Sunday, June 03, 2007

5 goals set toward making Memphis 'choice' city

Commercial Appeal [link]
By Amos Maki

In local economic development efforts, "green" refers to more than just money.

According to a draft version of the economic development portion of Memphis Fast Forward -- an economic growth strategy spearheaded by the City of Memphis, Shelby County, Memphis Regional Chamber and Memphis Tomorrow -- Shelby Farms would act as the eastern anchor of a countywide "greenprint" strategy that could help attract and retain highly coveted "knowledge workers."

Making Memphis a place of choice for knowledge workers -- young, highly educated, upwardly mobile -- is one of the five goals of the economic development plan and the "greenprint" is one of 15 strategies designed to reach the goals.
"This is a comprehensive economic development plan that will help grow the economic pie for all the citizens of Memphis and Shelby County," said John Moore, president and CEO of the chamber.

Goal 1: Develop a culture of innovation and entrepreneurialism

From Kemmons Wilson, who forever changed the hotel industry, to Frederick W. Smith, who revolutionized the package delivery business, the Bluff City has produced a long list of entrepreneurs and forward thinkers in business.

The economic development plan seeks to capitalize on those past successes and drive the creation of new high-value ventures and jobs.

To do that, the plan calls for the creation of a national entrepreneurship "center of excellence."

The Memphis Entrepreneurial Institute would license intellectual property from local and national universities and company research departments. It would also create business plans and secure management teams to start new companies based on the intellectual property.

The plan also calls for growing the share of minority firms in existing markets like roofing or food services that are underrepresented by minority vendors.

The program would include the Center for Emerging Entrepreneurial Development, the business incubator launched recently by the Mid-South Minority Business Council.

Goal 2: Market Memphis and Shelby County

"Sometimes, we can be our own worst enemy," Ken Glass, co-chair of Memphis Fast Forward and former president, CEO and chairman of First Horizon National Corp., parent of First Tennessee Bank, recently told members of the County Commission.

Instead of harping on the negative, Glass and other officials want residents to accentuate the positive locally and abroad.

One strategy includes crafting a marketing campaign designed to convince Mid-Southerners that Memphis and Shelby County are great places to live, work and play -- a potentially tough trick in a city with violent crime and public corruption issues.

The campaign also would urge Memphians to "talk up" the city when they travel.

"We have a lot of great stories and we need to tell them," Moore said.

Goal 3: Pursue target industries

The city and county would target four key industries: logistics, music/film, biosciences and tourism.

The plan calls for revising local payment-in-lieu-of-tax incentives so they are more aligned with the targeted industries.

Much of that has already been done. The City Council and County Commission recently enacted sweeping changes to the PILOT program of the Memphis and Shelby County Industrial Development Board. Part of those changes centered on awarding extra points to companies in targeted industries.

The plan also calls for developing a comprehensive logistics and aerotropolis strategy. Again, much of that is already in the works.

Tom Schmitt, president and chief executive of FedEx Supply Chain Solutions, is heading a 15-member aerotropolis committee.

The group has hired John Kasarda, who coined the term aerotropolis, which refers to powerful centers of commerce growing up around airports. They are in the process of raising funds from the private sector for an estimated $200,000 yearly budget.

The plan also calls for executing the Memphis Music Industry Strategic Plan, which includes bringing national and international music events to Memphis, recruiting new artists and labels, and establishing the Sam Phillips Center for Independent Music, a planned resource center for local musicians and others in the industry.

The five-year plan calls for $4.4 million to make the Sam Phillips Center a reality, including almost $1 million in the first year.

Goal Four: Grow existing firms

The chamber and a host of other local groups would attempt to recruit and create additional venture capital firms, which "seed" start-up companies and help growing firms expand.

The plan also calls on the MMBC, headed by Luke Yancy III, to deploy its Joint Venture Initiative to pair small Memphis firms with large minority firms outside of Memphis for execution of local contracts.

Goal Five: Make Memphis a place of choice for knowledge workers

All across the country, cities are increasingly competing for people, particularly the young, upwardly mobile knowledge-based workers of the future.

Because these workers are in such high demand, it is often the intangibles -- parks, recreational activities, nightlife, museums and institutions of higher learning -- that can "close the deal."

The plan places high priority on two controversial Downtown issues.

One is the construction of Beale Street Landing, a planned $29 million improvement to Tom Lee Park that includes a boat dock.

Recently, the Memphis City Council's budget committee for capital improvements reversed a previous vote by other members of the committee that deleted the project from the city's plans entirely. To stay afloat, Beale Street Landing needs the support of the full council when it meets Tuesday.

The plan also calls for resolving the legal issues surrounding the Promenade, a four-block area of Front Street between Union and Adams set aside by Memphis founders for public use.

The Riverfront Development Corp. wants private development on the Promenade to pay for public improvements, a plan that has been met with resistance by some citizens, particularly a grass-roots organization called Friends For Our Riverfront.

The plan also calls on establishing Shelby County's park system as one of the country's best by creating a "seamless system" linking Shelby Farms with Downtown parks and other green spaces via the Wolf River Greenway, Memphis Greenline and other green corridors.

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Sunday, May 13, 2007

Public's domain

Acting on 'public purpose,' government can snatch private property

Fred Davis' quarter-acre lot at 205 Looney was appraised at $16,200, according to Shelby County Assessor Rita Clark's Web site. Davis bought the lot, site of a fire-gutted apartment building, in 1989 for $53,000.

The Commercial Appeal [link]
By Amos Maki

Fred Davis, owner of Fred Davis Insurance Agency, bought a small lot on Looney Street in the Uptown neighborhood in 1989.

