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VOL. 122 | NO. 244 | Monday, December 24, 2007

History Lesson Serves As Cautionary Tale For The Pyramid

By Bill Dries

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When Brad Fain of Prosperity International looked at the Memphis riverfront around The Pyramid recently, he saw something that wasn't there. But he also missed a key part of the mental landscape.

Fain's Orlando investment company is one of the two out-of-town financial partners in the Ericson Group's $250 million plan to turn The Pyramid into Pyramid Adventure theme park and develop Mud Island park as well as other parts of the riverfront. The other is Essex Investment Partners of New York.

"Quite honestly, it's pretty beat up," Fain said of the northern riverfront. "It looks like nothing's been done for the last 25 years. To be part of that revitalization is very exciting to us."

Take note

Fain's estimate is off by about eight years.

It was in the late 1980s that another visionary saw much the same present and a glittering potential future. His name was Sidney Shlenker and he came to Memphis after local leaders already had made the general decision to build The Pyramid. Before his time in Memphis ended, he had gone from visionary to pariah.

The story's arc has become a cautionary fable that has informed every significant civic endeavor since then that proposes to make Memphis a "world-class city" with a new skyline-changing structure that comes with a price tag in the eight- or nine-figure range.

The first question from Shelby County Board of Commissioners member James Harvey to Greg Ericson, the president and CEO of the Ericson Group, was, "Do you currently have that funding in place?"

Ericson replied, "We have the funding secured."

In the 1990s, Ericson had a seat with a good, if frustrating, view of the Shlenker saga.

"I've been living in Memphis for 17 years now and I've seen Mud Island decline over the years," Ericson said. "It was built 25 years ago and virtually nothing has been done to it since then. The Pyramid has been sitting empty for three-and-a-half to four years. All we're asking is that we get a fair shake."

Shlenker's plans for a Pyramid that was not only an arena but a structure filled with other attractions sounded wonderful to civic leaders until repeated deadlines to name investors and committed financial backers came and went. Grand announcements of attractions for The Pyramid, and later Mud Island, depended on other attractions coming - and ultimately the financing that Shlenker never secured.

Shlenker left Memphis after a personal and business split with his financial partner, the late John Tigrett, who brought Shlenker to Memphis. Shlenker's Pyramid Cos. filed for bankruptcy protection in July 1991. A court order barred him from entering the building.

Been there before

Ericson was half of the partnership that surfaced in 1993 with an alternative to the failed Shlenker plan. It was called Island Earth, a theme park of sorts with interactive and cutting-edge technological attractions that included rides. The attractions also would have focused on ecology.

Ericson was senior vice president of marketing for EnGenius Entertainment then. EnGenius teamed with Penczner Productions, a video production and media company headed by Marius Penczner that was the technological side of the plan.

In the wake of Shlenker's fall from grace and credibility, Island Earth's plan became the most talked about alternative in a competition by the Public Building Authority to come up with a new plan for The Pyramid.

A December 1995 press conference was even scheduled by Memphis Mayor Willie Herenton and then-Shelby County Mayor Jim Rout at which they were set to announce that Island Earth was their choice. But it was cancelled that November when Herenton began having second thoughts and then nixed the Island Earth plan entirely.

EnGenius and Penczner sued both mayors in 1996 in Shelby County Chancery Court but never got anywhere. Penczner left Memphis for Nashville and became known for his firm's television ads and other media work for President Bill Clinton's re-election campaign in 1996.

Money sometimes talks

Ericson told county commissioners this month that the new Pyramid Adventure plan has 13 years of preparation behind it. It's a different plan than the Island Earth concept. Ericson also said no local tax dollars would be used for Pyramid Adventure, although part of the financing would rely on tax credits and similar incentives. At one point, Island Earth would have depended on up to $20 million in taxpayer-backed financing.

After talking this month with Robert Lipscomb, the city's point man in the negotiations with Bass Pro Shops for its plan to develop The Pyramid, Ericson sounded willing to see what will happen. There was no mention of the 1996 lawsuit.

Ericson assured the commission he could deliver proof of financing for Pyramid Adventure in a month and begin construction in six months. That's the point at which county attorney Brian Kuhn invoked Shlenker's name.

"I lived through the Shlenker era. I was the county attorney then," Kuhn said as he cautioned commissioners about rapid timelines.

The Pyramid Adventure plan would involve selling The Pyramid and other surrounding property to the Ericson Group or whatever entity is formed to own and operate the attractions. Kuhn estimated 80 percent of the property now included is owned by the city of Memphis.

"There's due diligence - Dunn & Bradstreet, investors, things like that you really need to get into before you approve this contract," Kuhn said. "You've got to undo what's been done. Right now we lease this property from the Public Building Authority. ... That takes a long period."

County Mayor A C Wharton Jr., who is also an attorney, sounded similar cautions about making any plan seem easy and quick. Wharton said his administration will review the financial information the Ericson Group presents for Pyramid Adventure.

"We have what is basically a term sheet and certainly we can't make any judgment on the basis of a term sheet," he said. "We'll have to go behind it at the time it's presented to us. I don't have it yet. They are supposed to get it to us. And we'll make a call."

Fain said the call should be a simple one.

"If we felt it was a risk, we wouldn't come in as an equity partner. We believe in it that much," he said. "At the end of the day, isn't there a governmental responsibility for the people to see everything that's on the table? That's the way it's supposed to work. Right? I don't know. I think I remember that from political science 101."

PROPERTY SALES 207 263 9,865
MORTGAGES 197 246 10,862
BUILDING PERMITS 138 686 21,643
BANKRUPTCIES 0 256 6,219