VOL. 125 | NO. 241 | Monday, December 13, 2010
Projects Seeking IDB OK Need More Time
By Sarah Baker
All of the items on the Memphis-Shelby County Industrial Development Board’s special meeting Friday were lacking one major detail: time.
The board granted U.S. Foodservice Inc. more time for the presentation of its seven-year, $14.3 million payment-in-lieu-of-taxes request for expanding a distribution warehouse it now leases a portion of at 5900 E. Holmes Road.
The PILOT would be for buying the warehouse and following through on another option to buy land across the street where the company wants to build a vehicle maintenance facility and fuel pumps for its trucks.
U.S. Foodservice markets and distributes more than 30,000 brand items to restaurants, schools, hospitals, military bases and other government facilities. It employs 221 people now and would add 60 more with the expansion.
The Hickory Hill facility employs 221 people now and would add 60 more with the expansion. The tax break would save U.S. Foodservice $2.1 million in real and personal city and county taxes.
The board also was informed that neither of the projects in the running for the $42.5 million of Federal Recovery Zone Facility Bonds allocated to the city and county would make an end-of-the-year closing. Because both projects involve high price tags and several avenues of due diligence and negotiation, they carry heavy risks.
Attorney Charles Carpenter, representing Royal Phoenix Development (RPD) Hotel LLC, said the project was not withdrawing its application, and is hopeful that the recovery zone bonds are extended. December is notoriously a difficult time to get a good tax-exempt rate, Carpenter said.
“We literally just ran out of time,” Carpenter said. “The investment community is just going on holiday.”
RPD Hotels’ bonds would go toward a roughly $68.7 million Hilton-branded hotel project at Fourth Street and Linden Avenue. Developers are working closely with Hilton to reduce construction costs.
But since interest rates are significant on a $50 million debt project, the current capital structure won’t work. RPD plans to come back in the first quarter of 2011.
Meanwhile, Poag & McEwen Lifestyle Centers-Memphis LLC was also facing the recovery bond rush at the end of the year but had a slightly different scenario.
“The recovery zone marketing process is the only piece that we were not able to bring together at the end,” said Bob Rogers, Poag & McEwen chief operating officer and general counsel. “I started this process a year and half ago with the city and ended with the county. The question is, who can really use this in the end?”
Poag & McEwen would use money for its $70 million Highland Row project next to the University of Memphis campus.
Friday’s news comes after Memphis Mayor A C Wharton Jr.’s administration on Tuesday confirmed that the Pinch District’s proposed redevelopment won’t meet the deadline because the developers don’t expect to secure financing until early 2011.
But all developers are facing the Dec. 31 deadline, and the city now has $40 million to $60 million from Washington (via the Tennessee state government) that could quickly disappear.
IDB vice chair Mark Yates suggested that Charles Gulotta, director of the Memphis-Shelby County Office of Economic Development, write a letter to all senators and congressman in all county districts – including U.S. Rep. Steve Cohen, D-Memphis – appealing for a six-month extension of the bonds.
If granted, the city and county might not lose out on both project’s economic opportunities – including the creation of jobs.