Davis, a former longtime city councilman, thought the property would make a good investment and that he might eventually develop it.

But he may never get the chance, because the Memphis Housing Authority and the Division of Housing and Community Development have notified Davis that they want to buy his property.

If Davis doesn't voluntarily sell, MHA could use "as a last and final resort" its power of eminent domain to acquire the property.

"If I decide that I want to develop it, I ought to have the option to do it," said Davis. "If they said this was for a fire station or library or the general public good, I can deal with that."

While different in some respects, Davis' case has echoes of Kelo vs City of New London, Conn., where the U.S. Supreme Court decided that local governments may force property owners to sell and make way for private economic development when officials decide it would benefit the public. In Kelo, the public benefit was additional tax revenue generated by new developments.

Governments have long purchased private property for the construction of roads, bridges, dams, sewer lines and other public projects. If owners are unwilling to sell, governments turn to eminent domain.

But the Kelo case touched off a nationwide debate about how and when eminent domain should be used, with dozens of states passing laws to make it more difficult for municipalities to exercise eminent domain.

"The Kelo decision was actually one of the best things that ever happened to the national property rights movement, as it clearly imprinted the precarious nature of private property rights in the public consciousness and has inspired significant reforms nationwide," said Leonard Gilroy, a senior policy analyst at the Reason Foundation, in a statement.

In Tennessee, a bill passed last year placed new restrictions on eminent domain but still allows its use for public purposes, industrial parks and limited private uses.

"It was a bit of a compromise," said Kevin Walsh, a principal with the law firm of Harris Shelton Hanover Walsh PLLC. "It was an attempt to calm some fears people had from Kelo, and I don't know that it truly accomplishes it."

One main provision of Tennessee's legislation requires local governments to certify the "public purpose and necessity" of seizing land.

The law also said indirect public benefits coming from private development -- such as new tax revenue in the Kelo case -- did not qualify as a "public purpose."

The legislation also gives property owners more time -- 30 days instead of five -- to challenge a finding of "public purpose."

Importantly in Davis' case, the legislation said housing authority or community development agencies could acquire property to "implement an urban renewal or redevelopment plan in a blighted area."

That is the main difference between the Kelo and Uptown eminent domain cases.

"If you look at Kelo, there was never any indication by the condemning authority of blight," said Walsh.

The Memphis City Council and Shelby County Commission declared the Uptown area blighted, allowing MHA to use eminent domain. In other words, the use of eminent domain in Uptown is to remove blight while the use in New London was to create more tax revenue by removing existing homes and residents to make way for more expensive developments.

MHA initiates the proceedings and buys the properties through its land bank. Then the city's development partners -- Belz Enterprises and Henry Turley Co., master developers of Uptown -- are paid fees to develop the property.

Davis' Uptown property is at the corner of Fourth and Looney. Surrounded by Uptown homes on the south and east, and well-kept existing homes on the north, with a mix of older and newer homes to the west, the vacant site has some tall grass. But Davis said it is hardly "blighted."

"I've paid my taxes and I keep it up," he said. "I pay somebody to come over here and mow the grass."

Robert Lipscomb, the city's chief financial officer, director and CFO of HCD and executive director of MHA, said the city has always used eminent domain as a tool of last resort and that there is a delicate balancing act of property owners' rights.

On the one hand, Lipscomb said, the city wants to preserve the property rights and investments of owners like Davis.

But on the other hand, the city is trying to bring more investment to the Uptown neighborhood. That investment could be halted or slowed by vacant lots strewn with grass, weeds or junk, Lipscomb said.

Eminent domain has been used, or threatened, in several Downtown projects, including FedExForum, AutoZone Park, the National Civil Rights Museum and in the airport buyout area.

With eminent domain, the government offers "just compensation" for the property and then takes the land. In MHA's case, the agency offers owners the appraised value of the property.

Davis' quarter-acre lot was appraised at $16,200, according to Shelby County Assessor Rita Clark's Web site.

While Davis said he has no current plans to develop the property, which he bought in 1989 for $53,000, he said he might one day decide to build something on the site, formerly home to a six-unit apartment building gutted by a fire.

And Davis believes the lot could bring a higher price on the market, especially since Uptown is in the midst of a remarkable transformation.

"There are two kinds of values to property, appraised and market," he said. "Appraised is a hell of a lot different from market value."

Gene Pearson, director of the graduate program in city and regional planning at the University of Memphis, said that while sometimes controversial, eminent domain is an important tool for cities.

"It's probably the only way redevelopment can take place in a timely fashion," Pearson said. "Clearly, most cities see areas that have declined and they make a judgment call as to what is in the best interest of the city and property owners may not see it that way.

"It's always subject to definition and there is always going to be debate."

If the city moves forward with eminent domain, Davis said the debate would almost certainly continue.

"I would have to get some legal advice on the best way to respond," he said.

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Friday, March 30, 2007

Study: Economic development program here lags competitors, a new study finds

The Commercial Appeal [link]
March 30, 2007
by Amos Maki

A new study blasts Memphis and Shelby County for an economic development program that is the "most under-funded in the nation."

The study, commissioned by local public and private officials, says the lack of funding has resulted in a "dearth of the programs, key personnel and marketing channels" necessary to grow and recruit businesses to the area.

"As the world of business recruitment has become more competitive, we have gone in the opposite direction," said Shelby County Mayor A C Wharton. "We're not even on the ball field."

Wharton, Memphis Mayor Willie Herenton, the Memphis Regional Chamber and local business group Memphis Tomorrow commissioned the study to create a new economic development plan.

