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VOL. 126 | NO. 236 | Monday, December 5, 2011

Changes Squared

Council moves vote on city's Overton Square involvement

By Sarah Baker

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Memphis City Council would have voted Tuesday, Dec. 6, on whether it would fork over about $16 million in funds for public infrastructure improvements in Loeb Properties Inc.'s redevelopment of Midtown’s Overton Square.

Memphis City Council has delayed approving the redevelopment of Overton Square until Dec. 20 so it has more time to study Loeb Properties’ plan for the entertainment district. (Photo: Lance Murphey)

However, the vote was pushed back to Dec. 20 so the council had more time to study a site-specific tax increment financing plan, according to council member Shea Flinn, who, along with Jim Strickland, represents the district encompassing Overton Square.

The improvements up for vote are twofold: one for a water detention facility to mitigate the downstream flooding from Lick Creek, and the other for a three-level, 450-space parking garage.

At a public meeting at Playhouse on the Square in October, the Memphis-based commercial real estate firm revealed its strategy to expand the Square’s footprint into a theater arts district – building on the success of current theater tenants while also relocating Hattiloo Theatre from Marshall Avenue to the south side of Overton Square.

The project encompasses about 120,000 square feet in redevelopment and new buildings.

For its share of the rebirth, Loeb said it would invest $19.2 million on renovating the buildings around Madison Avenue, such as the Radius and Palm Court buildings to the south; Memphis Pizza Café and Golden India to the west; and Boscos Squared, the former Paulette’s Restaurant, Bayou Bar and Grill, Chardonnay and Malco Studio on the Square to the north.

The city’s involvement isn’t so much in the revitalization of those businesses, but the parking lot they share. That’s why it’s important to note there are two projects on the table, said Loeb president Bob Loeb.

“If I had it to do all over again, I sure would call it two different projects – the Overton Square redevelopment and Lick Creek detention basin – because to group them together sounds like the city’s financial involvement in the Overton Square redevelopment is a lot bigger than it really is,” Loeb said.

Joseph Mallory of R & R General Contractors Inc. works on the exterior of the building that formerly housed Yosemite Sam’s at Overton Square. (Photo: Lance Murphey)

The vote is now Dec. 20, during its final meeting of the year. That’s the last possible date for a decision because Loeb’s due-diligence contract with the Colorado family who owns the property expires Dec. 31.

Regardless of whether the city agrees, Loeb will still move forward with its plans.

“The city’s had a full year, we’ve had a number of public meetings to get neighbor merchant stakeholder feedback, there’s been a whole lot of popular support for our plan,” Loeb said. “But for the public components, there’s a price tag that the city has to decide whether it wants to be involved. We’ve been very clear about our deadlines because the economics of our deal – whether the city’s in or the city’s out – are marginal at best. The sellers are not going to give us more time, and we cannot afford to close on the property and be burdened with the carry costs of just sitting around and continuing to wait on the city.”

Loeb said if the city votes against the detention facility and parking structure, it’ll have a debilitating effect on the surrounding neighborhood. Analysis of the economic impact of the project shows 294 new jobs, $2 million in new local and state sales tax revenue annually and $282,000 increase in annual property tax revenue.

“Without the city, it would be damaging to the neighborhood because there are existing businesses and institutions that depend on the parking that they’ll lose,” Loeb said, noting businesses such as Bari Ristoranta e Enoteca, Restaurant Iris, Playhouse on the Square, Circuit Playhouse, TheatreWorks, Side Street Grill and Mr. Lincoln’s Costume Shop. “It will be a lot better plan if the city participates; it’ll have more density and more vibrancy by the city building its infrastructure there. If the city chooses not to do that, then we’ll have a less dense plan, but it’ll still be a good plan.”

Yosemite Sam’s – a 40-year-old business that Loeb acquired in August from Faye Parnell – is a separate venture but was purchased with the Square in mind. The building is currently undergoing improvements, has “a couple of good tenant prospects” and “will be occupied by mid-year next year,” Loeb said.

Loeb said Flinn and Strickland understand the need for the parking and the city’s return on investment, adding the challenge is getting the other 11 members to agree on the moving target.

The council in May approved spending $6 million at the site, which was then a two-level garage with a detention basin underneath.

“As for the numbers, they have continued to change,” Loeb said. “The city engineering department increased the size of the water detention facility from 70,000 cubic feet of water detention to 1 million cubic feet of water detention – that’s a 14-fold increase. The biggest increase in our costs had to do with the growth and the size of the water detention. Well, that has nothing to do with the Overton Square redevelopment; it has to do with the Lick Creek flooding problem downstream.”

Loeb’s website has a page devoted to the Overton Square redevelopment, equipped with notes from the Oct. 12 presentation and email addresses of all 13 council members for neighborhood stakeholders to use as a platform to express their support of the project.

As for now, all Loeb can do is wait with its fingers crossed that the Dec. 20 meeting yields positive results.

“We’re very hopeful that the city will choose to do both of these improvements,” Loeb said. “To just sit around and wait on the public process has been good in some ways that it’s forced us to think and rethink our plans and to talk with a bunch of stakeholders. But it’s been frustrating in other ways because we’re ready to start work. Whatever happens, it’ll be a good development. It’ll just be better if the city’s involved.”

PROPERTY SALES 69 119 21,696
MORTGAGES 64 113 16,530
BANKRUPTCIES 28 64 6,781