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VOL. 123 | NO. 227 | Wednesday, November 19, 2008

Bass Pro Deal Trundles On

By Bill Dries

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MAINTENANCE EFFORT: Memphis Housing & Community Development Director Robert Lipscomb said this week he will keep the city’s negotiating team in place as the Bass Pro Shops deal moves forward over the next year. -- PHOTO BY BILL DRIES

The same team that negotiated the development agreement with Bass Pro Shops will do the talking for city and county governments on a lease of The Pyramid to the fishing and hunting retailer.

Earlier this week, the Shelby County Board of Commissioners approved the yearlong development agreement on a 9-3 vote. It’s the same agreement approved in October by the Memphis City Council.

Both local governments own the 17-year-old structure, which opened in 1991 as an arena. By agreement of Memphis Mayor Willie Herenton and Shelby County Mayor A C Wharton Jr., the Herenton administration took the lead in the negotiations with Bass Pro Shops.

The city not only owns part of the structure, it is also the sole owner of the parking lot and surrounding property.

Memphis Housing and Community Development Director Robert Lipscomb has led the negotiating team, which includes bond counsel and contract attorneys.

The never-ending story

A task force studied the best use of The Pyramid after the 2004 opening of FedExForum and recommended pursuing Bass Pro as the tenant. Bass Pro Shops did not express an interest in a renovation of The Pyramid prior to the task force pitching the idea.

The development agreement spans a year and comes with quarterly milestones Bass Pro must meet. During the year, Bass Pro will pay the city and county $35,000 a month starting Dec. 1. The agreement does not bind Bass Pro to building and opening a retail store with other attractions in The Pyramid. It sets the stage for negotiations on the long-term lease that would include the estimated $150 million overhaul and reuse of the structure.

In the next year, Bass Pro will undertake feasibility studies and draw up design plans. The hunting and fishing retailer can walk away from the project during that year.

Officials on both sides of the vote cited national economic conditions as a reason to vote for and against the contract.

Lipscomb declined to speak for Bass Pro Shops executives other than to say he was still talking with them.

Red tape

Bass Pro CEO Jim Hagale indicated in August that he was ready to sign the development agreement. He also said he hoped the council and commission would make their decisions by mid-September. But he also indicated that was not a hard and fast deadline.

Two months later, Lipscomb said in his latest discussions with the company, “They were concerned given the capital markets – given how long this has taken.”

“We never could get to the next stage,” he told The Daily News. “And that’s what’s held the process up, I think – a lack of understanding of the development process. … It’s almost like buying a house. You make an offer on the house. Then you go through the process. You get a closing attorney. Then you get an inspector before you close.”

City and county government would come up with $30 million in funding for public improvements around The Pyramid. The plan is to come up with that money through sales tax revenue generated within a Tourism Development Zone that includes The Pyramid. If the sales tax revenue doesn’t meet projections, the TDZ fund has a surplus Lipscomb and others have said could take care of a shortfall.

It was a point commissioner Wyatt Bunker questioned Lipscomb closely on last week in committee and County Chief Administrative Officer Jim Huntzicker on this week before the full 13-member body. Who would be responsible for backing that amount of money if for some reason the TDZ sales tax revenue doesn’t meet projections?

Huntzicker, who is also the county’s finance and administration division director, said the Herenton administration had made an oral commitment earlier to be responsible for all of the amount. He said it was only an oral commitment by the city. And that commitment was based on county government selling off its share of The Pyramid, Liberty Bowl Memorial Stadium and the Mid-South Coliseum to the city for $5 million. The commission voted down the selloff earlier this month.

Seeing it through

Lipscomb clarified further Monday by saying, “If you want the city to put up all the money, then I think all the benefits should come to the city. And that includes the entire rent amount.”

Bunker was bothered enough by the “uncertainty” surrounding the backing of the $30 million pledge that he voted no.

Voting yes were Joyce Avery, George Flinn, Mike Carpenter, J.W. Gibson, Henri Brooks, James Harvey, Sidney Chism, Joe Ford and Chairwoman Deidre Malone.

Bunker, Mike Ritz and Steve Mulroy voted no.

Commissioner David Lillard recused himself because his law firm has represented Cummings Street Baptist Church, which made a proposal earlier this year to buy The Pyramid.

Ritz said the agreement has “multiple deficiencies.” He said the two local governments should have pressed to either give or sell The Pyramid to Bass Pro Shops. That would have put the publicly owned building on the property tax rolls. “We left a lot of money on the table,” he said.

Ritz has been critical of what he sees as a lack of commercial real estate experience among the government negotiating team.

Carpenter said the object of all of the negotiations is unusual.

“This is not your typical commercial real estate deal,” he said. “There aren’t folks standing in line to do this. … This is the best deal. Is it perfect? No.”

Flinn emphasized that more negotiations are to come.

“Since we’ve come this far, we ought to play this hand all the way through,” he said.

PROPERTY SALES 28 290 16,197
MORTGAGES 33 165 10,087
BUILDING PERMITS 184 608 38,544
BANKRUPTCIES 33 125 7,597