The plan will be part of a broader four-part economic growth initiative called "Memphis Fast Forward" that focuses on crime, government efficiency, economic development and education, and workforce development.

While still in draft form, the economic development plan -- produced by Atlanta-based Market Street Services and funded by Memphis Tomorrow -- targets four key industries: Logistics, Music/Film, Biosciences and Tourism.

The five-year plan would create 49,395 jobs, about triple the number of jobs created from 2004-2007.

Those new jobs would generate $53.3 million in new tax revenue annually for the city and $32.1 million in new tax revenue annually for the county after five years.

"It's not like we're going to throw money in a black hole and never see anything happen," said Gary Shorb, president and CEO of Methodist Healthcare and vice chair of Memphis Tomorrow. "It's an investment with a return."

Market Street Services found that Memphis and Shelby County's economic development budget paled in comparison with peer cities like Nashville, Knoxville, Louisville, Ky., Atlanta, Charlotte, N.C., Orlando, Fla., and Richmond, Va.

In fact, even Sioux Falls, S.D. -- with a metro population of 213,000 -- invested more in 2005 in economic development initiatives than Memphis and Shelby County.

The 2005 budget for the Sioux Falls chamber's five-year economic development program was $1.7 million. The 2005 budget for the Memphis Regional Chamber's latest five-year plan, Think Memphis, was $324,000. Together, Memphis and Shelby County invested only $350,000 in economic development through the chamber in 2006.

Nashville's economic development plan -- called Nashville 2010 -- was also developed by Market Street and had a $3 million budget in 2005.

"I'm not going to sugar coat numbers, they're either good or bad," said John Moore, president and CEO of the Memphis Regional Chamber. "But this plan is about moving forward and I see opportunity after opportunity."

Moore sounds optimistic because despite serious handicaps the chamber has been able to bring significant new business to the area, including a $250 million Nucor steel mill and ServiceMaster's corporate headquarters last year.

"We've been successful in spite of ourselves," said Larry Jensen, president and CEO of real estate firm Commercial Advisors LLC and one of the local officials involved in developing the plan. "So if you step back and say 'Let's be strategic in our thinking,' we can take this thing to the next level."

Getting to that level will require a new five-year, $66 million economic development plan. At $13.2 million a year, that would be more than 40 times the amount the chamber had budgeted in 2005 for Think Memphis.

Securing that budget would require an all-out push by the public and private sectors, said Ken Glass, chairman of Memphis Tomorrow and outgoing chairman and CEO of First Horizon National Corp., parent of First Tennessee.

"The major portion of it, we think we will get it from the major players (in business)," Glass said.
Moore and others are entering a "quiet phase" of talks with some of the city's most high-profile executives to secure private funding before presenting the completed plan to the public.

"At every level, it's the top companies and top leaders of those companies that carry the flag on this type of initiative," said Moore, formerly the most senior Northwest Airlines executive in Memphis.

Supporters say the performance benchmarks set forth in the plan -- including significant increases in job creation, wages, per capita income and minority-owned companies, combined with equally large decreases in unemployment and poverty rates -- will help attract broad public and private sector support.

Herenton said the plan will likely need $1.5 million a year each from the city and county and that he will request that the City Council provide the funding.

"I think if it is adequately funded and implemented it will move Memphis and Shelby County to a new level in terms of economic growth, job creation, minority business development and per capita income, which will raise the quality of life for the whole community," Herenton said.

Wharton said his administration has already budgeted $1.25 million for economic development in the 2008, which starts July 1. "Shelby County is going to put its money where its mouth is," Wharton said.

Luke Yancy, president and CEO of the Mid-South Minority Business Council, expects the plan to have an army of supporters from the public and private sectors because each side was heavily involved in the planning process.

"I think this particular plan has been well thought out and I think we had representation from all areas of the community," Yancy said. "It attacks the issue of economics in this community and the disparity between the haves and have-nots.

"Unless we address this issue of economics, then our city will not prosper and become the world class city it has the potential to become," he said.

-- Amos Maki: 529-2351

Memphis fast forward
  • What: New economic development plan for Memphis and Shelby County
  • Why: Memphis-Shelby County has the most underfunded economic development program in the nation
  • How: A five-year, $66 million economic development plan with public and private contributions.
  • Targeted industries: Logistics, Music/Film, Biosciences and Tourism.
  • Goals: Creating 49,395 jobs over five years.
  • Benefit: $53.3 million in new tax revenue annually for the city and $32.1 million in new tax revenue annually for the county.

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Friday, July 01, 2005

Domain ruling gives developers options

Memphis Business Journal [link]
By Rob Robertson and Amos Maki

Opinions are mixed regarding last week's 5-4 decision by the U.S. Supreme Court that effectively expanded the use of eminent domain for private economic development.

In the case of Kelo vs. New London, Conn., the court held that New London could purchase and remove private homes and businesses to make way for a private riverfront development project because of the potential economic benefit the boost in tax revenues would create.

Kevin Walsh of Harris, Shelton, Hanover, Walsh PLLC, calls the court's decision "an unfortunate expansion of public use."

Walsh has an emphasis on eminent domain in his practice and has represented property owners in cases brought by governmental authorities to take private property.

"I found it disappointing that Judge Rehnquist was not able to muster a majority for purposes of protecting private property rights," Walsh says. "This decision essentially allows governmental entities to take property in the name of public use under the 5th Amendment of the Constitution solely for the purpose of generating additional tax revenue."

Still, there are additional levels of scrutiny to consider regarding the application of Tennessee state law, Walsh says. Tennessee has its own clause with regard to the right to take private property.

