South MS mayor pushes tourism while striking personal real estate deals with developers

Mayor Kenny Holloway’s personal financial dealings with real estate developers are raising eyebrows in Ocean Springs, where some residents are displeased over development plans the mayor has pitched.

Voters knew when they elected Holloway in 2021 that he is a real estate broker and owner of real estate companies. His platform emphasized economic development.

But residents might not have foreseen the personal and business deals Holloway would strike with developers whose projects the city regulates.

As mayor, Holloway has followed state ethics law, he told the Sun Herald in a recent interview. The law prohibits use of public office for personal financial gain and says those in positions of public trust should avoid conduct that would raise suspicion of a conflict of interest.

Nobody has accused the mayor of financially benefiting from the projects of developers with whom he does business.

Some residents are displeased, nonetheless. They say major developments are being planned with little public input, including the commercialization of a residential beach and an urban renewal plan that suggested some Black-owned homes in the downtown area should be demolished in favor of commercial development.

They also cite the unwillingness of city leaders to literally turn down the volume on music downtown bars blast into surrounding neighborhoods.

The pace of growth is dizzying. The atmosphere reminds retired business owner and resident Tom Ehringsen of the pandemonium after Hurricane Katrina.

“We were all so upset and we didn’t know what to do,” he said. “I call it Hurricane Kenny . . .

“We are overwhelmed with projects. It’s like whack-a-mole.”

Holloway buys land, sells to home builder

Holloway has worked in different fields over the years, with real estate being his main business since around 2006, he said. His real estate company, HRES Commercial and Development LLC, bought a piece of property beside the U.S. 90 overpass on Porter Avenue, just around the corner from Front Beach. The deed was recorded less than four months before he announced his run for mayor, land records show.

Both Holloway and Michael Butler, a home builder and developer, said they struck a deal for Butler to buy the commercial property before Holloway became mayor. Butler is building townhouses there and Holloway is his real estate broker. Holloway’s signs, which list his real estate company and cell phone number, are posted on the property.

While involved in the real estate deal, Holloway also played a part in negotiations between Butler and the unhappy neighbors of a subdivision he’s developing on Front Beach, The Sands. The neighbors and Butler were engaged in an epic court battle when Holloway took office.

While he was running for mayor, Holloway said he wanted to see the dispute resolved so the project could move forward. The city, he said, needed the property taxes.

Michael and Julia Illanne, who live next door to The Sands property, said they wanted the mayor to recuse himself from any involvement in the negotiations because Holloway was “co-developing” the property with Butler.

During the negotiations, Michael Illanne said the mayor pushed for a new zoning classification that allows smaller lots and setbacks, and a new designation called a planned unit development, or PUD. PUDs are not subject to regular zoning requirements and give local governments more leeway to grant height, setback and other variances.

“We saw it as a conflict,” Illanne said. “That was a discussion Julia and I had with him (Holloway) personally. He didn’t see it that way.”

Holloway said that he asked city attorney Robert Wilkinson about participating in the negotiations and was told it would be fine. Wilkinson said the deal was between Butler and the neighbors. The city, he said, just brought the two sides together.

Holloway received no financial benefit from the deal, he said.

Wilkinson added: “I am unaware of anything that’s come before this board that the mayor has had any financial interest in, but if he does, I would advise him to recuse himself.”

In the end, Mike Illanne said the neighbors accepted an agreement with The Sands because of covenants in place that will restrict any changes that can be made through the PUD designation that the city has adopted.

Mayor strikes personal deal with boutique hotel developer

Holloway points out that he has no vote under the mayor-Board of Aldermen form of government, also known as a “weak mayor” government, unless he’s needed to break a tie. At meetings, he does report to the board and advises members on city operations.

Even if he did have a vote, Holloway said, he doesn’t recall any business coming before the board that involved developer Joe Cloyd.

Cloyd has developed multiple properties in downtown Ocean Springs, most notably boutique hotels. He is a partner in The Roost at Martin and Porter avenues and The Hemingway on Washington Avenue. He also developed the Springs Hotel, which recently opened on Washington Avenue.

