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VOL. 125 | NO. 1 | Monday, January 4, 2010



2010

A Look at What's Ahead This Year in Memphis

By Bill Dries

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2010 PLANNER

JAN. 8 Elvis Presley’s 75th birthday
JAN. 11 Fourth quarter local economic reports begin in The Daily News Shelby County Commission fills commission and state house vacancies
JAN. 12 Special session of the Tennessee Legislature begins Special general election for State Representative, District 83
JAN. 26 Deadline for federal “Race to The Top” funding applications
FEBRUARY City Council scheduled to vote on demolition permits for the south side of Overton Square
FEB. 12-21 Regional Morgan Keegan Tennis Championship and Cellular South Cup, The Racquet Club of Memphis
FEB. 18 Filing deadline for candidates in the May and August county elections
MARCH U.S. Attorney Larry Laurenzi to make recommendations to Justice Department officials about seeking death penalty in Craig Petties drug case
MARCH 6 Last Tiger basketball home game of season against Tulsa
MARCH 10-13 C-USA Basketball Tournament/March Madness arrives
MARCH 15-19 Shelby County Schools spring break
MARCH 29-APRIL 5 MCS spring break
APRIL Budget season for city and county governments Bass Pro Shops extended predevelopment agreement with city runs out.
APRIL 1 Filing deadline for candidates seeking state and federal offices in the August and November elections
APRIL 4 42nd anniversary of the assassination  of Dr. Martin Luther King Jr.
APRIL 12 First quarter 2009 local economic reports begin running in The Daily News
APRIL 16 Home opener for Memphis Redbirds
MAY 4 Shelby County primary elections
MAY 21 MCS & Shelby County Schools’ last day of school
JUNE New Le Bonheur Children’s Medical Center opens
JUNE 7-13 St. Jude Golf Classic
JUNE 18 The Memphis News has been publishing for two years
JULY 1 Start of new fiscal year for Memphis, Shelby County and Tennessee governments
AUGUST Proposed metro government charter to be filed for public consideration
AUG. 5 Shelby County general, state and federal primary elections
AUG. 9 MCS first day of classes
SEPTEMBER Start of Tiger football season and debut of new coach Larry Porter
SEPT. 1 Winners of Shelby County general elections take office
OCT. 11 Third quarter local economic reports begin running in The Daily News
NOV. 2 State and federal general and Bartlett, Collierville, Germantown and Memphis municipal elections. Ballot includes referenda on Metro Charter proposal.
DEC. 7 Collierville and Memphis runoff elections

Is it over yet? That may be the most frequently asked question in the New Year. “It” is the worst national economic recession since the Great Depression.

Accurately reading the indicators will not be easy. Some will predict the recession is about to end, just as new indicators point to continuing economic agony for thousands of Memphians.

For some businesses, time will simply run out. Still others will venture forward with new plans and take their chances.

The worst of the foreclosure crisis may be over. November figures from real estate information company Chandler Reports, www.chandlerreports.com, showed a 17 percent rise in total home sales for Shelby County compared to November 2008. Nonbank sales were up 47 percent from a year ago. New home sales were down 27 percent from October.

Areas like Frayser and Hickory Hill, those hit hardest by the foreclosure crisis, are still suffering. In Frayser’s 38127 ZIP code, where 53 homes sold in November, bank sales outpaced nonbank home sales by a 2-1 margin.

The split was about even in 38141, in Hickory Hill South. And in Hickory Hill North, 38115, it was a 60-40 split with bank sales being the majority.

On the other hand, Arlington’s stalled Cambridge Manor planned development came back to life at year’s end as Grant & Co. bought all 45 lots in the subdivision’s first phase for $1.9 million.

At year’s end, company president Keith Grant told The Daily News, sister publication to The Memphis News, that Arlington has a demand for new homes.

“We were wanting to go out there knowing that there wasn’t an oversupply of lots as there are in other parts of town,” Grant said.

The company plans to build homes that sell for an average of $230,000 to $240,000. Before the recession hit, Grant said the same homes would have gone for $350,000.

The decision by Grant and his family’s business is one that others will mull in the year ahead.

The figures aren’t nearly as encouraging in commercial real estate sales. Apartment complexes showed some promise in part because of the relatively high percentage of Memphians who rent.

But 2009 was poised to be the slowest year in 20 years for commercial real estate transactions, according to the Chandler data.

Now here’s what lies ahead:

Elections

2010 is also a year with three election days – four if you count the possibility of runoffs for Collierville city positions and the Memphis school board district seats on the ballot.