"I'm not sure it would be interpreted any differently, but you would have to consider not only the Tennessee Constitution but the enabling legislation or statute under which the power of eminent domain has been delegated," he says.

That would include any legislation that allows a government entity to seize private property, including boards like the Riverfront Development Corp., which gained approval from the City Council last year to transform a four-block area of Downtown known as the Promenade.

The $50 million redevelopment plan calls for using private developments, including three proposed new buildings, to pay for projects like a two-level promenade and the relocation of parking garages underground. The buildings would be mixed-use, with restaurants and shops lining the bottom floors. Ground leases would keep the property under the control of the city.

Ultimately, the RDC seeks to revamp a 5-mile stretch of the Memphis waterfront over the next half century. The cost of that development has been estimated at about $300 million.

The property now contains the Cossitt Library, a fire station, the U.S. Post Office and Confederate Park. The land, except for Confederate Park, is virtually inaccessible to most of the public and offers prime views of the river.

The property was donated by the city's founding fathers for use as a public promenade. The heirs of the founders hold title to the land and have been divided on the proposal.

RDC president Benny Lendermon says the High Court's ruling gives the city attorney another tool in dealing with land acquisition for a plan that could produce a significant economic benefit for the city.

"It's incredibly important nationwide," says Lendermon. "Many large metropolitan areas are going through financial crises right now. This gives them more flexibility to pursue economic development when it is for the public good. We developed a plan for the best use of the property."

Barbara Kritchevsky, associate dean of the Cecil C. Humphreys School of Law at the University of Memphis, says the ruling would not directly change any restrictions under the Tennessee Constitution involving eminent domain.

"(The ruling) talks about what is permissible under the federal Constitution," says Kritchevsky. "It means if a state chooses to do what New London did it would not violate the federal Constitution. States could be more restrictive in their own interpretations of eminent domain."

Jim Arthur, an attorney at Armstrong Allen, says Tennessee's eminent domain clause is not more restrictive; it essentially mirrors that of the federal Constitution and has been construed by state courts in lockstep with the U.S. Supreme Court.
The New London case, therefore, may have a particular relevance if a similar situation were to occur here.

"It means if an E-Cycle could convince enough local officials to declare that a particular development project it proposed provides a 'public benefit,' however speculative, private property owners whose property stands in the way are afforded no protection by the Constitution," Arthur says, referring to the fake company the FBI used in its Tennessee Waltz sting operation that netted several local elected officials for allegedly taking bribes.

"According to the Kelo majority, I see nothing to stop the City of Memphis, or some agency to which it might delegate its power of eminent domain, from condemning every square foot of riverfront property in furtherance of some development plan it pronounces to be of 'public benefit'," Authur says.

Virginia McLean, president of Friends for Our Riverfront, a group that opposes the RDC's proposals, says that won't happen.

"The Public Promenade is protected by the Tennessee Supreme Court's prior decisions involving the property and the Tennessee Constitution," McLean wrote on the group's official Web site. "We believe that if the RDC attempts to condemn the Public Promenade, the Tennessee judiciary will reject the U.S. Supreme Court's reasoning in Kelo."

Lendermon says the RDC would use eminent domain as a "last resort."

Another project where eminent domain could come into play is the city's push to redevelop the blighted, 138-acre section of the city south of the $250 million FedExForum. Current conditions in the area, bounded by Mulberry on the west, G.E. Patterson on the south, Danny Thomas on the east and Linden on the north, are bleak, with lots overgrown with weeds and covered in trash.

The Center City Commission, the agency charged with guiding development Downtown, has developed a plan for revitalizing the area that includes the possibility of using eminent domain for land asemblage that would spur development.

"Land assembly will be key in creating development in what is a long forgotten neighborhood of vacant land," says Jeff Sanford, CCC president. "I would hope that eminent domain wouldn't have to be used to assemble property, but in the end it may be an option."

Downtown developer Henry Turley says the Supreme Court ruling is a victory for cities looking to attract economic development opportunities.

"I think a city has to be able to assemble property for economic development within that city," says Turley, principal of Henry Turley Co. "Otherwise, that economic development occurs outside the city. So the city tends to languish while the surrounding areas tend to prosper, putting the city at a great disadvantage."

At the other end of the spectrum is retired attorney Hal Rounds, chairman of the Libertarian Party of Shelby County, who says the Kelo case is fraught with dangers to everyone who intends to work, invest and build something.

"We have gone from being property owners to conditional custodians at the pleasure of our government," Rounds says.

He believes the matter is not settled, in part because as Justice Clarence Thomas noted in his dissent, the entire body of cases cited by the majority rests not on Constitutional law but on other precedents.

Should the next similar case go back to the 5th Amendment it could overturn more than a century of decisions. In the meantime, Rounds believes the Kelo case, while potentially unlawful, strengthens the hand of the city.

The problem with the decision, as Arthur sees it, is that it lowers the standard for governmental exercise of its power of eminent domain to an all but meaningless level.

"The 5th Amendment originally contemplated government taking private property for its own use, for forts, roads or other necessities for the common good, or for use by others who might incidentally reap a benefit to serve the public," Arthur says.

"Now, government can take your property simply because it determines that someone else can use your property more profitably and generate more tax revenue than you have."

CONTACT staff writer Rob Robertson at 259-1726 or rrobertson@bizjournals.com. Contact staff writer Amos Maki at 259-1764 or amaki@bizjournals.com. Staff writer Scott Shepard also contributed to this story.

