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VOL. 133 | NO. 118 | Wednesday, June 13, 2018

Hilton Canopy Hotel, Museum Lofts Receive Tax Incentives

By Michael Waddell

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Rhode Island-based Magna Hospitality Group, doing business as MHF Memphis VI LLC, has been granted a 15-year tax incentive to build a $43 million four-star hotel on the site of the former Benchmark Hotel at 164 Union Ave.

(Magna Hospitality Group via CCRFC)

The Downtown Memphis Commission’s Center City Revenue Finance Corp. approved Magna’s PILOT application Tuesday, June 12.

Magna acquired the Union Avenue site, which sits across the street from The Peabody hotel and AutoZone Park, in March. The development and management company touts extensive experience in the hotel hospitality industry, controlling 28 hotels with a total of 5,800 rooms and $1.5 billion in assets.

The hotel, which will be designed with a unique neighborhood feel over the next six months, will bear the flag of the upscale Canopy brand, a new concept from Hilton.

“As a lifelong Memphian, I’ve seen the evolution of Downtown Memphis and understand the strategic importance of this key corner location,” said Frank McFadden, part of Hilton’s franchise and development team. “At Hilton, we look at this as a tremendous opportunity partnering with Magna.”

Magna partner Alexandra Clegg said the company was “absolutely thrilled to have this opportunity.”

“We’ve been chasing this site since about 2013,” she said, “and honestly without the lawsuit that was filed by the DMC there was no way (former owner MNR Hospitality) would have actually sold this property.”

MNR acquired the property in 2012, two years after the Benchmark closed. The company began demolishing the building’s exterior walls in 2016, but left the work unfinished until the DMC filed paperwork in Environmental Court earlier this year.

Environmental Court Judge Larry Potter declared the site a public nuisance in February, despite MNR’s claims that it was still an active construction site. The building had been in a partially demolished state for more than a year and a half.

The five-story, full-service Hilton Canopy will feature 170 rooms, along with a restaurant and bar on the ground floor and basement and on-site parking.

“We know that no site is the same, no neighborhood is the same, so from meeting space to pools to rooftop bars, those elements we work with the neighbors and with our owners to make sure that it really suits the locale equally in comfort and design,” said Canopy senior manager Jenny Aboudou.

The CCRFC board expressed some concerns on the use of the alleyway leading to The Rendezvous, which welcomes more than 500,000 guests each year.

“Our intent is to probably do some work in that alley to really upgrade it through lighting or anything else we can do to make it more attractive,” Clegg said.

Demolition on the blighted Benchmark could begin before the end of the year, and construction could start by the first quarter of 2019. Construction is estimated to take 13 to 15 months.

Currently, the annual city and county taxes on the property are $41,996. The annual PILOT would equal $203,852, a 385 percent increase from the amount of taxes on the property, according to the DMC. During the 15-year course of the PILOT, this would result in a cumulative increase of $2.4 million.

Also at the CCRFC meeting, 138 Partners LLC was awarded a 10-year PILOT for Museum Lofts, a $9.2 million, four-story multifamily project in South City across the street from the National Civil Rights Museum at 138 Huling Ave. The development team consists of Robert Mallory, the chief administrative officer of Mallory Group, Mark Parmley of FedEx and local developer Vince Smith.

“We really like this area of Downtown,” Smith said. “We’ve done about six projects on Front Street. We like this area as a new point of emphasis for our little development group.”

Once the home of Lucky Cosmetics, the site currently contains several vacant attached buildings, the oldest of which were built in 1901. The developers will demolish the existing structures and construct three stories of lofts atop a new ground-up parking structure with 76 parking spaces.

“It’s a real nice project with podium-style construction,” Smith said. “There’s probably some podium-style construction in Memphis, but this is the first one that comes to mind Downtown. As we develop more and more Downtown and Downtown gets denser and denser … I think you’ll see more of this type of construction.”

The architecture designed by The Renaissance Group will be cutting-edge with brick, smooth hardboard panels and corrugated metal, compatible to trendy designs seen in new loft construction in Dallas and Washington. Floor plans for the 68 units would range from 580-square-foot “micro units” to 830-square-foot studio lofts to 1,268-square-foot two-bedroom units.

Currently, the property generates $7,842 in annual city and county taxes. The annual PILOT will equal approximately $51,245, a 553 percent increase from the amount of taxes currently generated, according to the DMC. This would result in a cumulative amount of $434,031 over the 10-year PILOT.

Construction could get underway by the third quarter of this year.

PROPERTY SALES 56 295 6,392
MORTGAGES 26 180 4,035
BUILDING PERMITS 128 840 15,361
BANKRUPTCIES 31 153 3,270