There will be 64 positions on the four ballots that voters will fill either outright or as part of the statewide election for governor. That doesn’t count the elections for Democratic and Republican state executive committee members.

The races that attract the most attention will be:

Shelby County mayor: The Democratic contenders include County Commissioner Deidre Malone and Bartlett Bank President Harold Byrd. The Republican possibilities include County Commissioner George Flinn.

Tennessee governor: Two Memphians are in the race to succeed Phil Bredesen. Shelby County District Attorney General Bill Gibbons is running in the GOP primary. State Sen. Jim Kyle is running in the Democratic primary.

Each hopes his hometown status will help by capturing essential blocks of votes statewide contenders must have to win. For Kyle, it’s the Democratic majority within the city of Memphis – the bluest island in a red state. For Gibbons, it’s the Republican majority in the parts of Shelby County outside Memphis.

The Democratic field has been slower to form, and late in 2009 was shuffled by the decision of U.S. Rep. John Tanner not to seek re-election in the 8th Congressional District.

Gibbons is part of a four-candidate Republican pack that formed as soon as former U.S. Sen. Bill Frist announced a year ago that he would not be in the running for governor.

None of Gibbons’ competitors in the GOP primary has ceded Shelby County to him. In return, Gibbons is still fighting for support in their political backyards even as he bills himself as the only Republican contender west of Chattanooga.

8th Congressional District: Specifically the August Democratic primary in the Memphis district that has been represented by a Democrat since 1975.

Incumbent Steve Cohen is seeking a third two-year term. Former Memphis Mayor Willie Herenton says he will challenge Cohen, in part because he just doesn’t like him.

That basis for running has caused some in both camps to speculate Herenton may forget about the race. Predicting what Herenton will do has been a perilous occupation for many years now.

Cohen has, so far, followed the incumbent’s strategy of de-emphasizing the challenger but not the challenge.

The two larger-than-life personalities involved in the primary could have an impact on the race for governor. Because Tennessee voters can decide which primary they wish to vote in on Election Day, turnout in the August congressional primary could help Kyle running in the neighboring statewide primary for governor. A heavy crossover turnout in the Democratic column could hurt Gibbons' chances in the Republican primary for governor.

The clerk races: In the eight countywide races – other than county mayor – to be decided this year, five are open seats with the Republican incumbents not seeking re-election.

The races for county, Juvenile Court, Probate Court and Criminal Court clerk are races where, in the past two to three election cycles, Democratic challengers have gotten closer and closer to the Republican incumbents in the vote totals. Four wound up within a thousand votes in 2006.

Democratic challenger Otis Jackson knocked off Republican General Sessions Court Clerk Chris Turner in the 2008 elections.

Civic Life

Graceland: Plans for the Aerotropolis concept of development around Memphis International Airport stayed alive in 2009 based on the expansion of the airport that continues.

Just around the corner, plans for Whitehaven and the Elvis Presley Boulevard corridor centered on an ambitious expansion of Graceland are moving forward – but at a crawl.

Elvis Presley Enterprises in 2006 announced the multi-year, $150 million expansion including a reconfigured entrance to the late entertainer’s home and at least one new hotel, as well as nightclubs and other businesses.

PHOTO BY LANCE MURPHEY

The plans came with the arrival of Robert F.X. Sillerman and his CKX Inc. as the majority owner of EPE. Sillerman had equally ambitious plans for developing the Elvis brand outside Memphis.

At the end of 2009, those plans were in trouble. An Elvis-themed Cirque du Soleil show debuted last month in Las Vegas’ new City Center ARIA resort. But Sillerman originally planned to build Graceland’s own Elvis resort next door that would be a permanent home to the show.

Sillerman’s FX Real Estate and Entertainment Inc. defaulted on a $475 million mortgage and the lenders are prepared to auction or sell the land.

In a November filing with the U.S. Securities & Exchange Commission, FX executives said the company would show a $10.4 million loss in the third quarter of 2009.

“(FX) does not have sufficient working capital to fund its liquidity requirements for any prolonged period and, as such, may not be able to continue as a going concern,” the SEC filing reads.

But FX is but one of several corporate entities Sillerman controls. Another includes the company that owns the popular “American Idol” television franchise.

Sillerman had formed a new company with two major FX shareholders at the end of 2009 that could buy the Vegas acreage. Negotiations were under way with lenders as EPE prepared to mark the 75th anniversary of Presley’s birth this month.

