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VOL. 6 | NO. 14 | Saturday, March 30, 2013

Crosstown Leaders Discuss Ambitious Project

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Leaders of the Crosstown Development Project talked this month with The Memphis News editorial board about their plans for the adaptive reuse of the 1.5 million-square-foot, circa-1927 Sears Crosstown building.

The conversation comes as the group is seeking $15 million in city government funding for what is a $175 million project with an impact in the surrounding area dominated by the building.

Those involved in the conversation were Todd Richardson, project leader; McLean Wilson, vice president of Kemmons Wilson Co.; Doug Carpenter of doug carpenter & associates; David Montague, director of Memphis Teacher Residency; longtime redevelopment consultant Tony Bologna; and Ann Langston, director of the Church Health Center.


TMN: So you’ve got 600,000 square feet leased?

McLEAN WILSON: There’s approximately 300,000 left in rough numbers. Half of it is residential, market rate apartments that really won’t be able to be leased up much closer to opening time. Retail lags in the process. Six months or 12 months before we open is when we think we will generate most of the retail interest.

TMN: In the final vision of this, does the whole building remain? What would be demolished with funding from the city.?

TONY BOLOGNA: It’s cutting light wells down through the building. They are some light wells. There are about eight of them going through the building.

WILSON: Right now there is a section on the north part of the building that will come down. It’s the old mechanical plant. The two-story section, the latest one in 1965 -- that probably will not be demolished. It’s in the worst shape of the building.

TMN: David, what is your role in this?

DAVID MONTAGUE: The building does a couple of things for us. We’re hoping to grow. So we need to go somewhere. The culture of the building is very much the culture of what we’re trying to do. … We’re trying to renovate, if you will, an education system that’s been failing for far too long. … There is a real “cool factor” to the building. It’s really very helpful to have something cool that people want to be a part of.

TMN: How many square feet will Memphis Teacher Residency have in the Crosstown building?

MONTAGUE: We’ve got two pieces to it. One is our staff office and training space. The other piece is the residential piece. That’s about 20,000 to 25,000 square feet for staff office and training space. And then we provide housing for all of our residents. Right now they all live in the Georgian Woods apartments. They will then move and live in the apartments in the building.

TODD RICHARDSON: It’s one of the best recruiters to Memphis that we have because they come for a year for training. But then they have to commit to teaching for three years in Memphis urban schools. You are guaranteeing that these smart, young recent grads are coming from all over the country. And they are staying here for four years. Well, by then we’ve got them, right?

MONTAGUE: Our first group of residents are now completing their four year commitment. It looks like more than 75 percent of them are going to stay.

TMN: Will there be classrooms. Will there be a charter school there?

RICHARDSON: Separate from MTR. Gestalt Community Schools, they are starting and operating a Crosstown school for arts and sciences 9-12th grade. About 500 students at capacity. They operate three schools now. August of 2016 will be the first school year. Gestalt, of all of us, is the one that is doubling down on this project already. They started a middle school at Gordon (Elementary) and they are moving already into the neighborhood. The idea is to have some elementary schools to feed into the high school.

TMN: Ann, what is the perspective of Church Health Center?

ANN LANGSTON: We have been searching for a number of years on how we could consolidate, hopefully in one place, never dreaming we would be so fortunate as to be under one roof. We are now in 12 different physical buildings. We can improve a lot. … We found the benefit of creating community as part of the healing process regardless of what may be ailing somebody so to speak. Everything the Church Health Center does now in wellness, medical and outreach will be under one roof at Crosstown. But in addition to that, something we don’t do now is offer residential. … We have 20-25 young people that have graduated from college at the top of their class. They want to go into professional schools usually related to medicine. They come and spend a year with us and go to medical school. We’ve never had the opportunity to let those folks live together. We’ve certainly never had an opportunity to let them live in communities with smart educators and artists and others that are of the same enthusiasm change the world kind of mentality.

TMN: So far, what real resistance have you had to this -- skepticism? Tony, you’ve seen that kind of skepticism with your other endeavors in Downtown in the 1970s in particular. How does that compare to what you encountered with Crosstown?

