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VOL. 132 | NO. 229 | Friday, November 17, 2017

Graceland vs. Errrybody

By Bill Dries

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When Memphis City Council members were told in an Aug. 22 open committee session about Graceland’s plan to build a 5,000- to 6,000-seat concert venue, it wasn’t the first time local officials heard about the idea.

Elvis Presley Enterprises had been talking with city and county leaders through their attorneys at least since the beginning of August about an expansion of the tax increment financing – or TIF – district to help finance the $40 million to $50 million addition to Graceland’s expansion plan.

But it may have been the first time Memphis Basketball Inc, the ownership group of the Memphis Grizzles that runs FedExForum, heard about it and reacted.

That’s according to the Chancery Court lawsuit filed Wednesday, Nov. 15, by Graceland against the city, the county and Memphis Basketball over the Grizzlies warning to city and county leaders that the concert venue and its financial incentives violated a non-compete clause in its contract with the city and county to operate the forum.

“Immediately after the presentation to the Memphis City Council executive committee, Memphis Basketball’s representatives contacted the city and objected to Graceland’s Supplemental Economic Plan,” according to the lawsuit, which has been assigned to Chancellor Jim Kyle.

On Aug. 16, as Graceland was marking the anniversary of Elvis Presley’s death, Graceland Holdings managing partner Joel Weinshanker was quoted in a Billboard magazine article talking about plans for the concert venue.

“Much, much larger acts are going to be able to play at Graceland, I would say in 2019,” he said. “We’re really going to make Graceland a destination for almost any band around the world that comes to the United States.”

A few weeks later, as Graceland was preparing to take its proposal to the Economic Development Growth Engine – EDGE – board for approval, Graceland and Memphis Basketball leaders met face-to-face, according to the lawsuit and Memphis Basketball leaders “threatened to sue EDGE if it approved Graceland’s Supplemental Economic Plan.”

Prior to those pivotal events, according to Graceland’s version of events, city and county leaders were ready to approve the theater and its financial incentives.

An Aug. 2 email from Graceland’s attorney to city Chief Operating Officer Doug McGowen noted that the city wanted a seat tax – with its revenue for future development in Memphis administered by EDGE – extended beyond the term of the TIF.

Weinshanker, through attorney James McLaren, “pushed back,” according to McLaren’s email to McGowen. Weinshanker countered with a five-year period beyond the TIF. McGowen agreed.

Two days later, there was another email from McLaren laying out detailed terms in preparation for going public at the council executive session.

“As we have discussed, the city administration will support the increase in the increment captured by the Graceland TIF from 50 percent to 65 percent as an incentive for the development of a 6,000 – 7,000 seat event center on the Graceland campus,” McLaren wrote.

McGowen didn’t affirm or dispute that in his email response. He reminded McLaren that Graceland should brief Shelby County Mayor Mark Luttrell before the council got the word.

An Aug. 7 email from county chief administrative officer Harvey Kennedy to McLaren, also quoted in the lawsuit, reads: “We are supportive of the request to increase the TIF increment to 65 percent.”

What the emails don’t reflect is a sudden freeze in the public expressions of enthusiasm for the potential of an arena in Whitehaven. There wasn’t anything like the accusations and counter charges that came this week with the lawsuit.

But political leaders became noticeably more reserved.

The lawsuit is Graceland’s account of the controversy and city Chief Legal Officer Bruce McMullen’s response Wednesday to the filing termed it “misleading.”

After Aug. 22 at City Hall, Graceland’s plan or at least its ambitions began to change.

In Memphis Sept. 6 during committee sessions of the Shelby County Commission, Weinshanker said, “The event center is not looking to usurp any other venues in the city and county. A lot of what we are going to do is create new opportunities.”

Graceland abruptly announced at an EDGE meeting with the theater plan on the agenda that it would scale back the arena to 3,000 seats and temporary seats at that and just for touring musical shows produced by Elvis Presley Enterprises.

Nevertheless the EDGE board delayed a first vote and cancelled a special meeting later to act on the matter.

An Oct. 9 email from Mark Beutelschies, the EDGE board attorney, to McLaren reads: “There are still several open issues to the city. However, we do not believe that it is in any of the parties’ interest to move forward without the Grizzlies explicit agreement that EPE’s development will not be contested.”

Graceland contends its theater doesn’t violate the non-compete part of the FedExForum agreement because the city, county and Memphis Basketball “did not place any restrictions on the city and the county’s ability to provide support for and approve private projects like the Graceland Project.”

EPE makes a distinction between its project and a facility built or constructed by the city and county on their own accord or financially supported by local government or encouraging a third party to build or construct a competing facility.

The exact wording of the “non-participation” provision is the city and county have to have the prior written consent of Memphis Basketball to “design, develop, construct or otherwise fund, provide economic or tax benefits or incentives to, or materially participate in the design, development, construction or financing of any new competing facility.”

But the provision also makes an exception for actions whose “general purpose of which is to encourage private development, in the ordinary course of establishing tax freeze programs, tax incentive programs, PILOT programs and other similar economic programs aimed at encouraging private development.”

Graceland contends the theater falls “squarely within the exception.”

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