Health care: The most visible sign of change in the Memphis medical community this year will be the June opening of the new $327 million Le Bonheur Children’s Medical Center, a block north of the existing Le Bonheur hospital at Poplar Avenue and Dunlap Street.

The biggest story, however, looks to be the future of the Regional Medical Center at Memphis. The public hospital funded by Shelby County government opens the year with a new chief executive officer, Dr. Reginald Coopwood, and a new round of cuts in the subsidies the TennCare program pays to the state’s public hospitals.

The MED is the largest of those hospitals. The cuts would be the second is as many years.

MED leaders have said closing or significantly altering services in the emergency room is a possibility. If that happens, the impact on other hospital emergency rooms in the city could be significant.

Meanwhile, life in the city’s biomedical community is certain to remain interesting this year.

GTx, the Memphis-based company specializing in men’s health drugs, remains the best barometer of just how volatile the business can be. The company laid off more than a quarter of its work force and canceled all pay raises and bonuses as 2009 came to a close. The federal Food and Drug Administration for now has withheld approval of Acapodene, a drug GTx is developing to prevent bone fractures in men with prostate cancer who take hormone deprivation treatments.

The Memphis-based orthopedics division of Smith & Nephew is set to move its research, development and marketing functions from Brooks Road near Memphis International Airport to the old Harrah’s headquarters at Goodlett Farms Parkway starting in the summer.

Joseph DeVivo, president of the orthopedics division, insisted the shift was not a move away from Brooks Road, where the company and other corporations have complained about nearby prostitution and strip clubs. “This is added commitment and investment,” he said at year’s end. “We will continue our commitment to Aerotropolis.”

Smith & Nephew is putting $42 million into the Goodlett Farms project. The corporation got a $6.2 million payment-in-lieu-of-taxes (PILOT) agreement from the local Industrial Development Board.

Memphis-based Luminetx Corp. should see a better year – albeit under different ownership – after a long-running dispute between company executives and its founder, Herb Zeman.

Zeman invented the technology in VeinViewer, the Luminetx product that allows doctors and other health care professionals to see blood vessels beneath the skin. Zeman was ousted as chief technology officer four years ago, but he remained a major shareholder.

Zeman’s vote in favor of the sale to Christie Digital Systems Inc. for $15 million was crucial because the feud was taking its toll on the company’s finances. “There wasn’t anything else to do but sell,” he said.

2010 could see Zeman returning to the company. He said he is open to the possibility or to “take my money and have a nice retirement.”

A few days before the sale was approved, the company fired Chief Executive Officer Richard Kindberg, who then sued Luminetx for violating his contract and misrepresenting the company’s status. The company denies the allegations.

Metro Charter Commission: The clock is ticking on the political effort that could make everything else on this year’s ballot irrelevant. The most serious effort to consolidate Memphis and Shelby County governments in nearly 40 years is now at the point where task forces are beginning to explore what a consolidation charter should look like.

The written proposal is due in August to be voted on in November.

Already the 15-member panel has voted to leave Memphis and Shelby County public school systems as they are – separate. But the proposed charter will have to address how the school systems are funded by local government.

The group’s deliberations won’t take place in a vacuum. The charter proposal will be on the November ballot as voters in

Bartlett, Collierville and Germantown hold mayoral elections.

A countywide group is already advocating giving the charter commission a chance to come up with a proposal. The formation of the Rebuild Government group prompted a lot of questions from suburban mayors about what political allegiances its members might have. Group founders said they had none.

The group also includes suburban voices that over the next year could reveal a generation gap on the issue in the geographic area considered by even the most vocal advocates of total consolidation as the toughest group to sell on the idea.

The county’s six suburban cities and towns – Arlington, Bartlett, Collierville, Germantown, Lakeland and Millington – would remain intact under consolidation. But the structure of services those six areas now get from county government, which varies from town to town, would change, as well as the structure for paying for those services.

The Petties drug trafficking case: U.S. Attorney Larry Laurenzi ended 2009 by beginning a series of meetings with attorneys for five defendants facing the federal death penalty.

The mitigation meetings will determine whether Laurenzi recommends seeking the death penalty against some or all of the five in the largest drug case ever prosecuted in Memphis federal court.

Craig Petties is accused of running a multi-state drug organization for 13 years, including the six years he was on the run in Mexico. He was first indicted in 2002 as the only defendant in a drug case involving 600 pounds of marijuana.

Petties ran to Mexico that same year. The case grew through a series of superseding indictments that include six murders allegedly ordered by Petties and carried out by the other four defendants who are being considered for the death penalty.