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Monday, April 18, 2005

Development threatens harbor operations

Land bridge, residential development may relocate harbor firms

Memphis Business Journal
by Amos Maki
Link to original

Businesses along the Wolf River Harbor say a proposed land bridge stretching across the harbor would cripple their businesses and probably force them to close for good.

"If they shut down river traffic, it would shut us down," says Deborah Seidel, communications director for Bunge North America, which has 11 full-time employees at its facility on North Second.

"The vast majority of our business there is barge traffic."

Officials from Riverfront Development Corp., Army Corps of Engineers and Tetra Tech, Inc., are contacting seven Wolf River Harbor businesses to determine the impact of RDC's proposed land bridge.

The land bridge, if built, would close the harbor many of the companies rely on to move everything from cement to grain. The planned $78 million, 38-acre land bridge would stretch across the harbor from Court Street to Poplar and is part of the RDC's Riverfront Master Plan drawn up in 2002 by architecture and urban design firm Cooper, Robertson & Partners.

Businesses affected include Anderson-Tully Lumber Co., Bunge North America, LaFarge North America, Inc., Buzzi Unicem, Cargill, Inc., Westway Feed Products and the U.S. Coast Guard.

The cost of the $332,000 feasibility study is being split by RDC and the Corps of Engineers.

But even if the land bridge is never built, those harbor businesses would probably be forced to move anyway to allow residential development to expand all the way to the water's edge.

"They are studying what impact the land bridge concept will have on the industries in the harbor and, more than that, how you get them to start looking at relocating their facilities within Memphis," says Dorchelle Spence, RDC spokesman.

"The reason that needs to happen is for a number of projects that are going forward and the biggest one is Uptown, moreso than the land bridge.

"The Uptown development that is occurring is taking residential closer to the waterfront and you can't do that when you have all of these industries in the harbor because of the 18-wheel truck traffic it brings through that neighborhood," she says. "(Moving industry off the harbor) needs to happen whether we move forward with the land bridge or not."

Uptown, a joint venture between Belz Enterprises, Henry Turley Co. and the City of Memphis, covers more than 100 city blocks in the north end of Downtown.

The project received a $35 million HOPE VI grant from HUD, which helped transform two of Uptown's former public housing units into mixed-income housing.

Robert Lipscomb, director of the division of Housing and Community Development and Memphis Housing Authority, says using the harbor land for industry isn't the best use for what could potentially be very valuable residential property.

"As Housing and Community Development, we want to go all the way to the river and make sure we use the land to its highest and best use," he says. "To me, the highest and best use of that land, not to mention the compatibility with residential uses, is residential and commercial development. The current use is really not compatible with the residential and commercial use that is moving toward that area."

Lipscomb says he will work with the RDC, a not-for-profit, public/private partnership under contract with the city of Memphis, to redevelop the area.

"The RDC is the primary motivator and will determine what goes there, so we'll be working with them to make sure the highest and best use of that property is attained," he says.

"I think we're definitely on the same page."

The RDC and Housing and Community Development may be on the same page, but harbor industry officials don't like the book. They say they rely on the harbor to transport their goods by barge and that closing the harbor or relocating them to make way for new development could put them out of business.

"We get all our barges in from that end of the river and if they dam that up, I'm out of business," says Terry Martin, terminal manager at LaFarge North America, a cement distributor which has been on Henry Street since 1947 and has five full-time employees. "We do everything by barge."

Mike Johnson, terminal manager for Buzzi Unicem, a cement distributor, says moving off the harbor would kill the business.

"It would put us out of business," he says. "The cost of trucking isn't even feasible and we don't have any rail into there and the cost and dependability of rail for the volume we do isn't feasible, either."

Spence says they are in the early stages of exploring how to relocate the industries, hopefully within the city.

"This is first step in exploring what it would take to make that happen," she says.

© 2005 American City Business Journals Inc.

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Friday, February 18, 2005

RDC gets offensive in Promenade battle

Memphis Business Journal
By Amos Maki
Link to original

The Riverfront Development Corp. is embarking on an image offensive.

The agency charged with planning, operating and enhancing the riverfront and its parks, including Mud Island River Park, is launching a public relations campaign.

"We feel like one thing we haven't done is market the parks to the public," says RDC president Benny Lendermon. "The idea is we need to tell people these parks exist and are there for them to take advantage of."

The RDC has inked a $35,000 deal with Archer Malmo to come up with a marketing plan and a budget to implement it. Radio spots touting Mud Island and Downtown's other green spaces will appear on local radio stations next month. The spots will appear on Memphis Radio Group FM stations WGKX-106, WSRR-98.1, WRBO-103.5 and WJZN-99.

RDC officials say they want to inform the public about Mud Island, which opens annually in April, being free to the public and about the other dozen parks the agency operates.
But another major reason for the PR push is to bolster the RDC's plan for the area known as the Promenade. Since plans for the Promenade were announced, the RDC has been involved in a protracted battle with a grassroots group called Friends For Our Riverfront that is opposed to planned changes. The group is a mix of environmentalists, concerned citizens and heirs to the city's founding fathers -- who set aside the area known as the Promenade in an easement.

As the RDC prepares to implement the Promenade plan the city council approved almost a year ago, FFOR is preparing to fight them all the way.

"We are not backing away, absolutely not," says John Gary, vice president of FFOR. "We will continue to hold them to task. We want the riverfront to be revitalized, but we want it done in a way that honors the easement and historical character of Downtown Memphis."

The plan calls for reshaping a four block area of the riverfront from Union to Adams by using private development to pay for public improvements to the area. The RDC claims private developments would pay for projects like a proposed two-level promenade and the relocation of parking garages -- from prime real estate with stunning river views atop the bluffs -- underground. The plan also calls for pedestrian bridges that would stretch across Monroe and Court and for improvements to sidewalks on the Promenade.

