VOL. 132 | NO. 143 | Thursday, July 20, 2017
Madison @ McLean Project Awarded 14-Year Tax Abatement
By Patrick Lantrip
Local multifamily development group Makowsky Ringel Greenberg has been awarded a 14-year tax abatement to construct a 132,477-square-foot, 108-unit apartment complex in Midtown Memphis.
Named Madison @ McLean after the eponymous Midtown intersection it will reside on, the $14 million project is the first ever recipient of a Residential PILOT (payment-in-lieu-of-taxes), incentive, which was created earlier this year by the Economic Development Growth Engine for Memphis and Shelby County.
The approval comes a week after MRG reached a settlement with a group of Midtown residents on an unrelated Midtown multifamily project at East Parkway and Sam Cooper Boulevard known as the Overton Gateway.
“Per EDGE policy procedures, staff engaged Arch Inc. to ensure the project was good for the area,” Trey McKnight, an economic development specialist for EDGE said. “Arch Inc. found the project to be appropriate for Midtown Memphis and construction costs are in line. The project is also supported by the Midtown CDC.”
Of the $14 million capital investment, only the $12.2 million associated with hard construction costs and land acquisition are eligible for incentives.
The project would occupy the entire block from McLean Boulevard to Idewild Street and consist of 72 one-bedroom units, 32 two-bedroom units, and 127 parking spaces contained within a five-story wood frame building and garage. Ten parking spaces along Madison Avenue will also be made available.
The complex also offers a fitness room, on-site bicycle parking and a common area.
MRG estimates rents will run around $1.51 per square foot, which would be comparable to rates at Crosstown Concourse and Highland Row, according to MRG principal Michael Greenberg.
“Part of the reason why I’m more optimistic about the rents than the market study is that we didn’t have a competitive set (of comparable properties),” Greenberg said of a third-party study that found rents in Midtown averaged $1.37. “We looked at a lot of properties, including many we own in Midtown, that have been renovated, which brings those averages down.”
Currently the site is collecting around $25,000 in taxes annually, but the EDGE staff estimates that tax collections would increase to $91,000 during the term of the PILOT and to $364,000 after the PILOT runs its course.
“Even with MRG’s strong estimates of $1.51 per square foot, PILOT assistance is needed for this project to work,” McKnight concluded.
Per the terms of its PILOT, MRG is required to spend $3 million with city and county certified minority and women business enterprises (MWBEs).