Cleveland hoteliers moving forward without Trump, keeping $6 million in tax breaks

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CLEVELAND — Despite the recent news that Trump Hotels would suspend expansion plans here, a Delta-based operator partnering with the Trumps on the project will finish construction and receive $6 million in state tax rebates.

The Trump Organization, the company President Donald Trump founded and now run by his children, blamed the decision to pull out of a Mississippi partnership on the political atmosphere.

“We live in a climate where everything will be used against us, whether by the fake news or by Democrats who are only interested in presidential harassment and wasting everyone’s time, barraging us with nonsense letters,” said Eric Trump, the president’s son, in a statement.  “We already have the greatest properties in the world and if we have to slow down our growth for the time being, we are happy to do it.”

Dinesh Chawla — a Delta native and chief-executive officer of the Chawla Hotel Group — announced in June 2017 that his business would partner with the Trump Organization to bring their Scion Hotel chain to Cleveland.

Nearly a year and a half later, Chawla said in a detailed announcement on his Facebook page that the company’s partnership with the Trump company was coming to an amicable end.

The Trump Hotel Group is a kick ass, top notch group of professionals,” he wrote. “I’m sorry that they are not with us anymore legally, but we are partners of a different sort–spiritually on this project. What an incredible TEAM. What a privilege to work with them,” he wrote.

Chawla also made clear that the hotel is on track to open in fall of 2019 and that the company is not facing financial hardship. Reached by phone Thursday evening, Chawla declined to comment any further on the Trumps’ decision to shelve the expansion plans.

The Trump-Chawla partnership has remained in the public eye, garnering significant national attention because the Chawlas secured a $6 million tax break from the Mississippi Development Authority, which could directly benefit the sitting president. 

Melissa Scallan, a spokesperson for the Mississippi Development Authority, said if the hotel is completed – even without the Trump name  developers will be eligible to receive up to $6 million in state funds over a period of years to help pay for construction through the Tourism Rebate Incentive program.

Under the program, the state rebates the developers a portion of the sales tax collected at the hotel once it is in operation. A hotel investment of at least $15 million is required to be eligible for the rebate program. And under the program, up to 30 percent of “eligible capital investment” can be returned to the developer.

Scallan said the hotel remains eligible because the tax rebate is for Chawlas Pointe not Trump Hotels. The sales tax rebate program, developed for tourism projects, has been used for other hotels and tourism projects, and most notably for the Trustmark Park in Pearl where the Mississippi Braves play professional baseball. The incentive program also has been used for shopping malls.

Requests for comment from the office Gov. Phil Bryant, a close President Trump ally, who oversees MDA, were not returned.

Two years before receiving this tax break, the Chawlas were also approved by the city of Cleveland to benefit from the historic tax abatement program, according to 2016 Board of Aldermen minutes. This tax abatement program exempts the Chawlas from paying ad valorem taxes on the property (not including school district ad valorem taxes) for seven years.

The Cleveland hotel saga is the latest in a string of starts and stops for Trump’s Mississippi business interests dating back more than 25 years.

The Sun Herald reported that in 1993, Trump persuaded local officials to lease him 4.5 acres of public land and grant a gaming license for a 35,000-square-foot casino in Gulfport.

“We’re going to do a really spectacular job. I believe that in two years or less you’ll all be looking at this site and you’ll all be very happy you gave approval,” Trump told the gaming commission at the time.

That project never came to fruition nor did several others that were widely reported because of their relationship to the flamboyant celebrity billionaire.

More than a decade after the failed Gulfport casino, Trump Entertainment Resorts and Diamondhead Casino Corp. signed letters of intent to develop a 40-acre casino and resort near Diamondhead. 

“We are excited about the prospect of bringing the Trump brand to the Gulf Coast,and we hope to join private and public entities in redeveloping the region. We believe that this is a great opportunity to create value for our company, our shareholders and the citizens of Mississippi,” James B. Perry, chief executive officer of Trump Entertainment, said in a press statement at the time. 

Trump ultimately also pulled out of the Diamondhead deal.

Dinesh Chawla and his brother Suresh operate 19 hotels in the Delta, including one in Clarksdale that recently partnered with Coahoma Community College to create a workforce development program.

Local leaders and property developers say they are not concerned about the hotel losing the Trump association, and do not believe it signals economic gloom. 

“To be honest with you, in my opinion, I don’t think it’ll make a difference. The Chawlas have a really good business in the hotel industry. I think they’ll do well with the plans that were there before the Trumps got involved,” said Henry Mosco, owner of a strip mall across from the hotel site. “I’m having people contact me about locating different franchises and different things in that area, which is exciting. I don’t think it’ll make a difference who owns it as long as it’s up and running.”

Located on the west end of town off Highway 8, the Chawla hotel isn’t the only one under development in Cleveland. The Cotton House, a 95-room luxury hotel carrying the Marriott Tribute brand in the downtown area, is also under construction.  

Cleveland Mayor Billy Nowell said that regardless of the Trumps’ involvement, both of the hotel projects will benefit the community.

“I’m just excited about all the things that will be done,” he said.

Other community leaders remarked that dropping Trump affiliation is a more positive development than the hotel bearing the Trump brand.

“I think it could be a blessing in disguise,” said Maurice Smith, a member of the board of Aldermen and superintendent of the North Bolivar Consolidated School District. “I don’t think the Trump brand was adding a lot to the hotel. I think it probably had the potential of being a negative factor.”