VOL. 133 | NO. 30 | Friday, February 9, 2018
DMC to Review Plans For New Downtown Mixed-Use Building, Midtown Apartments
By Patrick Lantrip
A local investment group is seeking a nine-year tax break from the Downtown Memphis Commission to construct a new mixed-use building where the Downtown Blue Monkey once stood at 529 S. Front St.
If approved, the new three-story, 7,500-square-foot building would feature approximately 5,000 square feet of ground-floor restaurant space with four rental units located upstairs.
The project carries a roughly $1.6 million price tag and would be ready to begin construction within three months of receiving PILOT (payment-in-lieu-of-taxes) approval from the DMC’s Center City Revenue Finance Corp.
If approved, the three-story, 7,500-square-foot building where the Blue Monkey once stood at 529 S. Front would feature about 5,000 square feet of ground-floor restaurant space with four rental units located upstairs. (529 S. Front Street LLC)
Currently, the 0.63-acre vacant lot generates $1,433 in city and county taxes annually.
DMC staff estimates that during the nine-year PILOT, taxes would rise 537 percent to $9,130 annually, or $69,278 in total.
The local investment group, operating under the name 529 S. Front Street LLC, consists of Michael and Rebecca Johnson, Chris Jameson, George Hampton, Larry Clark, George Bogy, Vernon Delashmit and Carl Jordan.
529 S. Front Street LLC plans on purchasing the property from the current owners, Blue Monkey Enterprises LLC, if the PILOT is approved.
Funding of approximately $1.4 million from Landmark Bank has also been secured pending the CCRFC’s approval.
The site was the original Downtown location for Blue Monkey that burned in 2005. It was constructed nearby at 513 S. Front St. where it still operates today, along with the original Blue Monkey at 2012 Madison Ave. in Midtown just west of Overton Square.
“According to the applicant, approval of a PILOT is necessary for the project to be economically viable and attract financing,” the DMC staff report reads, in part. “Without a PILOT tax incentive, the project pro forma shows a negative cash flow, deficient debt coverage ratio, and negative returns on both equity and investment.”
The project’s development team also consists of architect Larry Clark with Development Studio LLC and a yet-to-be-named general contractor.
The CCRFC will review 529 S. Front Street LLC’s application during its regularly scheduled Feb. 13 meeting.
The panel also will consider an application from PMT Investments LLC, a newly formed business partnership between Aaron Petree, Cliff McLemore and Ed Thomas III. PMT Investments is seeking an 11-year tax abatement to construct a 16-unit apartment building on the periphery of Overton Square.
Dubbed The Flats at Overton Square, the 11,000-square-foot building is slated to fill in a vacant lot on Diana Street near its intersection with Monroe Avenue, and carries a $1.9 million price tag.
The development will include four “live/work” units on the bottom floor and 12 traditional housing units upstairs ranging from 500 to 915 square feet.
The development team consists of architect Arch Inc., engineers McCaskill & Associates, Fowler Engineering and Innovative Engineering Services, and general contractor CBI Construction Co.
Though PMT is an independent venture consisting of Loeb Properties’ Petree, CBI Construction’s McLemore, and Colliers International’s Thomas, the group is partnering with Loeb to use the Overton Square brand.
Currently, the property generates $1,824 in annual property taxes. The DMC staff estimates that taxes would increase by 481 percent to $10,601 annually during the life of the 11-year PILOT for a total of $96,548, if approved.
$1.4 million in funding from Community Bank has also been secured pending the DMC’s approval.
“Based on the submitted application and the accompanying pro forma, staff agrees with the applicant that a PILOT is needed for the project to be viable and attract financing,” the DMC staff report read in part.
Per the terms of the PILOT, PMT would have to spend approximately $339,505 in hard and soft construction costs with certified women and/or minority-owned businesses.
If approved, PMT plans on starting construction during the second quarter of 2018, and wrapping up in the first quarter of 2019.
The project is expected to be 33 percent pre-leased with full occupancy obtained within two months of completion.