As 2012 comes to an end, the most ambitious plan from City Hall for the revitalization of an inner-city area in 15 years of such projects has hit a critical stage.
The idea of a tax increment financing zone for a large swath of the area south of FedExForum as well as the Downtown area itself into South Memphis is being examined closely by Shelby County Commissioners before they commit county property tax revenues with the “Heritage Trail” zone.
The zone to recapture the city and county property tax revenue is centered on the redevelopment of the Cleaborn Homes and Foote Homes public housing developments. Demolition is already well under way on Cleaborn Homes. The city has not put forward a specific plan and application for federal funding for the demolition of Foote Homes, which is the last remaining large public housing project in the city.
But City Housing and Community Development Director Robert Lipscomb has said through the tenures of former Mayor Willie Herenton and now Mayor A C Wharton Jr. that his goal is to end public housing on that scale.
County leaders aren’t nearly as concerned about the demolition of Foote Homes as they are about the much larger area away from both housing projects in the TIF zone that includes areas now covered by tax freezes administered in smaller zones as payments-in-lieu-of-taxes.
“Theoretically, the concept of a TIF has some merit,” said Shelby County Finance Director Mike Swift. “But not like this.”
Downtown Memphis Commission president Paul Morris has been talking with the Wharton administration about the impact of Heritage Trail on PILOTs his agency and others have been using to freeze taxes for development projects. His conversations are important because City Hall has made few specific comments about the project since the criticism and concerns have become more vocal.
Morris said the original Heritage Trail plan, when it was called Triangle Noir, was to spend $25 million from the tax increment financing zone on Cleaborn’s revitalization as a mixed-use, mixed-income development and a bit more on Foote.
That has changed to $11 million for each of the two housing project sites, according to what Morris has heard.
But the TIF zone would still generate $100 million in property tax revenue – city and county – in the 20-year span of the Heritage Trail project with all or most of it spent in the first five years and even more of it spent away from the two housing project sites than originally envisioned.
Aside from the mechanics of where the money goes and how it impacts other revenue flows to other projects, there is the complexity of the deal that is causing hesitation.
Memphis City Council members got into the broader topic just before the Christmas holiday as they reviewed the $12 million administration plan to make Liberty Bowl Memorial Stadium compliant with the Americans with Disabilities Act in a year’s time.
The Wharton administration would front the money to put the repairs on a fast track required in the agreement with the U.S. Justice Department. The money would be paid back with sales tax revenues generated within a tourism development zone still to be approved by the state.
The zone to be proposed would include Overton Square as well as the Mid-South Fairgrounds where the Liberty Bowl is located.
But the plan takes in more than just an upgrade to the Liberty Bowl. The sales tax revenue from the area would go toward transforming all of the Fairgrounds acreage into a public recreational area.
“We’re trying to solve multiple issues with a project,” Lipscomb told the council.
“Do we have a choice to do nothing?” asked council member Jim Strickland. “What would be the worst-case scenario if we did nothing?”
Lipscomb said the Justice Department could shut down the stadium and require that the whole Fairgrounds area become ADA compliant.
“We could be sued and the whole project could be held hostage,” Lipscomb said.
When the council votes on the Liberty Bowl upgrade in January, Strickland emphasized that his vote for that is not a vote for the larger Fairgrounds plan.
Council member Kemp Conrad also expressed concerns.
“I kind of feel like you are coming to the bank for the loan without the business plan,” he told Lipscomb. “It’s a lot of money to be spent with big plans without a lot of time for us to be thoughtful about it.”
Lipscomb said doing nothing “is not an option.”
“I think in Memphis we want to do nothing too often,” he added. “We’re taking a risk but I think it is a calculated risk.”
“We’ve got a lot of projects,” Conrad countered. “But is that really moving the city forward?”