VOL. 123 | NO. 188 | Thursday, September 25, 2008
Lipscomb: Bass Pro Deal Could Slip Away
By Bill Dries
BETTER HURRY UP: Robert Lipscomb has cautioned that Bass Pro negotiations must speed up before the deal dies. -- PHOTO BY BILL DRIES
The clock is ticking on the Bass Pro Shops deal for The Pyramid, said the Herenton administration’s point man in negotiations with the outdoor retailer.
But Robert Lipscomb stopped short this week of saying Bass Pro executives are ready to walk away from the deal to build a super store in The Pyramid as well as other attractions.
Bass Pro executives had set a Sept. 15 deadline for city and county governments to approve the development agreement. That deadline hasn’t been enforced.
“But they are concerned now that we’ve dragged this thing out. It has been going on for awhile,” Lipscomb said. “I don’t think that we need to keep dragging this thing out.”
The Shelby County Board of Commissioners is considering selling its interest in The Pyramid to the city for $5 million. The Herenton administration made the offer, which the commission is scheduled to vote on in two weeks, as well as selling to the city its share of Liberty Bowl Memorial Stadium and the Mid-South Coliseum.
Lipscomb told the City Council the sooner that happens the better.
“We’re trying to streamline the process and make it more efficient,” he said. “It’s hard enough getting one entity to pass this. It’s almost impossible to get two.”
Reservations about the tentative Bass Pro deal terms have been more apparent on the commission than the council.
Council member Reid Hedgepeth is the council’s representative on a four-member city-county Pyramid Reuse Committee, with Lipscomb as the other city representative.
“If we do not take full control of this project – meaning we’re going to have to invest another $5 million buying this from the county – I do not believe this will even happen,” he said.
County participation in the project would continue if sales tax revenue from a tourism development zone (TDZ) is used to finance public improvements around The Pyramid. The county doesn’t get sales tax revenue, but approval from the County Commission and the Tennessee Legislature would be needed for a change to the Downtown TDZ terms, said attorney Charles Carpenter, who is part of the city’s legal team in the Bass Pro negotiations.
“We already have an established TDZ,” he said. “However, in order to have a use, we have to have an agreement with Shelby County and we have to have this approved by the state.”
The financing scenario would devote excess sales tax revenue generated in the zone to the $30 million in bonds to build the parking garage and fund the other infrastructure projects around The Pyramid, including street improvements.
Some of the revenue from the zone is already dedicated to paying the bond debt that financed the construction of FedExForum and the renovation of the Memphis Cook Convention Center.
The Wharton administration has said it wants assurances that even if county government gets out of its stake in Pyramid ownership, any use of TDZ revenues for the vacant arena does not interfere with the revenue stream to pay off convention center debt.
“Let me answer the question as delicately as I can,” Lipscomb said when asked about working with the county. “I think there’s a false assumption that there is some risk to the county. There is no risk.”
Carpenter said the revenue streams would be separate.
“There is (excess) capacity to service up to $30 million in bonds,” Carpenter said of the potential revenue stream for The Pyramid.
The TDZ funding is crucial to the emerging financing scenario because it would be used in a swap with HUD Section 108 funding. TDZ revenues can’t be used to pay off debt. So the TDZ funds would be used to replace the 108 funds used to pay off the bonds.
The 34-year-old Section 108 program allows large cities and urban areas to borrow money from HUD for such projects and use their future Community Development Block Grant (CDBG) funds as collateral.
Lipscomb also told council members this week that financing the local government commitment of $30 million to the $150 million project no longer includes the possibility of federal tax increment financing (TIF).
The Pyramid project would compete for the federal tax credits and other financing possibilities with other cities and other projects across the country. Federal officials announce those decisions each October.