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VOL. 133 | NO. 69 | Thursday, April 5, 2018

Two Downtown Hotel Projects Moving Forward After Delay

By Patrick Lantrip

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Two Downtown Memphis hotel projects that were seemingly in stasis appear to moving forward.

Though unrelated, both projects have filed paperwork indicating physical progress may soon be around the corner.

In the first, the developers of a 62-room Arrive Hotel planned for the former Memphis College of Art graduate school at 477 S. Main St. are seeking approval from the Center City Revenue Finance Corp. for a change of ownership and timeline extension.

The original development team, Wessman Holdings LLC, purchased the property in late 2016, with principal John Wessman saying at the time that the California-based company was attracted to Downtown because of the growth of boutique hotels and abundance of vacant buildings.

The following February, Wessman’s team filed the first building permit and the CCRFC awarded the project a 15-year payment-in-lieu-of-taxes incentive.

But two days after the PILOT was approved, Riverside County District Attorney’s Office in California filed a criminal complaint against John Wessman in a public corruption case that included former Palm Springs, California, mayor Stephen Pougnet.

Now after more than a year of silence, the project appears to moving forward without Wessman.

In a March 30 letter of intent filed with the CCRFC, attorney Chad Wilgenbusch of Baker, Donelson, Bearman, Caldwell & Berkowitz PC stated the developers “determined that it was in the best interest of the project to restructure the corporate existence of the project.”

“That restructuring took materially longer than expected and extended the timeline of the project development beyond the initial 1-year closing timeline contained in the CCRFC policies,” he wrote.

The developers of an Arrive Hotel located at the former Memphis College of Art graduate school at 477 S. Main St. are seeking approval from the Center City Revenue Finance Corp. for a change of ownership and timeline extension.

(Daily News File)

Under the new structure, the initial applicant of the project, 477 Memphis Hotel LLC, will be replaced by South Main Hotel LLC, and the project development will be led directly by its manager, Los Angeles-based Arrive Hotels & Restaurants.

All references to Wessman in the application have been stricken through and replaced with information about Arrive Hotels & Restaurants LLC, including its lead developer and co-founder Chris Pardo, who was the main point person in Memphis during last year’s application process.

The CCRFC board will review the project during its Tuesday, April 10, meeting.

Meanwhile, a completely unrelated hotel in the center of Downtown is taking another tangible step forward.

MRN Hospitality filed paperwork with the Land Use Control Board April 3 to advance its own hotel project at the former Benchmark Hotel site at 164 Union Ave.

“The developer will use the shell of the existing building as it has been completely gutted of all interior and exterior walls,” project consultant Cindy Reaves wrote in MNR’s application for a special use permit. “The proposed hotel will contain approximately 172 rooms with a restaurant and bar, fitness center and approximately 1,500 square feet of meeting space.”

Though a partial demolition of three of the exterior walls occurred in 2016, the property remained fenced off with no visible site work for more than a year, until the Downtown Memphis Commission announced in January it was taking legal action against MNR to declare the site a public nuisance.

On Feb. 1, Environmental Court Judge Larry Potter declared the site a public nuisance after several hours of intense legal wrangling by attorneys Danny Schaffzin, representing the DMC and a coalition of surrounding business owners, and William Sessions, representing MNR Hospitality. However, Potter didn’t sign off on the paperwork declaring the site a nuisance, instead ordering mediation between the two sides to ensure the project would continue to move forward.

Potter retired in March, and the Shelby County Commission has appointed deputy city public works division director Patrick Dandridge as his interim replacement until a special election is held this August.

The next hearing on the Benchmark case is set for Thursday, April 5, and the LUCB is scheduled to review MNR’s application during its April 26 meeting.

MORTGAGES 0 49 10,665
BUILDING PERMITS 336 548 21,505
BANKRUPTCIES 256 256 6,219