VOL. 123 | NO. 25 | Wednesday, February 6, 2008
Sands Shift in Pyramid Saga
By Bill Dries
At least one Memphis City Council member expects changes to the tentative terms of a development agreement between local government and Bass Pro Shops for use of The Pyramid. Meanwhile, the developer of the rival Pyramid Harbor project has made some changes to his plans already.
Robert Lipscomb, the city’s project director, who negotiated the terms with executives of the hunting and fishing gear retail chain, is scheduled to present the lease deal terms formally Feb. 19 to the City Council. He’s declined comment on the terms until then. Lipscomb repeatedly said no comment Tuesday as he walked to an elevator in City Hall when a reporter approached.
But a widely circulated copy of the terms shows Bass Pro would have a maximum of another 18 months to come up with design plans and a feasibility study that would bind it to such a project. During that time, Bass Pro would pay the city up to $35,500 a month and have exclusive rights to any plans for using The Pyramid. The rental payment is a concession to an increase in Bass Pro’s original cost estimate of $75 million three years ago. The revised cost of the project would be determined during the development period. The city and county would put up $30 million in federal funding.
“I wouldn’t be shocked if those terms didn’t look the same when we got our briefing,” said City Council member Shea Flinn. “I’m not confirming or denying my proclivity to gamble. But I wouldn’t bet on it.”
Rolling the dice
Flinn and other council members got a letter Monday from Pyramid Harbor developer Greg Ericson in which Ericson said he’ll follow up next week with a proposed contract between his group and the city and county.
The letter changes some details of the project in which Ericson’s company would buy The Pyramid as well as Mud Island park from the city and county and develop 90 acres, including both as well as other riverfront property.
“We’ll agree to expand the size of the hotel to be at least 1,000 rooms as long as the Convention Center expands in its current location,” he said. “We’ll have local minority ownership.
“If the city would like, we would do this in two phases, where we would complete the Pyramid theme park, shopping plaza and hotel prior to starting construction on our Harbor Island project.”
The change in the Pyramid Harbor timeline comes after several City Council members told Ericson and Michael F. Burgess, his key financial backer, last month that their priority is a use for The Pyramid not necessarily selling off the park.
Council member Bill Boyd said Tuesday Bass Pro comes with a financial stability he hasn’t seen proof of yet from Ericson’s group.
“I think we all know that the Bass Pro people have the bucks and wherewithal to back up whatever they say and whatever they would like to do. Of course, they apparently haven’t come to that decision yet. I like the idea that they are going to pay rent. The other group, I haven’t seen the money or the ability to finance this,” he said before adding he doesn’t have a preference yet. “We just don’t have enough information to lean one way or the other right now.”
Council member Jim Strickland was in about the same position.
“It’s a letter of intent with a little bit more commitment. They’re paying rent,” he said of Bass Pro.
“I want to see the financial details. So until I can see the fine print, I don’t really have any opinion. I’m going to look at both projects skeptically but fairly.”
City Council member Wanda Halbert is getting used to how the retail giant operates and who its customers are.
“I’ve never been to a Bass Pro store or shop. I just want to see how does it benefit the entire city of Memphis? I’m not sure that I know what that is. I will be listening with real big ears,” she said.
Development Period Terms
- The development period, the time in which Bass Pro would design and determine the scope of its project, runs from now to the end of 2009. It can be extended no more than six months. Bass Pro can walk away at any time.
- During the development period, Bass Pro will pay the city and county up to $35,500 a month, reflecting the expense of operating The Pyramid. The city will verify the operating expenses.
- The construction period is another two years, during which Bass Pro would not pay any rent.
- Once the conversion is finished, Bass Pro has a 20-year lease on The Pyramid. There would be seven renewal options of five years each. Bass Pro cannot build any competing store within a 100-mile radius of The Pyramid.
- Rent during the lease:
- 1% of gross sales of boats, ATVs and RVs with a cap of $250 per sale
- 2% of all other gross sales of merchandise and restaurant sales
- The total from both percentage deals guaranteed for a total minimum of $1 million a year after the first year of the lease.
- First year rent $880,000. If the development period is extended, $820,000 a year.
- Starting with the development period, Bass Pro has exclusive rights to the development and use of The Pyramid.
- The city and county would contribute $30 million, probably in federal funding, to the project.