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VOL. 123 | NO. 189 | Friday, September 26, 2008

Mall Purchase Idea Spurs Further Debate

By Bill Dries

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PUNTED: City Chief Administrative Officer Keith McGee found City Council members to be a tough sell this week as he outlined a proposal to buy Hickory Ridge Mall and turn it into a local government complex. The council delayed the vote for two weeks. -- PHOTO BY BILL DRIES

It would be called the Southeast Satellite Multiplex. The new name is not as snappy as Hickory Ridge Mall, but it does fit the government facility the Herenton administration proposes to retrofit into the mall severely damaged by a tornado in February.

Memphis City Council members weren’t so sure this week. They delayed for two weeks any decision on the $1.2 million purchase.

The mall already was in decline by the time the tornado arrived. That’s when Carlyle Development Group of New York, the mall’s owner, started talking about selling it.

The city, which had been planning to buy a three-story office park complex off Lamar Avenue near Democrat Road for $7.2 million, was listening.

Savings, not cost?

The funding for a move of the Memphis Police and Memphis Fire Department dispatch centers under one roof with more space already was in the city’s capital improvements plan (CIP) budget for this fiscal year.

The plan was to move into what is now the Lamar Commerce Center, a sprawling 34-acre office campus at 3760-3796 Lamar. Longtime Memphians remember the center as the old Holiday City complex built by Memphis-based Holiday Inns in 1966. Holiday Inn moved out in the 1990s and another big Memphis corporate name, FedEx, moved in and stayed until 2005.

City Chief Administrative Officer Keith McGee told council members the mall is a better deal, with more square footage than the Lamar center, a lower sales price and a lower estimated cost for seismic renovations.

“We believe that we could take that space and utilize it in a way that city municipal services could be provided. Fire and police dispatch would have a facility built that we think is appropriate,” he told the council. “It’s a multimillion-dollar savings for the acreage and the square footage for the city and the citizens of Memphis.”

The $1.2 million price quoted by McGee is for the mall concourse, parking lots and an Applebee’s restaurant outparcel. It doesn’t include the three anchor store sites.

The Macy’s and Dillard’s stores have closed and the Sears has reopened. McGee said the city’s preference is for the Sears to remain.

The new plan is to spend $6.2 million overall for building acquisition this fiscal year.

‘Unbelievable’

With council approval, the city has longer-term plans for the mall, including relocating the city claims office, the city tax office, and a Memphis Light, Gas and Water division customer center. The Applebee’s could become the city employee pharmacy, McGee said.

Council member Reid Hedgepeth estimated the city had been getting about $300,000 a year in taxes from the mall before the tornado, with another $400,000 in county tax revenue.

“I’m trying to figure why we are taking these things off the tax base,” he told McGee. “We’ve got an unbelievable amount of space that we’re buying and an unbelievable amount of money we’re going to spend renovating the space.”

The CIP budget is a 10-year plan for construction projects funded by bonds. Costs of projects are spread out over several years and the projects are finished in phases.

Outfitting the fire and police dispatch center at the Lamar Commerce Center was budgeted to cost $14.8 million in fiscal year 2010. The next fiscal year, it was budgeted for $32.6 million to outfit the center with office equipment and information technology. Over four fiscal years, starting this year, the project has a budget of $61.2 million.

McGee said the CIP figures are unique to the Lamar site and the city will review them in later fiscal years if the mall becomes the new dispatch center.

It is the spending in future years that gave several council members pause this week.

“We don’t know how much this project is going to cost,” Hedgepeth said. “You don’t know what construction is going to cost to renovate this. Once we buy it and spend $8 million, we’ve got $750,000 off the tax books and we have no idea what it’s going to cost just to renovate it.”

But McGee said the city could save money it now spends on leasing office space for some city departments and agencies by using the mall.

‘Grandiose things’

Council member Barbara Swearengen Ware said that was the city’s idea in buying the old supermarket at Austin Peay Highway and Yale Road in Raleigh. The city data center it was to house is now in the long-term plans for moving to the mall, if the council approves the purchase.

“We have property in Raleigh that was purchased some years ago that’s still sitting there with a fence around it,” Ware said. “We have Raleigh Springs Mall that has not died, but it’s in the emergency room, with a lot of space there. I’m trying to understand where we’re trying to go with this and I’m hearing all of these grandiose things.”

McGee said the old supermarket is now being looked at as the site for the police traffic division.

Council member Jack Sammons said the mall purchase is “probably a bad idea.”

“By the voice of the community, we hear that we’re not executing the concepts that we come forward with,” Sammons said. “The real problem in government is ‘build it and they will come.’”

Sammons said he feared if city government bought the vacant Sears Crosstown building in Midtown it could probably find and create enough government functions to eventually fill the cavernous building to capacity.

The Hickory Ridge Mall is in the district of council member Harold Collins, who said he was initially skeptical.

“We need to look at where the base of our people are,” he told fellow council members. “I appreciate the debate. I can tell you, for me, its personal because I represent the area. … Our city is roughly 600,000 and 20 percent of the people live in that area.”

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RECORD TOTALS DAY WEEK YEAR
PROPERTY SALES 86 182 13,079
MORTGAGES 135 267 17,025
FORECLOSURE NOTICES 15 36 3,336
BUILDING PERMITS 366 366 30,930
BANKRUPTCIES 69 135 12,478
BUSINESS LICENSES 23 43 4,532
UTILITY CONNECTIONS 182 328 19,221
MARRIAGE LICENSES 32 67 3,976

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