VOL. 125 | NO. 142 | Friday, July 23, 2010
IDB Approves $45 Million For Downtown Hilton
By Bill Dries
A luxury hotel planned for the corner of Linden Avenue and Fourth Street got a big boost this week with the approval of $45 million in taxable revenue bonds from the Industrial Development Board.
The hotel, which will be branded a Hilton, is a key part of the Triangle Noir development plan for the area south of FedExForum and into South Memphis.
The hotel, to be developed by RPD Hotels LLC, will be financed with a combination of those taxable revenue bonds, as well as $7 million in Recovery Zone Facility Bonds awarded earlier by the city and private financing the bonds will be used to leverage.
M.R. Beal & Co. of New York is financial adviser and investment banker to the project.
The estimated cost of the Royal Phoenix Hilton is $77 million. But RPD Hotels managing partner Bridget Chisholm told the IDB the estimate is an early figure that could be more like the upper $60 million range once the plans start to take shape.
The 14-story, 300-room building will be a “full-service luxury hotel” and will include a parking garage, according to the group’s IDB application. The land will remain owned by Pentecostal Temple Institutional Church of God In Christ. Royal Phoenix has an option for a 99-year lease agreement.
Chisholm told the IDB her group is still rounding up $15 million in new market tax credits and is exploring tax increment financing (TIF) for the hotel.
Attorney Charles Carpenter, bond counsel for the owners, said RPD is also interested in any unused recovery zone facility bonds the state may have. If more of that financing is secured, the project probably wouldn’t use all of the bonds approved at Wednesday’s meeting.
The hotel would open in May 2012, according to RPD’s application, with closing on the bond issue set for October and the permits process for construction starting in November.
Triangle Noir is an ambitious 10-year, $1 billion redevelopment plant that includes the demolition of the Cleaborn Homes public housing development and its replacement with mixed-use, mixed-income housing.
The city was awarded $22 million in federal HOPE VI money in June for Cleaborn Homes. The same type of federal funding has been used to demolish every other major public housing project in the city except Cleaborn and the neighboring Foote Homes development.
The Wharton administration hopes to secure HOPE VI money to demolish Foote Homes after the Cleaborn Homes work is completed.
In other action, the IDB approved an amendment to a 2005 payment-in-lieu-of-taxes (PILOT) program for KTG USA, a paper and cardboard company that hasn’t yet met a goal of creating 100 new jobs.
The company is spending $6 million to add new converting lines to its operation that should employ more people. The Greater Memphis Chamber also is working with KTG to land a larger plant for the Memphis area that its parent corporation is considering building.