Currently, much of the land is virtually inaccessible to most of the public, but it offers breathtaking views of the river. The RDC plan calls for increasing the public space by more than 60%, from 3.76 acres today to 6.03 acres.

FFOR wants the city to keep the easement in place and convert the area into park space.
Lendermon and other RDC officials say if the public is more aware of the park space already available Downtown, the FFOR push for park space could be batted down.

"I think there is a constituency that wants the Promenade property to become a park and the folks who believe that, it will be very difficult to change their minds because they believe it for philosophical reasons," says RDC spokesman Dorchelle Spence. "But when they talk to the broader community we thought a good educational marketing campaign would be helpful so people aren't blind-sided when they say, 'Would you rather have a park or a building?' Well, if you ask me that out of context I'd probably say I'd rather have a park, too."

During a slide presentation at a recent RDC board meeting, officials showed images of banners, similar to the ones stretched across Peabody Place parking garages, applied to the garages along Front Street. But these banners included catchy phrases like "Your car shouldn't have this kind of view" and "Pretend I'm a cafe." Spence isn't sure if those slogans will actually appear on the banners, but the RDC board erupted in laughter and approving nods when they appeared on the screen.

Gary, who attended the meeting, says he isn't impressed.

"Why do they need public relations if their idea is so good?" he says.

Lendermon says FFOR waged a successful PR campaign of their own, one that painted the RDC as an enemy of park space and in the pocket of big-money developers.

"There's no doubt about it," he says. "But we think information has been twisted and people have been misled. What we basically do is build and maintain parks. We would like to do something other than build parks.

"We maintain 275 acres of park land along the riverfront that we've improved," Lendermon says. "I've personally been involved in adding a big portion of that. But at some time you have to have something along the riverfront other than parks."

The contract with Archer Malmo is for a year, but Lendermon says the RDC's focus on getting their message across will continue far past that time frame as the agency moves forward with a legal strategy to implement the plan.

"The legal process, depending on the number of appeals, is going to take two years," Lendermon says.

In all likelihood, Spence says, that could mean two more years of the RDC-FFOR feud.

"They continue to be active," she says of FFOR. "They're researching the legal issues surrounding the Promenade. Everywhere our attorneys go, they've either been or they're right behind our attorneys in getting there. They're committed to what they think is best, as are we."

© 2005 American City Business Journals Inc.

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Friday, May 14, 2004

Public promenade vote looms amid growing dissension

Memphis Business Journal
By Amos Maki

The plan for transforming a four-block area Downtown known as the public promenade is in a crucial phase. A public hearing before the City Council is scheduled for May 18.

Critics and supporters of the $50 million redevelopment plan that would be paid for by private development are gearing up for what could be a bitter fight.

"We feel like we are presenting the appropriate plan for the city of Memphis and hope our elected officials will endorse it," says RDC president Benny Lendermon. "It is providing access to a property that is inaccessible now and it's providing an experience that doesn't exist in

Memphis that exists in cities all over the world on their waterfronts."

Some local developers instrumental in the rebirth of Downtown are as far apart on the plan as the banks of the Mississippi River at Memphis.

In a memo obtained by Memphis Business Journal that was sent April 26 to Lendermon, Belz Enterprises chairman and CEO Jack Belz, along with company vice presidents Ron Belz and John Dudas, express deep concern about the plan.

"Our community has only one front door and that is Downtown," the memo says. "Our Downtown only has one riverfront.

"The public promenade set aside by our founding fathers is the only publicly owned property on our city's high bluff that will ever exist. We must not let short term pressures override the long term best interest of our community."

Private developments, including three proposed new buildings, would pay for projects like a two-level promenade and the relocation of parking garages underground. The buildings would be mixed-use, with restaurants and shops lining the bottom floors. Ground leases would keep the property under the control of the city. The plan also calls for pedestrian bridges that would stretch across Monroe and Court and for improvements to sidewalks on the promenade. Grand staircases would provide access to the upper level of the pedestrian walkways.

The property now contains the old Cossitt Library, a fire station, the old Custom House and Confederate Park. The land is virtually inaccessible to most of the public and offers prime views of the river.

But there is some skepticism about the projected height of two of the three buildings proposed in the promenade plan. The plan says the property would be able to sustain a 300-foot residential tower where the fire station and an All-Right parking garage now sit and a 400-foot office tower north of Confederate Park, between Jefferson and Adams. Those are maximum heights the buildings could reach.

The Belz memo also states that it is "misleading" for the RDC to imply there will be no cost to the public for the plan and that private developers would be able to foot the bill for the $50 million price tag.

"A $50 million bond issue would require approximately $4 million per year of revenue to amortize the debt service on the bond issue," the memo states. "It is unlikely that private interests could justify paying $4 million per year in land costs for the limited amount of property available on the promenade."

The memo says the plan does not protect taxpayers and could harm restorative efforts under way in the rest of Downtown.

"In other words, this action could retard the revitalization of the currently developed portions of Downtown and turn over a large portion of the public space overlooking the waterfront to private interests in order to raise a relatively small amount of funds for these improvements," it states. "The financing assumptions need re-evaluation before the city adopts a plan based on this thesis."

Belz Enterprises owns Peabody Place, the 2 million-plus-square-foot retail and entertainment center near Beale Street, and the company has been a primary influence in revitalizing Downtown.

