VOL. 130 | NO. 92 | Tuesday, May 12, 2015
Developers: Tennessee Brewery Work is Tough Job
By Amos Maki
The team behind the proposed redevelopment of the long-vacant Tennessee Brewery received a 20-year tax freeze and a long-term loan for a new parking garage to help usher the Downtown development along, but officials say much work remains before the $28.1 million project becomes a reality.
The development team, 495 Tennessee LLC, won approval Tuesday, May 12, for a 20-year payment-in-lieu-of-taxes incentive from the Center City Revenue Finance Corp., the financing arm of the Downtown Memphis Commission. The CCRFC also agreed to up to nearly $5.2 million in financing for a 339-space public parking garage.
Developers received incentives Tuesday to help move the proposed redevelopment of the historic Tennessee Brewery forward but say much work remains to be done before the $28.1 million project becomes a reality.
(Daily News File/Andrew J. Breig)
But even with the incentives, redeveloping the historic stone and cast iron brewery, which opened in 1890 and has been vacant since 1953, presents challenges, according to the developers and Downtown officials.
“The project is very tenuous,” said developer Billy Orgel, who is teaming with Adam Slovis and Jay Lindy on the project. “There are a lot of different layers involved.”
The developers are proposing a $28.1 million adaptive reuse of the existing 90-foot-tall brewery building overlooking the Mississippi River, a new residential building and the new parking garage.
The project could include up to 151 rental units in total, 17,200 square feet of commercial space and a 339-space parking garage that will be built on what is now a vacant lot.
But for the PILOT, the project would not happen, according to Downtown officials and the development team.
“This project not only meets the ‘but for’ test it might also meet the ‘even with’ test, which is even with this PILOT the numbers don’t work perfectly,” said DMC president Paul Morris. “We feel very confident and comfortable in telling you that without the 20-year PILOT we don’t think the project is possible, and even with a 20-year PILOT we still have some work to do.”
To finance construction of the new garage, which will be located at 11 E. Butler and could eventually include 15 apartments above 3,800 square feet of commercial space, the CCRFC agreed to loan the Downtown Parking Authority up to nearly $5.2 million through its PILOT Extension Fund, a fund that developers who receive PILOTs pay into.
The development team will be responsible for constructing the garage and will lease the structure from the DPA. The developers also will be responsible for operating the garage, including any losses the facility might incur, and repaying the garage construction loan over 60 years.
“I think this is a really, really good structure that protects the public and also allows the project to happen,” Morris said. “We wanted to do what we had to do to make the project possible, and again even with this help the deal is tenuous and not guaranteed to happen. But we feel like what we’ve offered is what’s necessary to make it possible and not anything more than is necessary to make it possible.”
Republic Parking System, which the developers commissioned to conduct a parking study of the area, recommended the garage include 200 parking spaces, an amount it said could balloon to 535 spaces if the surrounding area becomes fully developed. But considering the availability of on-street parking and Memphians’ historic hesitancy to pay to park, the developers and Downtown officials settled on 339 spaces, which would be enough to accommodate residents of the development and the general public.
“On the garage, it’s tough,” Orgel said. “Everybody parks on the street until they can’t park on the street anymore.”
“You’re going to lend us the money (for the garage),” Orgel said. “We’re going to build, operate and lose money on the garage, but it’s going to help the project get going because there’s nowhere to park.”
The mayors and legislative bodies of both the city of Memphis and Shelby County must still approve the garage construction loan.
The development team stepped in last year to save the brewery from the wrecking ball following last summer’s successful month-long Tennessee Brewery Untapped event, which activated the long-vacant space with a beer garden, music, food trucks and other activities. Orgel and his partners acquired the property in November for $825,000.
An economic impact report on the proposed redevelopment said the construction phase of the project would create 307 jobs and have an economic impact of $43.8 million. Once redeveloped, the project would produce $8.2 million in ongoing annual economic impact.
“I think anybody that goes to the building or spends time at the building falls in love with the building,” Orgel said. “I travel a lot and go to a lot of cities and you just don’t have old treasures like that everywhere. People rip them down. It’s a great opportunity for the community to have a building reestablished and used.”