VOL. 132 | NO. 189 | Friday, September 22, 2017
Overton Square Hotel Awarded Tax Incentives
By Patrick Lantrip
The developers of a $24 million Overton Square hotel and a Canadian elevator company looking to build its first U.S. facility in Memphis have been awarded tax incentives to move ahead with their projects.
The Economic Development Growth Engine board on Wednesday, Sept. 20, approved Loeb Properties’ request for a 15-year payment-in-lieu-of-taxes abatement to build a 100-room boutique hotel in Overton Square, while AVT Beckett Elevators USA Inc. was granted a 10-year Fast Track PILOT for its new manufacturing facility on East Raines Road in Hickory Hill.
Loeb Properties is partnering with boutique hotel developer LRC2 Properties and hospitality management company MMI Hotel Group on the $24 million hotel, which is slated to be built at the southwest corner of Cooper Street and Trimble Place, south of Madison Avenue. The plans also call for a rooftop restaurant and structured parking on the 1.2-acre site.
EDGE staff projected the PILOT would save the development team $6.1 million and the project would generate $5.4 million in local tax revenues over the course of the 15-year abatement.
Loeb is partnering with LRC2 Properties, which developed The Graduate in Oxford, Mississippi, and MMI Hotel Group. (Loeb Properties)
Loeb Properties president Bob Loeb and the project’s supporters, including representatives from Playhouse on the Square, Hattiloo Theatre and the Midtown Memphis Development Corp., pitched the hotel as a necessary piece to grow the budding entertainment district into a regional theatrical destination.
“There are only four free-standing black theaters in our country, and the closest one to Memphis is in Houston,” Ekundayo Bandele, founder and CEO of Hattiloo Theatre, told the EDGE board. “Hattiloo is actively working to become the leading and foremost black theater in our country, and a hotel will help with that.”
Loeb told the board that during the five or six years his company has been involved with the revitalization of Overton Square, he has heard if there were a hotel in Overton Square they could develop a regional theater district that would attract visitors from a broad area to Memphis.
However, Loeb affirmed that he was not a hotel developer and has tried for several years with no luck to bring a hotel to Overton Square without getting involved in the development side of the project.
“So at the beginning of this year we engaged Pinkowski & Associates to do a search for a hotel develop who would come partner with us to build a hotel on this site,” Loeb said. “We have seven firms who indicated an interest in coming, but all of them required either a PILOT or TIF (tax increment financing) in order to do this project.”
However, there was some debate over the application’s use of term “blighted” when describing the property and its eligibility for a Community Builder PILOT, which typically is used to provide help for distressed neighborhoods.
When asked by the board, Reid Dulberger, president and CEO of EDGE, explained the Community Builder PILOT type was chosen because its eligibility for new market tax credits.
Loeb Properties plans to build a $24 million hotel on Cooper Street south of Madison Avenue in Overton Square. (Loeb Properties)
“There are some parts of Midtown that are quite nice,” Dulberger said. “But we also know that there are parts of Midtown that are not as nice as we would like them to be, and lots where the residents don’t have all that they would like to have or we would like them to have, and as a result of that, this census tract is eligible for new market tax credits as defined by the federal government.”
In its PILOT application, Loeb Properties said the new hotel would most likely be a soft brand under the Hilton or Marriott banner. Once operational, it would employ 65 people, including 35 hotel workers, 25 food and beverage workers, and five management positions.
Meanwhile, AVT Beckett Elevators USA Inc. was granted a 10-year Fast Track PILOT to open the Canadian company’s first U.S. facility at 4949 E. Raines Road.
AVT Beckett will invest $3.5 million into the 100,000-square-foot facility and add 25 new jobs with an average salary of $35,992, plus benefits, according to its application.
EDGE staff projected the project would generate $1.2 million in local total tax revenue during the term of the PILOT while saving AVT Beckett $477,211.
Barb Buchanan, president of AVT Beckett Elevators USA, told the EDGE board her company wanted to expand into Memphis so it can grow its presence in the southern half of the United States.
“From our Toronto location, we can cover a good part of the northern U.S. states,” she said. “Memphis is a hub for transportation and a 10-hour drive can cover a lot of large cities.”