VOL. 124 | NO. 74 | Thursday, April 16, 2009
Fairgrounds Discussion Becomes More Ambiguous
By Bill Dries
For two hours this week the lights were dimmed in the theater of the Children’s Museum of Memphis and Memphis City Council members got a review of plans for the Mid-South Fairgrounds renovation.
When the house lights came up and the PowerPoint presentation went dark, many concluded the ambitious Herenton administration plan is “back to square one,” to quote several council members.
“I thought there were plans and tonight you’re saying we’re making plans,” said Council member Barbara Swearengen Ware.
Some even questioned if developer Henry Turley and his Fair Ground LLC team were still involved in the project. They are, city Housing and Community Development Director Robert Lipscomb assured them. But no development agreement has been reached between Fair Ground and the city.
The administration chose Fair Ground in May to come up with a fairgrounds plan.
Turley has been pushing Mayor Willie Herenton for months to move ahead with the agreement or at least appoint a Fairgrounds Commission to supervise the start of project planning. Herenton at one point in February said he would make a decision up or down on the project’s future in a day’s time. No decision has been made since.
But after Tuesday night’s session at CMOM, some basic assumptions about the still-forming fairgrounds plan had been seriously questioned.
The administration undertook its own marketing study as well as its own review of how much financing for public improvements the city could provide for a big box retailer Turley has said is the key to private financing of the project.
Here are some of the new factors that emerged in this week’s meeting.
- A new retail study by RKG Associates concluded retail on the fairgrounds site likely would compete with retail in Overton Square and the Highland Row as well as Cooper-Young to a smaller degree. There are now more stores than demand in the general area, according to the study, which contradicts a basic premise Turley and his partners have used in their assumptions citing an older University of Memphis study.
- The RKG study also estimated sales tax revenue from a tourism development zone, including the store probably would not support $100 million in bonds for public improvements to the fairgrounds. But the study showed the sales tax revenue would be enough to support approximately $65 million in bonds.
- Turley was out of town. Fair Ground partner Mark Yates attended the session and said it was the first time he had seen the study.
- The plot of land fronting on East Parkway to the south of Fairview Junior High School would be an ideal location for retail, according to RKG. But it’s not likely the Salvation Army Kroc Center could be persuaded to move its planned recreation center even with incentives such as cash and free city clearing of the old Libertyland amusement park as an alternative. The Kroc Center has all but $3.9 million of the $25 million it pledged to raise ready for the 100,000-square-foot facility.
- Southern Heritage Football Classic Founder Fred Jones told the council committee he is opposed to any Fairgrounds redevelopment plan that involves demolishing the Mid-South Coliseum. Architect and former city council member Tom Marshall is recommending a facility condition index study of the facility.
- The administration and developers Fair Ground LLC disagree on whether Fair Ground should be paid a project manager fee or a developer fee. At least for now, the city favors paying a project manager fee of 2 percent to 4 percent of the project cost with some other factors like maintenance expense that could be included in a lease with a Fairgrounds Commission. Turley is seeking a developer fee that, in the case of other projects in other cities, is closer to 10 percent but can be a lower percentage the more the project costs.
- Bond attorneys are considering two alternatives to new market tax credits to finance the project. The alternatives are being considered because of apprehensive bond investors and a lack of direct city backing that would lower interest costs.
- The alternatives are Build America Bonds, which are part of the federal stimulus funding package. They offer a 35 percent tax credit on the interest the city could keep or that the holders of the bonds would get.
- Recovery Zone Economic Development Bonds offer a 45 percent tax credit. But those bonds are part of a state allocation that Memphis would have to compete for.
- There is a tentative agreement between the Memphis city school system and Christian Brothers University for a conversion of part of Fairview Junior High School to include a middle college high school – a separate program slated for fall 2010 that offers a college-type setting for high school-age students.
Grist for the ‘mill’
After the session, Lipscomb told The Daily News the project is being re-examined and might be reconfigured to meet new economic realities. But he was adamant that the changes would not include any city general revenue funds to pay for the project in any form.
“We’ve always wanted to make sure that the park was self-sustaining,” he said. “If you say I don’t want any money to come from local taxpayers, then you’ve got to make sure that you change the project a little bit. We’re making sure that whatever we do we can afford it, but that it doesn’t come out of taxpayer dollars.”
When asked if the RKG projections posed problems for the idea of Tourism Development Zone financing for the project as envisioned by Turley, Lipscomb said, “I think it does. … It has an implication for that. We want to make sure that whatever we do it doesn’t cost taxpayers money.”
That could mean scaling back the scope of the project, he said, or coming up with a different kind of retail component that would draw shoppers from the region instead of just the immediate area.
“It’s not the run-of-the-mill thing,” he said.
Council member Kemp Conrad said the bottom line of whether a study shows the project can perform financially to meet financing goals should be the deciding factor.
“Either we can do that or we can’t,” he said. “If we can, then the development fee should be negotiated that’s taken a year to negotiate. If the answer to that question is no … we need to go in a different direction. … I think we know the answer to that. Why are we still sitting here talking about it?”