Prosecutors have told U.S. District Court Judge Hardy Mays at recent report dates for the defendants that Laurenzi will make his recommendation to U.S. Justice Department officials in Washington by March. His recommendations will then trigger another round of mitigation meetings in which the attorneys again make their case to top Justice Department officials for not seeking the death penalty.

Two of the nine defendants in the last of the superseding indictments have already pleaded guilty.

Latonya Ingram, accused of laundering drug money through car purchases, pleaded to a rewritten money laundering count that made no mention of the Petties drug organization. She was sentenced to the 11 months she had already served after her bond was revoked following an unrelated arrest.

Bobby Cole, accused of helping transport millions of dollars to Mexico and tons of drugs to Memphis, pleaded guilty and is awaiting sentencing.

Look for another important decision out of Washington this year. President Obama still has not made his choice of a U.S. attorney for West Tennessee. Laurenzi is the acting U.S. attorney, a post he has held several times in recent years – most recently following the resignation of David Kustoff in late 2008.

Crime: Memphis Mayor A C Wharton Jr.’s choice of a state corrections commissioner and former prison warden as his chief administrative officer last year seemed ripe for political humor of some sort.

But George Little has more than a prison background. He was director of planning for Gov. Lamar Alexander in the 1990s, and the prison administration background isn’t unheard of. Keith McGee, former Mayor Willie Herenton’s CAO, also came to the job from a corrections background.

But Little’s knowledge of how to run a corrections system could come into play at City Hall. He told reporters last month that many people assume corrections is the business of locking people up.

“It’s not,” he said. “What we run, in almost all of our institutions, are small cities – everything from public works to health care to education.”

Wharton intends to broaden the police department’s success in bringing down the crime rate with an attempted overhaul of some kind of the criminal justice system.

“George will be able to hit the ground running in terms of helping me with what is the No. 1 priority in this city. And that is public safety,” Wharton said on Dec. 2 as he nominated Little. “We’ve got to do something better.”

It’s one of several ambitious goals Wharton is expected to roll out during the brief two years he has guaranteed in the mayor’s office. It’s shorter than two years when you consider that

Wharton’s second year at City Hall will probably be shared with a campaign for a full four-year term – if the consolidation charter on the ballot this November is rejected by voters.

As Shelby County public defender for more than 20 years, Wharton served on several task forces charged with looking at how the system decides who gets locked up and who remains free on bond.

“We won’t be timid about being tough when we have to be tough,” Wharton said. “Yet we will not be bullied into talking tough talk just for the sake of talking tough talk. We’re going to do what’s effective rather than what might sound popular.”

Bredesen’s last year: Tennessee Gov. Phil Bredesen’s final year in office will be dominated by budget concerns. He told The Memphis News they are “the most difficult of my time as governor.”

State budget cuts in 2008 were eased by replacing the lost funding with federal stimulus money. The theory – a dangerous one that some critics warned against – was to do that until state revenues came back in line with projections. The stimulus money will run out by the new fiscal year that starts July 1 and state revenue is on a bender – 17-18 months in decline by Bredesen’s count.

“It’s been something that hasn’t happened in this state since the Great Depression,” he said during a visit to Memphis in December. What he’s left with are cuts. “We’ve been doing that for a couple of years, so the easy stuff is all gone at this point. You’re really down to some really painful choices.”

Wharton argued in 2009, while still Shelby County mayor, that the stimulus money should have bypassed the state and come directly to cities and counties – Memphis and Shelby County in particular. He lost the argument but is making the same point as he, along with city leaders across the country, scramble for the last of the stimulus money still in the pipeline.

“I don’t know how much is going to come out of Nashville this year. ...” Wharton said. “We’re going to have to get to work down here. If we’re looking for salvation from Nashville, we’re looking in the wrong place right now.”

Money will be Bredesen’s chief concern in 2010, but not his only pursuit. He has called a rare special legislative session for later this month to give the state a better shot at a share of $4 billion in federal education funding. The program is called “Race To The Top” and the Obama administration will award it to six or seven states for education reforms.

RECORD TOTALS DAY WEEK YEAR
PROPERTY SALES 64 87 1,429
MORTGAGES 39 60 1,107
FORECLOSURE NOTICES 8 14 204
BUILDING PERMITS 92 209 3,265
BANKRUPTCIES 42 84 837
BUSINESS LICENSES 21 23 352
UTILITY CONNECTIONS 0 0 0
MARRIAGE LICENSES 0 0 0