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VOL. 123 | NO. 168 | Wednesday, August 27, 2008

Bass Pro Project Picture Becomes Clearer

By Bill Dries

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READY TO PROCEED: Bass Pro Shops CEO Jim Hagale told members of the City Council and Shelby County Board of Commissioners this week that he’s ready to move ahead with a development agreement for The Pyramid. -- PHOTO BY BILL DRIES

For six hours Monday, the political and legal forces backing a Bass Pro Shops development of The Pyramid made their case to Memphis City Council members and the Shelby County Board of Commissioners.

They began that morning at City Hall and ended that afternoon at the County Building as Bass Pro CEO Jim Hagale ran to catch a 3 p.m. flight out of Memphis.

After it was done, the effort had made some progress with the skeptical local elected officials who are most concerned with the financial assumptions behind the project. And critics on both bodies succeeded in stripping away a bit of the gift wrapping on the package.

Part of the sales pitch included how rent from Bass Pro would help pay the remaining city and county government debt on The Pyramid. The combined debt comes to about $10 million with county government owing just more than $5 million of that.

Commissioner Mike Ritz calculated that all but about a million of the county’s debt would be paid by the time a Bass Pro Shop opens.

Memphis Regional Chamber President and CEO John Moore came with a printed handout after the meeting to refute the point. Ritz had his own and neither made much progress in convincing the other. But Ritz is the one with a vote on the future of the project.

“Some of them are drinking the Kool-Aid,” Ritz said after a couple of rounds with Moore on the point. A lobbying session between Ritz and former County Commission member Charles Perkins, hired by the city of Memphis, appeared more amicable.

Pursuing finality

Incoming commission chairwoman Deidre Malone said the four-member city-county Pyramid Reuse Committee of which she’s a member will be the next to take up the proposal and make a recommendation to the full council and commission.

A commission vote could come by the end of September, she estimated.

Council member Jim Strickland chaired the council’s session but said no vote had been scheduled by the full council.

Negotiators for the city, who have taken the lead in the talks at the agreement of both mayors, had set a Sept. 15 deadline to have approval by both bodies.

But Hagale didn’t seem to be worried about trying to enforce an exact date.

“All these deadlines are floating around. I’m not sure what they are,” he told The Daily News. “I’m going to be honest. I’ve signed three agreements here. The ball is in the city and county’s court. Hopefully, they’ve had enough time to vet all of the other options and they’ll come to a conclusion. This process, I think, for everybody’s benefit needs to be finalized.”

As Commissioner Steve Mulroy questioned Hagale about Bass Pro’s Memphis business plan, Hagale put a finer point on the efforts from his end of the negotiations that began three years ago this week.

“I’ve signed three agreements since this all started that have not been counter-signed,” he said. “Frankly, I think Bass Pro has been given credit for delays in this project that are not rightfully ours.”

The central question for commissioners and council members is $30 million in state and federal government funding to build a parking garage and take on infrastructure projects around The Pyramid.

Funding sources

City Housing & Community Development Director Robert Lipscomb was adamant that no city or county general fund revenue would be used in the project. He and the city negotiating team said $87 million in potential funding through the use of tax incentives and other financing instruments has been identified to draw the $30 million from. That includes drawing from excess tax revenue returned to projects already in zones identified as a tourism development zone (TDZ) and a tax increment financing (TIF) area.

Strickland questioned attorney Charles Carpenter, part of Lipscomb's team, closely on whether the city and county governments would be on the hook if there aren’t excess revenues.

“That’s never been anticipated,” Carpenter replied.

“There’s no way possible?” Strickland asked.

“I’m not that omnipotent,” Carpenter responded.

Strickland was uncertain at the end of the session.

“I still am not crystal clear in my mind that general fund tax dollars will not be used for the project. It was said that they are not intended to be used,” he said. “I don’t know the answer to that.”

Attorney Hunter Humphreys said Bass Pro’s $1-million-a-month rental fee to local government starting in the second year of a 20-year contract once the new attraction is open could be offset with ad valorem tax revenue or payment-in-lieu-of-taxes agreements. But Humphreys said that wouldn’t include an offset for sales tax revenue.

Ritz, who had feared tax offsets would mean Bass Pro wouldn’t pay any rent, argued the language on that point could be more specific in the agreement.

Humphreys said a lease agreement to come after the development agreement would have more detail.

“I think it’s clear on this issue. … I’d love to argue it if it were ever disputed on this issue,” he told Ritz.

The 20-year contract would follow a two-year construction period that would in turn follow the one-year period covered by the development agreement unveiled this week.

The commission and council would have to approve those agreements as well.

Meanwhile, Hagale said structural issues that had been a concern of Bass Pro this summer have been resolved.

“I don’t think that at this point, we have any concerns about the structural feasibility of that building,” he said.

Concerns about new seismic standards in place since The Pyramid was opened in 1991 and how to build a seven-story hotel inside the structure were a major issue earlier this year as project negotiations reached a decisive point. Hagale told The Daily News on Monday that he was unaware of the end of July deadline at the time.

He also addressed doubts about his commitment to the project.

“Early on we said that we wanted this to be really evaluated on the merits, and not become a part of the theatrics,” Hagale said at the first session of the day.

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RECORD TOTALS DAY WEEK YEAR
PROPERTY SALES 209 209 16,401
MORTGAGES 252 252 18,937
FORECLOSURE NOTICES 0 0 0
BUILDING PERMITS 393 393 33,519
BANKRUPTCIES 124 124 10,861
BUSINESS LICENSES 57 57 5,255
UTILITY CONNECTIONS 102 102 11,446
MARRIAGE LICENSES 70 70 3,937

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