In his reply, Lendermon says an alternate plan calling for the promenade to be turned into a park proposed by a group called Friends For Our Riverfront "generates no revenue and the RDC Plan generates significant revenues that reduce the burden on the taxpayer." Plus, the removal of what is currently there, "no matter what you put back is very costly -- $50 million." The memo goes on to say "the cost of putting a park on the site, public open space around mixed used developments as we suggest, or even converting it to a soybean field are all in the $50 million cost range due to the previously mentioned cost of removing existing infrastructure."

FFOR officials claim their plan will cost only $7 million.

Other important members of the development community, while not endorsing the RDC promenade plan outright, have been far less critical and generally supportive.

"I think we have an opportunity, and in fact an obligation, to get right on it and improve that area," says Henry Turley, principal of Henry Turley Co. "I would be embarrassed if I finished my career and the riverfront looks as shabby as it does now, with parking garages and abandoned libraries and neglected parks. So, I'm for doing things and not leaving things alone. I, by the way, own as much property as anyone on the east side of Front Street. "

Turley previously has expressed some reservations about the heights of the buildings, saying he doesn't believe the economy is dynamic enough to support them. But other concerns voiced by critics, particularly about blocked views, were acceptable to Turley.

"If I had to give up 20 degrees of my view by way of a new and taller building that gives vitality and a more continuous link to the river, I would gladly give it up," he says.

Jay Buckley, vice president and asset manager for Parkway Properties, the company that owns Morgan Keegan Tower and the Falls Building on Front Street, says his company favors the plan, although the proposed office tower would restrict some views of the river.

"We value the views we have as much as anybody on Front Street and we know that it means a lot to our customers," he says. "But it would be a fairly small price to pay to lose a sliver of a river view and gain what is likely to result from the promenade development."

City Councilman and RDC board member Rickey Peete will vote in favor of the redevelopment, saying the plan is viable and that it could do great things for the city.

"I think it can be profitable and improve public access to the promenade," he says. "And it will give the city an opportunity to improve its skyline."

Peete says he understands that some people have concerns about the plan.

"We try to do what is best for the city and sometimes you can't make everybody happy," he says. "I just think this is the best thing for the city of Memphis."

City councilman Carol Chumney says that if she had to vote up or down on the plan Tuesday, she would vote no.

"I can't vote for it the way it is," she says. "There are parts of the plan I can support and there are parts that I cannot support."

Chumney would like to see some cooperation between the RDC and FFOR. She says the council could delay action on the plan and ask the two sides to work out a compromise.

"It is too important an issue to say you've got to do this or forget it," Chumney says. "Whatever happens on the riverfront, we are all going to have to live with it for the next 50 years."

Jeff Sanford, president of the Center City Commission, says it is difficult to judge exactly how the proposed promenade developments would affect redevelopment in other parts of Downtown. Sanford is an ex-officio member of the RDC board.

"Redevelopment of Downtown is far too complex to conclude categorically that development in one area will hinder development in another area," he says. "In some sense, redeveloping the riverfront into an attractive, bustling area could actually enhance our ability to attract redevelopment in other areas of Downtown."

Sanford says the market, not the RDC or FFOR, will determine what gets built Downtown.

Some members of the CCC's affiliated boards met with officials from the RDC and FFOR May 6 to review each plan. The FFOR presentation seemed to hit a snag when members of the group were unable to say how they could fund their plan or how they would replace parking spaces that would be lost. Commissioners, however, asked tough questions of each group and seemed to favor a middle ground.

But Rick Masson, RDC board member and former longtime member of Memphis Mayor Willie Herenton's administration, was emphatic in his opinion that it is now or never for the promenade area.

"I honestly don't feel anything will be done" if the RDC plan is not approved by the council, Masson says. "It is going to stay the same way. I guarantee you."

Masson says a park would be an "impediment instead of an enticement" to getting people Downtown and he says that "in terms of making the river part of our lives, there is nothing" in the FFOR plan. Plus, he says, there is plenty of park space Downtown now.

According to the CCC, there are at least 300 acres of parkland in Downtown Memphis.
John Stokes, RDC board chairman, agrees with Masson and says this is do or die time for the promenade.

"I think if they don't adopt some form or fashion of our plan, I am firmly convinced it will sit dormant," he says. "That has been the history of the property for 50 years."

Lendermon says he knew there would be some opposition to the plan, citing previous debates over bringing the Grizzlies to town and building a new arena, the bluffwalk and the location for AutoZone Park.

"We always anticipated opposition," he says. "We knew there would be a lot of debate over this very important piece of property."

Plus, legal challenges will delay any work for at least two years. If the council approves the plan, the city must move to take control of the land.

The property was donated by the city's founding fathers for use as a public promenade. The heirs of the founders hold title to the land and they are somewhat divided on the proposal, although a large majority of the Overton heirs support the RDC proposal. The city would have to take control of the land, possibly through eminent domain.

In his memo to the Belzes and Dudas, Lendermon sums up his thoughts on the promenade's future.

"The truth is that absent a private vehicle to fund a significant portion of these costs," he says, "the existing condition of these promenade blocks will remain just as they have over the last 50 years."


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Friday, April 23, 2004

Mixed reviews for promenade riverfront plan

Memphis Business Journal
By Amos Maki

Riverfront Development Corp.'s plan to transform an area of downtown known as the public promenade is getting mixed reviews from business and political leaders.

The plan calls for reshaping the riverfront by using private development to pay for public improvements to the area. The private developments would pay for projects like a proposed two-level promenade and the relocation of parking garages -- from prime real estate with stunning river views atop the bluffs -- underground. The plan also calls for pedestrian bridges that would stretch across Monroe and Court and for improvements to sidewalks on the promenade. Grand staircases would provide access to the upper level of the pedestrian walkways.

