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VOL. 133 | NO. 101 | Monday, May 21, 2018

Graceland Arena Controversy Shows Strings as it Broadens

By Bill Dries

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Elvis Presley Enterprises and City Hall got together last week in Whitehaven on neutral ground to talk about Graceland’s expansion plan, specifically a 6,200-seat arena. And from a distance you could barely see the strings from the arena attached to the 1,000-job manufacturing facility Graceland has also talked about starting on Brooks Road.

Memphis Mayor Jim Strickland has said he has no problem with incentives for a manufacturing facility that would make such products as The Clapper and Chia Pets – made by a company recently bought by Graceland Holdings managing partner Joel Weinshanker. But he says Graceland hasn’t sought incentives for that project.

At the May 16 forum hosted by City Council member Patrice Robinson at the Southwest Tennessee Community College Whitehaven center, attorney Clarence Wilbon, representing Elvis Presley Enterprises, said he hasn’t heard that before. And he indicated Graceland may begin moving in that direction.

This map shows a proposed exhibit area and a new arena west of the Elvis Presley's Memphis entertainment complex.  (Elvis Presley Enterprises) 

But Wilbon also said there is a legal argument to be made for tax incentives that might be granted for any project on the Graceland campus – including an arena.

“I termed it ‘the carve out.’ But it’s an exception that we believe allows – even though we receive some tax benefits – we believe that carve out allows Elvis Presley Enterprises to construct this arena on this campus,” he told a standing room only crowd of more than 100 citizens. “The city and the Grizzlies disagree with us. Therein lies the rub.”

The point is an important distinction. Graceland wants to increase the percentage of city and county property tax revenue it gets from its campus expansion from the current 50 percent to 65 percent.

It says the increase would go toward paying the debt on two completed parts of the expansion – the Guest House at Graceland hotel resort and the Elvis Presley’s Memphis entertainment complex. EPE would then divert the money it spends on the debt from those two projects toward financing the arena.

Strickland has said that’s a switch on paper that still amounts to city and county tax money going to an arena.

City chief operating officer Doug McGowen reiterated Strickland’s stand that an arena in Whitehaven or anywhere else that gets tax incentives violates the noncompete agreement the city and county have with the Memphis Grizzlies to operate FedExForum.

“They asked for the 6,200-seat arena. At the same time they said, ‘We do not want any public money for the arena. We will not spend any public money on the arena. But we want to increase the percentage of tax dollars that we receive from 50 percent to 65 percent,’” McGowen told the crowd at the Whitehaven meeting. “What they didn’t say is what is that money going to be used for? Our position is only this: if you are going to ask for more money from the tax increment financing – you should identify what you are going to use it for and they have not done that with the project.”

Wilbon was asked if Graceland might drop the number of seats in its proposed arena below 5,000 – considered an amount that triggers the noncompete and a number Weinshanker went below earlier in the controversy and while the arena proposal specs were in flux.

“It doesn’t matter what the number is,” Wilbon responded last week. “The position has been taken by the opposition. We’re not going to come down on the number.”

Wilbon said Graceland wants a court to rule on the noncompete clause in general, including the idea that there could be some tax incentives permissible for an arena.

The noncompete clause got bad reviews in the public comments from Whitehaven residents.

“Why didn’t y’all get it right the first time?” Mildred Carroll said of the noncompete. “Can I get a witness in here.”

Democratic state Rep. Joe Towns Jr. was also critical.

“The city does not have a right to create a monopoly,” he said, citing $50 million in state funding that was part of the financing of FedExForum.

“None of us were around when that was done. So I understand the frustration,” McGowen countered. “But it’s where we are today. We have to live with it.”

But at the Memphis Rotary Club earlier in the week, Strickland doubled down on the arrangement when asked about it.

“This is one of the most misunderstood provisions in the history of Memphis. I’m going to challenge conventional wisdom,” he said. “That is a great provision and it’s great because government is not responsible for the operating losses of FedExForum. Most arenas in the country lose money. The Landers Center loses money. They only cover that expense by hotel-motel tax. Nashville has to pump millions of dollars into the arena over there. FedExForum loses money but the Grizzlies pick up that loss.”

The Whitehaven discussion of the controversy came with a third element – lots of questions from Whitehaven residents about what the jobs created by a further Graceland expansion will pay and what kind of jobs they will be.

“What kind of jobs – working in a restaurant?” a homeowner asked Wilbon. “Who wants a blasted Chia Pet? I don’t even like those things.”

“Let’s focus on the jobs,” Wilbon replied.

Still other residents wanted to know when long-delayed improvements in the Elvis Presley Boulevard streetscape will get underway as they complained about persistent potholes.

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