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VOL. 132 | NO. 196 | Tuesday, October 3, 2017

Paying Beale Street Security Costs Raises Lease Questions

By Bill Dries

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Memphis City Council members vote Tuesday, Oct. 2, on whether the city should start using some of the $378,000 in Beale Street cover charge funds the Downtown Memphis Commission has been holding in two bank accounts since June.

A former interim manager of the entertainment district says lease provisions put the cost of private security on the merchants.


“I’m afraid that certain of the merchants have misled certain of the policymakers about how things work there,” said former DMC president Paul Morris, who in that role was also interim manager of the district and who reviewed the leases of tenants in detail as part of his duties.

Those leases spell out that the tenants pay the cost of private security in their spaces as well as on the street itself.

As of mid-August, according to the council resolution, there is $257,770 in an account from the $5 cover charge enacted by the council starting in June. There is another $120,284 in similar fees from the Beale Street Bucks program that charged a $10 cover on Saturday spring and summer nights after 10 p.m., with $7-$8 in coupons useable at most Beale Street businesses.

The council dropped the cover charge to $5 pending action by the council on a set of recommendations coming later this month from a Beale Street Task Force on security within the district.

Morris is concerned with the resolution’s wording that would allow some of the money in both accounts to be used by the city administration to defray costs associated with securing Beale Street.

“The tenants on Beale Street, under their leases, are responsible to pay for the security including the security of the public space and they have been for the last 15 years,” Morris said, adding that the street itself counts as part of the common area. “It goes beyond the leasable area that includes the district – the Beale Street area.”

The council acted on the cover charge under the reasoning that the council controls the use of city streets and the cover charge is an admission fee to a city street.

That may be the case, but Morris says the money collected for admission to Beale is a different matter that is already covered by the individual leases.

“The private security companies create a perimeter around the district. And those private security guards check your ID and they wand for weapons,” Morris said. “That’s what we are talking about. And in their leases they are required to pay for that. Those guards are on a public street.”

If the city is going to use the money collected for security in general, Morris said it should go to Memphis Police.

“When we first did the fee very briefly and it was just a $10 straight-up fee with no Bucks – one of the things that that required, and the police were more than happy to do this because they were at wit’s end … the police had to put in extra security to make sure that people didn’t jump the fence or successfully challenge our perimeter,” Morris said. “Ultimately, it’s the police that have to enforce the perimeter. The idea of using that $5 fee that’s collected from the citizens to defray the security expenses that are the legal obligation of the merchants doesn’t make any sense to me.”

He added that leasing agents for some of the tenants who continue to earn a percentage commission on rental income, including John Elkington, the manager and developer of the district for 30 years, could seek a cut of the cover charges if the tenants make the argument that the cover charge should go to them for other reasons.

“Guess who gets a percentage of all of the cover charges and other income?” Morris said, referring to Elkington. “That’s how percentage of rent is calculated. If it’s a cover charge that the merchants are getting … then that means it is included in the rent calculated.”

The council discusses the resolution at an 8:30 a.m. committee session.

The full council votes on it and other items at 3:30 p.m. at City Hall, 125 N. Main St. Follow the meeting @tdnpols, www.twitter.com/tdnpols, for live coverage and updates earlier in the council day from committee sessions.

In other agenda items Tuesday, the council votes on third and final reading of an ordinance that would direct the city to remove Confederate monuments in city parks at any point after the Oct. 13 meeting of the Tennessee Historical Commission.

Memphis Mayor Jim Strickland intends to push for a waiver of state law that would allow the city to remove the monument of Confederate general, slave trader and Ku Klux Klan Grand Wizard Nathan Bedford Forrest from Health Sciences Park.

The chairman and the attorney for the historical commission said last week the matter will not be on the Oct. 13 agenda because there are no rules or criteria in place for making such a decision.

Strickland said he will make his case to the group anyway.

Council chairman Berlin Boyd, in a letter dated Saturday to the historical commission, said he stands with Strickland in the administration’s bid for the waiver calling it the commission’s “last chance to be on the right side of history.”

The council also votes Tuesday on a $10 million advance in city money to begin planning and design on the renovation of the Memphis Cook Convention Center. Council members delayed a vote last month on the matter saying they wanted more detail. They will be briefed by the administration during the 2 p.m. executive session.

That session also includes more details of the city’s pursuit of Amazon’s $5-billion second U.S. headquarters project.

Council member also get an afternoon briefing on instant runoff or ranked choice voting that the Shelby County Election Commission is moving toward implementing for 2019 city elections.

Memphis voters approved the voting method years ago as an amendment to the city charter.

Voters would choose several candidates in council races where there is currently a runoff election requirement if no candidate gets a simple majority of the votes cast.

Voters, under the charter amendments, would instead rank multiple choices in a council race in the order of their preference. Those with the fewest votes would see the second and third preferred choices get those votes until a winner is declared.

Council member Edmund Ford Jr., who called for the briefing, has said he is opposed to it.

At a 12:50 p.m. committee session, council members review a set of eight ordinances and resolutions, some of them joint actions that must be approved by the Shelby County Commission, that would give the Community Redevelopment Agency a greater role and authority in redeveloping the Uptown area.

The administration is in the process of hiring a full-time executive director for the CRA to more aggressively redevelopment the area.

PROPERTY SALES 51 223 1,152
MORTGAGES 55 189 861
BUILDING PERMITS 149 541 2,593