The city of Memphis has a tentative lease of Handy Park with a group that includes some current tenants of the Beale Street entertainment district.
And the pending agreement would resolve one of the final issues in the city’s relationship with John Elkington, the developer of the district and founder of Performa Entertainment.
A proposed lease agreement for Handy Park helps the city of Memphis tie up loose ends as it moves toward day-to-day control of the Beale Street entertainment district.
(Daily News File/Lance Murphey)
“If that agreement is consummated, it will resolve the one lingering piece of litigation, which is who controls Handy Park,” said Memphis Mayor A C Wharton Jr. “To answer that, we had to find out who was going to pay off roughly $500,000 to $600,000 that Performa had borrowed to make some improvements on it.”
That would be the new group Handy Park LLC, led by Bud Chittom, partner in Blues City Café and Club 152. The group includes attorney Ted Hansom.
Handy Park LLC would pay the $600,000 Elkington is owed for improvements to the park with an outdoor amphitheater that he financed personally.
The payments to Wells Fargo Bank NA would release the city and Elkington from their obligation. Wells Fargo is the successor by merger to Wachovia Bank NA, which held the loan.
“The whole idea of that proposed agreement is that whoever takes that over will pay off that and there will be no more litigation,” Wharton said. “That will settle everything completely. The city of Memphis will be in complete control of Beale Street.”
The lease is for a five-year term with renewal options for three more terms of five years each.
Under the terms of the new contract, Handy Park LLC would pay the city a monthly base rent of 1.5 percent of quarterly gross revenues of up to $1 million and 2 percent on gross revenues over $1 million for the park.
Handy Park LLC gets a $10,000 monthly credit for legal fees deducted from the base rent.
Any additions or improvements the LLC makes to the park exceeding $15,000 must be approved by the city.
Performa has remained in day-to-day control of the district since June 2010 when Wharton called a City Hall news conference to announce the city and Elkington had reached an agreement on an end to Performa’s tenure as developer, which goes back to the renovation of the district in the late-1970s and its 1983 reopening.
Performa filed for bankruptcy as part of the endgame worked out between the city and Performa. It began with the settlement between those two players in a three-sided Shelby County Chancery Court suit. The Chancery Court suit is still pending with the nonprofit Beale Street Development Corp. still pursuing claims against the two others.
The endgame of city control and Performa’s exit has taken much longer than either of them expected.
“It was not difficult at all,” city attorney Herman Morris said of the park lease. “But if you look at the time that has passed between the court’s order and this day, it was obviously time-consuming, though not difficult.”
It was in January that the federal bankruptcy court case for control of the Beale Street entertainment district reached a key juncture.
U.S. Bankruptcy Court Judge Jennie Latta adopted a settlement in the bankruptcy case of Performa Entertainment. It settled the long-standing claim by Beale Street Development Corp. that Performa owed it $6 million. Latta ruled Performa owes the nonprofit nothing.
Wharton talked cautiously then of seeing some light at the end of the tunnel. And by March, he released a city task force report on next steps the city should take post-Performa that city attorney Herman Morris had ordered sealed in 2010.
Morris remained cautious this week as he outlined the tentative park agreement the Memphis City Council is scheduled to vote on next month.
“We’ll be a step closer to wrapping all of those things up and we will have the compass set without creating any other waves or ripples,” he said. “I’m optimistic and hopeful that we’ll take this major step forward in beginning the process of bringing that phase of Handy Park and Beale Street to a close.”
With that, Wharton wants to pursue an expansion of the district, which now takes in three blocks from Fourth Street to Second Street.
“I would say our manifest destiny is to go east of Fourth Street and west of Second Street,” Wharton said. “The real Beale.”