In addition, Cloyd worked on an application that netted the city $2 million in BP oil spill funding to relocate its public works building. Holloway is hoping the Pine Street property can be developed as recreational space, while private property that adjoins it on Government Street might become a hotel and conference center.

“We’re a tourist town,” Holloway said. “That’s our main industry, tax generator. I think we need a hotel/conference center combination.”

Neighbors are strongly opposed to development of the private property because of toxic chemicals that linger underground from an optical manufacturing operation that closed more than 20 years ago.

The application that Cloyd worked on also included an early, broad description of urban renewal. The application mentions a redevelopment authority that would offer incentives to developers or landowners to redevelop “blighted” property.

An urban renewal plan the city later proposed, which targeted some Black-owned properties downtown as “blighted” and suggested they be redeveloped, proved unpopular with residents and was scrapped.

Holloway said that Cloyd did not charge the city to write up the application for a Gulf Coast Restoration Fund grant. Cloyd declined to comment on his businesses or his relationship with Holloway.

Land records show that one of Cloyd’s companies bought the home where Holloway and his siblings were raised, which sits beside The Roost properties on Porter. Holloway was living in the house before it sold. On the same day the deed was signed in May 2023, another Cloyd company is shown acquiring a house on Ward Avenue. Holloway moved into the Ward Avenue home.

Holloway said the cost of monthly rent, which he did not want to disclose, is market rate.

“I needed a place to live, so I’m renting a house from Joe,” Holloway said. “But I don’t get the issue there.”

Ocean Springs tourism creates low-paying jobs

Some residents see Holloway’s focus on development as the issue, especially in the tourism arena as the city continues to rack up accolades on top location lists compiled by the likes of “Southern Living” and, more recently, “U.S. News & World Report.”

Downtown Ocean Springs is defined by its oak-draped main street, Washington Avenue, and the historic homes that populate the downtown area. “Quaint” and “charming” are words most often used to describe the setting. But longtime residents are afraid that charm will evaporate.

“I grew up in town and I don’t want it turned into a mini-Bourbon Street, which is has been,” said resident Karen Stennis, who lives near the beach in the same house where she grew up. Stennis ran unsuccessfully against incumbent Rickey Authement for the Board of Aldermen in 2021.

Stennis and many others say bars have overtaken Government Street downtown, where live music keeps many in the neighborhood awake at night.

Stennis has joined a group, SaveOS.org, that is looking for candidates to challenge Holloway and incumbent aldermen in 2025. Holloway said he does plan to run again because he wants to see through projects the city has started.

“Our mayor and aldermen are not responding to the people, and we are convinced Ocean Springs residents deserve better representation,” a statement on the group’s website says.

The nonprofit has posted information on conflicts of interest, the voting records of aldermen and proposed city projects. The website also links to public records.

Holloway sees the group as a vocal minority. He said residents often stop him so they can let him know they appreciate his leadership.

“We are heavily reliant on sales tax to run this city,” he said. “We can do one of two things: We can create projects that are going to raise the sales tax, or we can raise property taxes. That’s not something we want to do.

“The city’s just a big business and I like the business part of the city. I like seeing how we can grow the city, how we can take care of these expenses.”

Some residents who live a stone’s throw from Government Street bars say they’re OK with the traffic and music.

“Growth is inevitable,” said James “Butch” Waddell, who returned home and retired in a house downtown after running a business for years in Key West. “It’s how you do it. There’s a group that wants it to be like it was when we were kids.” He said that he enjoys all the activity and the atmosphere.

Lori Carter, a SaveOS.org member kept awake nights by the music from Government Street bars, spent 20 years in economic development in Louisiana. She thinks the city is headed in the wrong direction with its focus on tourism.

“Tourism is just tourism,” she said. “It’s visitors, people who do not have a stake in your community. The jobs are not high-paying.

“ . . . If we have this established beast of tourism and bars, it’s easier than doing the hard work to go find a technology office or something that is sustainable economic development.”