance of the TIF proceeds because that’s what the TIF plan and agreement call for,” Wiseman said. “We are aware that there’s been a foreclosure notice published. That is a situation the city attorney will continue to monitor.”
Aldermen previously agreed to a $4 million-maximum TIF package for the entire $20 million development, which includes the proposed hotel and the completed retail center now housing four chain restaurants — Hungry Howie’s Pizza, Insomnia Cookies, Jimmy John’s Sandwiches and Salsarita’s Fresh Cantina — boutique clothier Maroon & Co. and Pure Barre fitness center.
TIF bonds are used to fund public improvements, including new roads and water and sewer lines, and can be issued either in phases matching the development’s progress or all at once. Funding is used to reimburse developers after these infrastructure improvements are formally dedicated to the public.
To fund the bond, aldermen previously agreed to divert 75 percent of both ad valorem and sales taxes generated once the entire development was constructed and producing revenue. Wiseman estimated the city has issued about $1.3 million for the project, but the mayor did not have an exact figure on-hand when contacted by The Dispatch.
Nicholas, officials said, is seeking reimbursement for the retail development’s improvements, as they were completed over a year ago. Similar improvements on the hotel parcel have not been completed.
Before a developer can receive reimbursements, the associated public infrastructure improvements must be constructed and dedicated to the city through a process of platting, which clearly defines their locations in city and county land records.
Nicholas is working with Starkville officials to plat the completed infrastructure improvements, Community Development Director Buddy Sanders said, and the issue could come before aldermen next week or in October.
Until the board approves the plat and a TIF disbursement, the money will remain with the city.
The TIF agreement with Nicholas’ Cotton Mill Hotel Group will stand whether or not the company owns the potential hotel site, since it was agreed upon by the city and the limited liability company.
A new developer could, theoretically, purchase the property and approach the city for a new TIF, whether or not they intend to build a hotel or a different type of project, if they plan on constructing public infrastructure.
A similar situation occurred this year with the upcoming Academy Sports project on Highway 12. In August, aldermen and supervisors approved a $1.5 million-maximum, 15-year TIF with RM Development I LLC after the original developer, Multisite Properties, could not close on the project.
Carl Smith covers Starkville and Oktibbeha County for The Dispatch. Follow him on Twitter @StarkDispatch