VOL. 125 | NO. 155 | Wednesday, August 11, 2010
Pinnacle Board Gets Downtown Hard Sell
By Andy Meek
Pinnacle Airlines Corp. executives, after listening to a coordinated, Downtown-focused pitch from developers, businessmen and political leaders, will now take about a month to finish deciding where to relocate their corporate headquarters.
They’re considering sites Downtown, near Memphis International Airport as well as beyond the city. Mississippi has made what Pinnacle acknowledged is a “generous” offer for the company to move to Olive Branch.
Pinnacle executives are in town this week for the Memphis-based regional air carrier’s regular board meeting. Backers of the proposal to make Pinnacle the anchor tenant at Downtown’s One Commerce Square took that opportunity to make their case directly to the company in a private meeting Tuesday evening on the 29th floor of the landmark tower.
After about an hour, Pinnacle executives descended to the One Commerce lobby, where Memphis’ business elite were gathered, refreshments were served, and projected onto a screen were the words “Pinnacle Land Here” against a backdrop of the city.
Guests included a handful of political leaders, representatives of the Greater Memphis Chamber, EmergeMemphis, the Center City Commission and the heads of Memphis two largest locally-based banks, First Tennessee and Independent Bank, among other people.
Contrasting with the traditional nametags everyone else wore, the nametags of Pinnacle board members were brightly colored. All the better, Downtown supporters pointed out, for identifying them and laying on the charm.
“We’re going to fill this building,” exclaimed Karl Schledwitz, one of the partners with Southland Capital president Terry Lynch involved in buying the tower and working to lease a significant portion of it to Pinnacle.
As guests mingled, a marketing video produced by the Center City Commission was played on one wall that featured Downtown workers talking up the neighborhood. The same video was shown earlier that evening during the private pitch to Pinnacle’s board.
Making the case to the board were Memphis Mayor A C Wharton Jr.; incoming Shelby County Mayor Mark Luttrell and representatives of the investors buying One Commerce, as well as the Center City Commission and the Looney Ricks Kiss architectural firm.
“Pinnacle Airlines Corp.’s board of directors participated in a walk-through of One Commerce Square, hosted by members of the Center City Commission, the investors who are buying the building, and key business and government leaders,” said Phil Trenary, Pinnacle’s president and CEO, in a statement released Tuesday night. “This visit gave our board an opportunity to get a firsthand look at the building.
“Pinnacle has not selected a new site and still has to complete an in-depth analysis on this and other sites. We appreciate the interest and enthusiasm that the City of Memphis, the CCC, the Chamber and the ownership group have shown as we move through this process.”
Tuesday was the culmination of a months-long synchronized attempt at deal-making among several entities working to keep Pinnacle from being lured away from Memphis.
Details of the multimillion-dollar incentive package business and civic leaders have pieced together to cement the Downtown location for Pinnacle also began to trickle out Tuesday.
Coupled with that, a series of well-timed dominoes still needs to fall into place before a deal sweetened with a variety of incentives comes together.
Lynch confirmed Tuesday afternoon that several things have to happen more or less simultaneously.
The city, or perhaps an entity like one of the Center City Commission’s affiliated boards, would need to buy a nearby parking garage at the same time the investors buy One Commerce Square and at the same time Pinnacle signs a lease. Plans in the works now call for leasing the nearby parking garage back to One Commerce Square's new owners and giving Pinnacle parking there. More Pinnacle parking would be available at 250 Peabody Place.
Lynch said a memorandum of understanding has already been making its way around to various people involved in the deal. Wharton, outgoing Shelby County Mayor Joe Ford and CCC President Paul Morris have all signed a memo outlining the proposed incentives.
Lynch said U.S. Bank, the current owner of One Commerce Square, has accepted the investment group’s bid, but plenty more moving pieces need to fall into place.
“We have a letter of intent and we’re working through a contract right now. We’re just going back and forth. That’s the status of it right now,” Lynch said.
He said the timeline for next steps is fluid.
“If we don’t get past the first one, we can’t get to the second one,” Lynch said. “There’s various steps we have to get to.”
Wharton said Tuesday the city would like to commit $3 million from the $5 million economic development fund Wharton recently asked for the City Council’s approval to establish.
Wharton also mentioned Tuesday the possibility of applying for $15 million in American Recovery and Reinvestment Act bond allocations from the state to add to the pot of financing for the Pinnacle deal.
Another facet of the issue is how to pay for and fit into the package the acquisition of a nearby parking garage for Pinnacle’s use. The importance of that topic was discussed by Downtown officials with Pinnacle’s board Tuesday night.
“Landing Pinnacle Downtown would be a big boost in all kinds of ways,” said council member Bill Boyd.
U.S. Bancorp recently accepted the bid to buy One Commerce Square tower from a group of investors that includes Lynch; Schledwitz; and Gary Prosterman.
Lynch’s group is committing $25 million to $30 million on the building, which includes the purchase price and improvements to the building in the coming months. The group is now teeing up a deal to make Pinnacle the building's anchor tenant, something that Wharton has said will be an attraction to other businesses that have expressed interest in following suit if Pinnacle inks a deal.
Lynch wasn’t able to disclose the building's formal purchase price, but One Commerce Square was listed for $12 million.
Look for updates at The Daily News Online, www.memphisdailynews.com.