Sunday, September 28, 2008

Personalities Often Obscure Proposals

In politics, you know things are getting out of hand when your very presence produces an added overlay of suspicion and mistrust that complicates public decision-making.

That's certainly been the case with the conspiracies and intrigues ascribed to plans to expand Beale Street and to consider a new convention center.

These days, it seems that every plan or idea is made more volatile by attaching the mayor’s name to it. A Herenton Convention Center plan produces more heat than just a convention center plan. The Herenton plan for Beale Street immediately sparks rumors when compared to Memphis’ Beale Street plan.

The Dividing Line

While the headlines about an option to purchase the Greyhound bus station by Mayor Herenton associate E. W. Moon in the location that makes the most sense for a new convention center – the Peabody/Beale Street area – rightfully raise questions, but as is often the case in city government, and contrary to outside impressions of grand conspiracies, Mayor Herenton generally gets a process under way and has little voice in what they do. According to tourism officials, he had no voice in who was selected for the convention center committee nor in what their agenda was to be. In truth, the most difficult hurdle for this proposed project is to find tax sources to pay for a new convention center that have not already been tapped out.

For example, if city and county governments (remember county government: it owns half the building) want to build a new $500 million convention center, it will have to find $30 million a year to cover its debt service, said tourism insiders. The primary funding source for a new facility would seemingly be from the Tourism Development Zone (TDZ), but as we explained recently, it is almost tapped out and there is little room for additional debt.

There is of course the potential for a Tax Increment Financing District (TIF), but again, it’s difficult to imagine that it could generate $30 million a year, and even if TIF and TDZ are stitched together, it still doesn’t appear to have the funding capacity to support a new center.

The Core Question

But a more fundamental question has to be answered before the money issue is even dealt with: Can a new convention center substantially improve our appeal as a convention destination?

We are at best now a third-tier convention city, and we have become a skeptical lot. After all, we were told that if we had a convention center hotel, it would make us a successful convention site. Then, we were told that we needed to expand the convention center. Then, we were told that we needed an expanded convention center hotel. Then, we…well, you get the picture.

This time, before we embark on a new project, we need definitive, conclusive proof that we can in fact move up to the top tier of convention cities and that we can in fact compete with our major rivals. It’s only after establishing that this can be done that attention should turn to the funding.

Location, Location, Location

Somewhere along the way, however, someone needs to consider what contractual entanglements must be resolved as well, particularly any agreements with the Marriott Hotel who significantly expanded the number of its rooms a few years ago with the promise of a bigger convention center.

There’s little argument that the convention center more logically belongs in the Peabody Hotel/Beale Street area. There’s equally little argument that the current convention center provides a dismal experience and is detrimental to any serious vision of Memphis as a convention destination.

Mayor Herenton said that no decisions have been made about where a new convention center could be built, and while the area from Fourth to Danny Thomas might seem the most likely choice, other possible sites are located to the east of Beale Street and also south of FedEx Forum.

Mixed Signals

While there is wide supposition that Mayor Herenton wants the convention center on Union Avenue, it's worth remembering that he opposed the placement of FedEx Forum there. In a tug of war with Shelby County Government – which favored the Union site – Mayor Herenton bested former Shelby County Mayor Jim Rout and had the new arena built where he wanted it.

But back to our original premise, just consider plans to expand Beale Street with new hotels and entertainment venues. It was widely known in downtown tourism circles that city government was anxious to remove John Elkington’s Performa management from the historic street and that Mr. Elkington was equally anxious to turn his attention to developments in other cities. In truth, it is in neither party’s interest in litigating the issue.

Beale Street Blues

Negotiations appeared to be going in a positive direction and predictions were that a new arrangement for Beale Street – complete with a new oversight group – would be announced by end of the year. With a flurry of subpoenas apparently designed to intimidate, Mr. Elkington is winning no friends in the tourism industry or in City Hall, and in upping the ante, he has made the deal much harder to reach.

Mr. Elkington’s supporters report that city government had a chance to seal the deal if it had moved ahead in good faith, while a city official said that he had overestimated his “nuisance value.” There are few elected officials who would have commented in the midst of such legal manipulations, so it's really no surprise that City Hall didn't comment and is following legal recommendations to fight a subpoena.

It’s too bad, because all the rumors about city operatives measuring buildings to jack up rents to pay for new development serve no useful purpose. Neither are they based on much logic, but then again, Beale Street is nothing if not a cocoon where rumors are rife and assumptions abound.

Symptoms Of The Political Disease

Meanwhile, some county commissioners remain reluctant to sell to City of Memphis their interests in The Pyramid and the Fairgrounds for $5 million. Although the transaction would be the ultimate protection against risk, several key county commissioners are suspicious that somehow the Herenton Administration will “take” them in the deal.

It’s symptomatic, because there’s no funding source being used on the Bass Pro Shops project at The Pyramid that would otherwise go to county government. The principal source of funds for the $30 million in so-called landlord improvements at The Pyramid is the TDZ, which captures sales taxes to pay bonds that would otherwise go to state and city governments.

One commissioner questions why there was once consideration of Bass Pro Shops paying property taxes. Whether you like Bass Pro Shops as the tenant in the former arena or not, it still makes more sense for it to remain public property. Any way, even if the building were subject to property taxes, we’re sure Bass Pro Shops would immediately ask for a lengthy tax freeze. Meanwhile, if someone is really concerned about this issue, the most graphic example is found in the hundreds of tax-free publicly-owned acres occupied by FedEx at Memphis International Airport.


Zippy the giver said...

Sounds like desperation, giving Bass Pro a year of free rent and no tax on citizen's tab.

Anonymous said...

"Even back then, county officials were told by their city counterparts that Mayor Herenton had plans for the site and did not want it occupied by FedEx Forum, thus making it difficult to understand why he would now prefer a mammoth convention center."

It's damning obvious why he didn't want the forum built there back then.

he hadn't gotten his fincial ducks in a row yet at that point in the regard to the land that E.W. Moon "Owns" at present.

And like the old saying, "Where there's smoke, there's fire", its a good comparision to say "Where's there's E.W. Moon, There's Willie."

Connect the dots. Its glaringly obvious.

Tom Guleff said...

The "Herenton Premium" is a gentle way of putting it ... :)

Smart City Consulting said...


Not that there's a majority of support for Bass Pro Shops here, but we did want to make sure you know that in its 12-month agreement, it will pay $420,000 in rent and $500,000 additionally if it walks away (in agreement with city government).

Zippy the giver said...

Well, that's one of the thirty one down. Way to aim high. Dream big.