Three organizations crucial to the redevelopment of the Chisca Hotel will vote next week on blight remediation and development incentives for the historic Downtown property that has been in dilapidated condition for the more than 20 years.
The 99-year-old, eight-story hotel at 272 S. Main St. is owned by the Church of God In Christ but is under contract with local partnership group Main Street Apartment Partners LLC, made up of chief manager Gary Prosterman and members Terry Lynch, Gail Schledwitz and J.W. Gibson.
The group plans to invest about $17 million in private funds to pay for the acquisition and development of the Chisca into a mixed-use facility including multifamily housing, retail and parking – a project that totals $19.6 million.
The economic development, tourism and technology committee of Memphis City Council will meet Tuesday, July 17, to amend the Fiscal Year 2013 Capital Improvement Project budget by appropriating $2 million to the Center City Development Corp. for funding blight remediation work at the Chisca.
The $2 million that the city council is voting to appropriate is the same $2 million that the city council voted at budget time to put in the budget. This Tuesday vote is appropriating the $2 million to the CCDC under an array of conditions and approvals.
The CCDC will then meet Wednesday, July 18, to vote to accept the $2 million and set forth the parameters under which that $2 million would be spent. Those parameters are that the money would go directly to contractors who would have completed blight remediation work on the Chisca such as asbestos abatement, lead paint abatement and foundation/structural integrity issues to get the project to a point that makes it possible for private development.
“That money will just be held basically by the CCDC until or unless the project team puts together the complete project financing for the complete redevelopment of the Chisca,” said Paul Morris, president of the Downtown Memphis Commission, the umbrella organization that includes CCDC. “Because what the city council did not want, and what we don’t want, is to spend a dollar there and then just see the project not mature and just never happen.”
On top of that, the CCDC won’t spend any of the city’s money until the developers sign a reimbursement agreement. That surplus return states if the project is successful and makes a profit above what’s required to attract private development, the city will get half of that excess return to pay back the $2 million.
Also at stake in the Chisca revitalization is Main Street Apartment Partner’s $700,000 contract to purchase the hotel from COGIC expires in mid-August.
“The city appropriating this money to CCDC kind of puts in escrow and says, ‘hey, we’re behind it as a city and if you can get the deal done and if you can satisfy all of these conditions, we’ll pay for the blight remediation part (up to $2 million),’” Morris said, noting the developer will pick up the remainder of the blight remediation work as well as the rest of the development to put the whole deal together.
The city council committee will also vote Tuesday to authorize the Center City Revenue Finance Corp. to use $1 million from its payment-in-lieu-of-taxes (PILOT) Extension Fund as a loan to Downtown Parking Authority to be used to acquire and undertake improvements to the Chisca Garage.
It will be a garage owned by the DPA, in the form of a loan from the CCRFC to the DPA. The money for the loan will come from the capital funds of the CCRFC, which are derived from Downtown properties and legally can only be used for Downtown garages or other public infrastructure in Downtown.
The DPA meets Wednesday afternoon to discuss Chisca garage acquisition, lease and improvements.