The debate over which development projects should be public or public-private efforts could intensify in the coming months as the city of Memphis explores multiple redevelopment plans.
Memphis Mayor A C Wharton Jr. said if the city, which is facing strong financial headwinds, hopes to attract investment, it must sometimes help jump-start developments in areas that the private sector may otherwise be hesitant to enter.
Surveyors Mike Waren and Tommy Archer, left, in Washington Bottoms. The city could get involved in efforts to revive the dormant project. The current owner, TN Poplar Avenue LLC, which is affiliated with Lehman Brothers, in September won approval from the Land Use Control Board to extend the planned development zoning on the site for an additional five years.
(Memphis News/Andrew J. Breig)
“Certain areas of our city have fallen into such disrepair, they’re not attractive to private developers unless we put some skin in the game,” Wharton said. “That controversy is as old as the public-private partnership itself. But look at our history, anything we want to accomplish as a nation we partner with the private sector.”
Pursuing the idea that government functions or amenities can help spur private investment, the Wharton administration is now considering moving some government operations into two shopping malls – Raleigh Springs Mall and Southbrook Mall – and the Soulsville Town Center.
So far, the Southbrook Mall proposal has been the most controversial. The city had considered investing $1.5 million to fund roof and heating and air conditioning repairs before determining doing so would violate the prohibition against using public funds for “private use.” The property’s owners do not have a background in retail and the city now estimates it would cost $7.6 million to renovate the property and $13.7 million to demolish and rebuild it.
“It’s embarrassing,” said councilman Kemp Conrad. “We’re trying to be all things to all people and instead of spreading our resources everywhere we need to refocus on our strategic priorities and implement a more business-like process for how we plan and allocate our scarce resources.”
At the Raleigh Springs Mall, the city hopes public functions – such as a branch library, police station and traffic division, walking trails, skateboard park and other improvements – could attract private dollars that would help ignite a revival of the broader Raleigh area.
The city could also become involved in plans to revive the long-dormant Washington Bottoms project near Poplar Avenue and Cleveland Street in Midtown, including a fire station or a storm water detention facility.
The city is still mulling the creation of a Tourism Development Zone to capture increased state sales tax growth to fund improvements at the Mid-South Fairgrounds.
The city has already invested in several major projects, including the conversion of The Pyramid into a Bass Pro Shops destination center and the construction of a parking garage and storm water detention basin at Overton Square.
The city and Loeb Properties joined forces to bring a parking garage to Overton Square.
(Memphis News/Andrew J. Breig)
“If you look at where we’re doing the public-private partnerships, it’s to revive and sustain those things that are economic engines,” Wharton said.
Bob Loeb, whose Loeb Properties has poured millions into the redevelopment of Overton Square, said the city simply can’t invest in every project that comes its way and must focus on the ones that will produce the best returns.
“The litmus test is what is the private sector investing and what is the public return on the public investment?” Loeb said. “What are we going to get that we otherwise would not get?”
The city’s investment in a parking garage at Overton Square, which Loeb will assume any operating losses for, allows for enough parking for new and exiting businesses to thrive and the detention basin that helped save homes from flooding.
“At Overton Square, the return on investment is increased sales taxes, increased ad valorem taxes and increased employment,” Loeb said. “We had decided to do Overton Square whether the city invested or not but it wouldn’t have been as good of a project because it wouldn’t have had the density that it does now.”
Councilman Jim Strickland said only projects with a sound plan that produce significant results for taxpayers are worthy of city involvement.
“Before I invest any city dollars I need to see what the return on investment is,” Strickland said. “I don’t want to spend any city money until every road that needs to be paved is paved, every pothole that needs to be fixed is repaired and we can pay for the basic services of city government.”
Conrad said the city must establish a better process for evaluating which projects deserve city investment – those that further strategic goals and leverage the city’s strengths, instead of a political free-for-all where politicians cherry-pick projects.
“I think this project-envy really symbolizes where we are right now,” Conrad said. “I liken Memphis to a big, beautiful house with a ton of potential but there’s been a lot of neglect and instead of going in and doing the hard work and strengthening the foundation, we just slap another coat of shellac on a house that is rotten to the core.”