BOLOGNA: It was probably higher skepticism on this because it’s so big. This thing is huge. Everybody said how are you going to find a tenant to fill that building? Well, that’s not what we were trying to do. We knew we couldn’t do that. We weren’t going to find a single tenant or even two big tenants to fill the building. That’s when the whole process of the vertical urban village came in bringing the neighborhood from a horizontal neighborhood to a vertical neighborhood. … The skepticism was there and you could understand it. A lot of times people announce projects early on and they don’t come to fruition. We chose not to do that. We chose to sit under the radar until we had a good solid base of information to put out.

TMN: When you are looking for financing, do you pitch it the way you do any commercial space? The bank on the other side of the table, do they care about this sense of community and the urban village and synergies or do they just care about the price per square foot and construction?

WILSON: It’s both. There is a story to be told. This building has a past, present and future. … No debt provider wants a project that is not going to be sustainable. The sustainability is really the story of the founding partners and the story of the community – what is going into it and what’s going to happen to the neighborhood and the community surrounding it.

TMN: What’s the environment in terms of getting financing.

WILSON: Our capital structure will be 50 percent debt to cost and I think that is a pretty good capital structure for a lender to put debt into a project like this. We’re in that early process of putting our story out there and seeing what debt providers surface. We’re encouraged in terms of what we’ve received in terms of early feedback.

TMN: The fact that one of the first name organizations was Crosstown Arts – you had people saying that’s great but you’ve got a million square feet and how are you going to pay for that. Was that part of the initial skepticism when it seemed like it was going to be exclusively arts?

RICHARDSON: It never was going to be enough to put a bunch of smart people in a room to come up with an idea for that building. Crosstown Arts was formed in 2010 to be supportive of the arts and music scene in Memphis but to do it in Crosstown and bring people back to Crosstown. Crosstown had kind of fallen off the mental map. The neighborhood had been kind of forgotten. … We had our first event in May of 2010 with 60 people. Last November, 10,000 people were at MEMfix. In the course of almost three years, 15,000 people have come to Crosstown that wouldn’t have come there otherwise. There’s real intention on our part to do community building, bringing people back to Crosstown, as well as redeveloping a building.

BOLOGNA: If we had tried to deal with everybody thinking it was going to be an artists’ colony, we would have been on the defensive. When we were ready to come out, it dispelled on its own.

WILSON: There is the challenge some people have of seeing beyond what is in front of their face – in this case what has been in front of their face since 1993 – an empty building in a location that has not seen a lot of things in a long time.

CARPENTER: I remember the very first conversation we had was, “We don’t want anybody involved who doesn’t believe we can make this happen.” … We haven’t spent time and gotten distracted about negative things. We have gone and told people what we are doing and why we are doing it. If they get it, then we get serious and we go forward.

TMN: What is next and what is your feeling about what the city will do?

WILSON: The building was built to be a distribution center and they bought a 16-acre site that was developed to support distribution. Now we’re talking about transforming that abandoned distribution center into a whole new neighborhood. You can imagine on a 16- acre site there is a lot of infrastructure from sewer to flood mitigation to reconnecting streets to lighting that are necessary to make this vertical urban village happen. … We’re doing our part with the building. The founding partners are doing their part as tenants. Now we need the city to do their part in terms of infrastructure as well. That’s our hope, anyway.

TMN: Do you worry that this is just a shifting of people and dollars?

RICHARDSON: There will be 1,300 jobs in the building and 875 of those jobs are net and new. Yes, there is some relocating of resources whether that’s jobs or whatever. But 60 percent of it is net new.

The idea that while metropolitan Memphis has lost population, according to the 2010 census, the Midtown and downtown zip code census tracts have actually increased by eight percent. And a large portion of that eight percent is ages 18 to 35. So we’re building on that momentum.

WILSON: Which is why we were so shocked when we started having these events at the response. We were asking people to come to an abandoned building that has been empty for 20 years … and 300 people pay $25 a ticket to go to a dinner where paint chips are falling from the walls. … and it sells out six weeks in advance.

TMN: Why should the city support this? The city has limited funds.

RICHARDSON: The thing that differentiates this from other projects – Bass Pro Shops, Overton Square, Cooper-Young – it is not retail based. This is 70 percent pre-leased of people who are going to be there everyday because they have to be there.

PROPERTY SALES 74 74 17,458
MORTGAGES 93 93 20,128
BUILDING PERMITS 126 126 36,072
BANKRUPTCIES 63 63 11,227