VOL. 132 | NO. 144 | Friday, July 21, 2017
MRG, Thomas & Betts Receive Tax Incentives
By Patrick Lantrip
Makowsky Ringel Greenberg is the first ever recipient of a Residential PILOT tax incentive, awarded for its $14 million Madison @ McLean project. (Submitted artist rendering)
Makowsky Ringel Greenberg and Thomas & Betts were both awarded tax incentives to advance their respective projects by the Economic Development Growth Engine for Memphis and Shelby County on Wednesday, July 19.
Local multifamily development group Makowsky Ringel Greenberg (MRG) was awarded a 14-year tax abatement to construct a 132,477-square-foot, 108-unit apartment complex in Midtown.
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 EDGE.
The approval comes a week after MRG reached a settlement with a group of Midtown residents on an unrelated 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 for Madison @ McLean are eligible for incentives.
The project would occupy the entire block from McLean Boulevard to Idlewild 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 near the University of Memphis, 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 per square foot. “We looked at a lot of properties, including many we own in Midtown, that have been renovated, which brings those averages down.”
The site is now collecting around $25,000 in taxes annually, but EDGE staff estimates that tax revenues 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).
EDGE also granted a 15-year PILOT to Memphis-based Thomas & Betts to relocate its corporate headquarters from Southwind to the Ridgeway Center in East Memphis and consolidate its regional research and development functions.
The tax incentives will pave the way for the low-voltage electrical components and products manufacturer to invest $20.7 million into its new facility at 860 Ridge Lake Blvd. That is the home of ServiceMaster Global Holdings, which is relocating its corporate headquarters to the former Peabody Place Mall in Downtown Memphis.
“Thomas & Betts represents the third piece of securing three corporate headquarters in Memphis and Shelby County,” McKnight said of the musical chairs-like reshuffling of corporate headquarters involving Thomas & Betts, ServiceMaster and Sedgwick Claims Management Services, the latter of which plans to occupy Thomas & Betts’ current office location at 8155 T&B Blvd. in Southwind.
“These three projects saved over 2,500 jobs and invested more than $92 million in Memphis and Shelby County,” he said.
According to Thomas & Betts’ PILOT application, the plan will allow the company to retain 523 jobs and create 75 net new jobs with an average salary of $86,788.
EDGE officials estimate the expansion project will generate $45 million in local tax revenues during the term of the PILOT, while resulting in a $3.1 million benefit to Thomas & Betts.
Additionally, Thomas & Betts is required to spend at least $2.3 million with Memphis and Shelby County certified MWBEs.
Thomas & Betts, which was acquired in 2012 by ABB, a global technology conglomerate specializing in power and automation, now operates as a division of ABB’s $10 billion Electrification Products Division.
News of the company’s relocation plans was first reported by The Daily News June 30, after the manufacturing company informed its employees of the pending move.