The property now contains the old Cossitt Library, a fire station, the old Customs House and Confederate Park. The land is virtually inaccessible to most of the public and offers breathtaking views of the river. The RDC plan calls for increasing the public space by more than 60%, from 3.76 acres today to 6.03 acres.

But some residents and businesses are concerned about the projected height of two of the three buildings proposed in the promenade plan. The plan says the property would be able to sustain a 300-foot residential tower where the fire station and an All-Right parking garage now sit and a 400-foot office tower north of Confederate Park, between Jefferson and Adams.

"I've always felt like our riverfront was underutilized," says Mohamad Hakimian, managing partner of the Madison Hotel. Some views from his hotel will be obscured if the two larger, bookend buildings are constructed at 300 or 400 feet. "So having said that, I'm excited some projects are on the drawing board.

"However, I'm not fond of a couple portions of it. In particular, the high rises. Such high rises at the banks of the Mississippi River are going to block an enormous amount of views from many other buildings."

Hakimian also wonders what effect new, developable property will have on the ongoing efforts to revitalize old developments in the heart of Downtown.

"Those will become the prime locations and will discourage developers from developing many of the beautiful buildings that are Downtown that are vacant," he says.

Henry Turley, principal of Henry Turley Co., says what is there now is unacceptable and that something should be done with the property.

"We don't like the way it is currently developed," Turley says. "We think what is there now serves as a wall, a barrier, between our properties along the east side of Front and their enjoyment of the river."

Turley says he would like to see towers go up Downtown -- as long as the economy drives the development.

"I would like to see our economy and our Downtown so vital it calls for another building," he says. "It's not just something you will into existence or zone into existence. That takes a real dynamic economy."

John Dudas, vice president of Belz Enterprises, says he has some concerns about the towers because of the current availability of space.

"I would conservatively estimate that we have at least 2 million square feet of vacant building space Downtown today," he says. "If another corporate user does not relocate to Downtown Memphis, then the approximate 750,000 square feet of commercial space that is proposed in the subject towers would accomodate all of the average annual demand for office space in Downtown Memphis for a 15-year period."

Plus, Dudas says, additional parking would have to be provided for the buildings.

RDC president Benny Lendermon says the 300- and 400-foot heights are the maximum height of the proposed developments, not the predetermined size of the buildings. Lendermon says he doubts any of the buildings, especially the largest one, would be constructed to the maximum height, if it's ever built at all.

"We don't think that office tower ever gets built," he says. "There is probably a 3% chance of that tower being built."

Lendermon says the economy, not the plan, will determine the size of the developments and emphasized the RDC isn't taking the build-it-and-they-will-come approach.

"A developer will build the building based on the economic reality of what the demand is," Lendermon says. "That demand will determine which buildings go up and when they go up, as well as the height and mass of the buildings."

The promenade plan could cost as much as $50 million. Officials say work on the property would not begin until private developers sign contracts to develop the land.

"There will be signed contracts and everything before the first spade of dirt is turned," Lendermon says. "We don't think you do anything until you are well along the road of executing contracts with developers."

The promenade plan will land in front of the City Council's Public Works Committee April 27; a final vote on the project will be held May 18.

Lendermon says he thinks the RDC has enough votes on the council to win approval for the promenade plan.

City Councilman Ricky Peete, who also serves on the RDC board, agrees with Lendermon and says there is enough support for the plan on the council.

"I think there is enough support for it, but there will be serious debate," he says.
At least one council member, Jack Sammons, would like to hear more about the plan before voting on it.

"This is a generational issue and, frankly, I wouldn't be shocked if the council deferred this for a year," he says. "I'm not ready to vote and if we have to do it in the next few weeks, I'd be inclined to vote against it. I suspect there will be a lot of discussion about this in the next couple of weeks."

Turley, for one, is tired of talk.

"It just seems like a lot of talk and I'd like to see some specific developments proposed and gotten under way," he says.

But legal challenges will delay any work for at least two years. If the council approves the plan, the city must move to take control of the land. Lendermon says that could be done in a number of ways, including the city exercising its right of eminent domain.

The property was donated by the city's founding fathers for use as a public promenade. The heirs of the founders hold title to the land and they are divided on the proposal. Some support the promenade plan while others have joined a group, called Friends for Our Riverfront, that opposes it.

"We're not against development," says Virginia McLean, an Overton heir and president of Friends for Our Riverfront. "We're just against the wrong development at the wrong place at the wrong time."

Her group created an alternative plan that would turn the promenade entirely into park space at a cost of about $7 million.

"That plan would require taxpayers to finance it and the RDC plan would be paid for by development and therin lies the difference," Peete says.

Lendermon says the Friends plan is unrealistic because whether or not the land is developed or turned into park space, the cost of relocating the existing structures will remain about the same.
"You have got to replace the parking because business depends on it and you have to replace the library and fire station," he says. "Maybe the council will make our life easy and come up with this big pot of money and say 'Here's $50 million, make this into a beautiful park.' "
Hakimian hopes there will be an opportunity to tweak the plan and wonders what would happen if the council voted the plan down.

"We all should be careful not to fight it in a way that kills the project forever," he says. "But we need to ask for modifications to it. It looks like this is the only plan on the table.

"This shouldn't be the only option where we either do this or there is no plan."

Peete says he hopes the two sides can find some common ground.

"While I respect everyone's right to have an opinion, I think that too often we are so extreme in our views that we can't see the forest for the trees," he says. "I think we have the ability to compromise to do something great for Memphis. Where there is flexibility to tweak the plan, I think we are of the mind to compromise."

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