Behind the Headlines — Dec. 6, 2013

Behind the Headlines — Dec. 6, 2013


(female announcer)
This is a production
of WKNO – Memphis. Production funding for “Behind
the Headlines” is made possible in part by.. The role and the limits of
city funding for Autozne Park, Crosstown and other
projects tonight on “Behind the Headlines.” [theme music]
♪♪♪ I’m Eric Barnes,
publisher of The Memphis Daily News. Thanks for joining us. We’re joined tonight by a number
of folks involved with various projects the city is
looking at right now. We’ll start with
Todd Richardson, co-leader of the
Crosstown Development Project. Thanks for coming back. Thank you. Bill Dries, senior reporter
with the Memphis Daily News. And Lee Harris from the
Memphis City Council. Thanks for being here. Sure thing. I will start with you, Lee. And talk about.. You know right now the city is
moving through a whole bunch of projects at a
relatively quick pace. The city administration,
who couldnt be here today. Some other folks involved with
various projects — could be in part because of the storm. Involved with these various
projects couldn’t be here in part because the storm. But from you as a city council,
you guys are being asked to look at these projects. You’re being asked to
look at them pretty quickly. There’s a lot of money involved,
a lot of creative or complicated financing involved. Let’s start with Autozone
Park, which that’s been delayed. Where do you stand
ont hat right now? What more do you need to see
from the city and the other people involved with Autozone
Park in order for you to make a decision about whether this
is a good deal for the city? Well, you know I’m trying
to keep an open mind on it. I think whether it’s a good
deal is still an open question. I mean what do we know. We know that the Saint Louis
Cardinals are gonna pay $15 million for the team. And we know the proposal
currently is for us to pay $20 million for the stadium. So all total, that’s about $35
million for a team at a stadium that costs about $24 million
on the face of the matter. Right. And so, that’s an $11
million profit for somebody. So the question is is whether
or not that’s a field return on their investment or not. So, you know there’s got to
be some more details here. We’ve got to learn
some more information. But on the face of the matter,
we’re paying about $35 million. $50 million form the Cardinals,
$20 million from the city for an asset that is, at best,
worth about $24 million. So, we’ve got to figure out
how that deal was negotiated and whether or not at that level
it’s a good reasonable price for the city of Memphis. Philospohically, I mean the
numbers are very important. But we’ll set those aside
a little bit for a second. You know cities, states
all around the country fund, buy ballparks be it at the
minor league level or at the professional, you know,
level or the top level. We, you know, in
Memphis have the FedEx Forum. Are you philosophically opposed? Do you feel like there are
people on the council who are philosophically opposed to
the idea of owning the stadium? I mean yeah. You raise a good question. The point is is that what we’re
supposed to be doing on the council is making sure that we
take decisions in the community benefit. And it is hard on the face of
the matter to square purchasing a stadium with a
community benefit. It’s very hard to see that. I mean the fact of
the council for.. I’ve been on the
council for two years. And for much of that time, the
council has complained a lot that we need a
five-year strategic plan. Kemp Conrad, of course, has been
a huge proponent of a five-year strategic plan. And the mayor and the council
agreed that we’re gonna do this at some point. And my guess is is that if
we were to have a five-year strategic plan and we had
it in front of us today, it probably wouldn’t include
as part of our vision stadium ownership. That’s my guess. But who’s to say? Short of it is, you’re
right that as a general matter, you don’t think of city
government as going in to the stadium ownership business. Now, the numbers might
pencil out and may work. But that is, you know.. That’s sort of beside the point. The numbers can pencil out
and work with respect to many assets. We could buy a Wendy’s franchise
and the numbers coule pencil out. That doesn’t necessarily mean
that it is within the strategic vision of the city of Memphis. So, I mean that’s another
question to be answered. And you know I think people
will take different opinions. But I think the starting point
is probably not for most folks. Yeah. And Bill, help me walk through
some of teh various funding projects that are on the plate
of the city council right now. Crosstown — Obviously we’ll
talk to Todd here in a second about where that stands
as a $15 million approval. I think there’s a technicality
left before that’s finalized. But the city has
basically approved that. They are looking at, you know,
we’re in the middle of Bass Pro. We’re in the middle
of Overton Square. We’re in the middle of
improvments down in Graceland and Whitehaven. And then, there’s all these
other issues kind of out there. There’s talk of what are we
gonna do with the fairgrounds. There is. It’s not a project so much
but it’s a major problem with pensions that the city is
underfunded it’s pension plan — has the state
breathing down it’s neck. What have I missed in
terms of big ticket items? And give me your sense of where
the city council’s concerns are with all those various
needs coming to them. Well just on the same day
that the council took up the Crosstown project and took up
the Autozone Redbirds deal, they also got a briefing earlier
in the morning on the Heritage Trails project, which is the
administration’s massive plan for redevelopment on several
fronts of the area south of FedEx Forum moving
in to South Memphis. And the city’s already applied
for a federal grant that is the successor to the Hope Six
funding that the city has had for a number of
public housing projects. And that’s now in the works in
Washington and the city should know something
February or March. So, that’s also on the table. There was so much on Tuesday’s
agenda for the council and committee sessions that they
really didn’t get around to getting a briefing on this huge
issue of the city’s unfunded pension liability and how
to increase funding for it. Right, which can be a number
int he 60- to 80 million range. It could be, yeah. On this show, the estimates that
have been talked about are 60- to 80 million dollars in
city spending that could be put toward that. Right. And there was a moment. And I think I’m quoting from
your article where the city and Barbara Lipscomb is briefing the
council on the Heritage Trail project. And whatever it’s merits,
there’s this little box in the corner that has all
the Autozone Park, you know, briefing proposals. And I think it’s Harold Collins
from the city council who said, you know, “What’s in the box?” You know, let’s get to the
details becuase we don’t have them. I may be messing that story up
but it seemed to reflect a lot of frustration. Let me turn back to you, Lee. Frustration with a lack of
details and maybe that coherant big picture plan. And again, these kind
of short deadlines. Back to Autozone Park, the bond
holder of the current bonds on the park has said look, we
got to get this thing done by December 31st or we’re going
to foreclose and bankrupt and, you know, start auctioning
off pieces of the park. That’s got to be frustrating on
some level as someone who’s got to weigh all these
varous projects carefully. I mean, I try to stay
cool and collected. But you’re right. There’s a little bit of
frustration that comes with the deadlines. And most of these deadlines
are invented deadlines. I mean they’re
somebody else’s deadlines. And they’re not real. And they certainly don’t
apply to us trying to make good decisions about how to
spend city resources. And so, I’m hopeful that all
the council members will realize that, you know, these
aren’t our deadlines. There are somebody else’s
deadlines and that we’ve got to take our tiem to make sure we
make a decision in the best interest of the
citizens of Memphis. Because we’ve got
a responsibility. And we can’t just punt that
responsibility and say well, we woudl have made a good
decision but we didn’t have enough time. That’s no excuse. Right. Let me bring you in, Todd. And you know we talk
about these various projects. You’ve been a huge advocate. And I think you told me before,
you’ve spoken I don’t know how many hundreds of
times to various groups, locally and maybe nationally
about Crosstown project which is the big Sears building that
people see have been vacant for, I don’t know, a decade or more. The city approved $15
million this past week. That goes with
another, I don’t know, 150 to 175 — you can tell me. That you all have
raised or about to raise. You live in Memphis
so you pay taxes here. You’re an assistant professor
at the University of Memphis. You know, how do you
balance that philosophically? And then, we’ll talk about
the plans for the project. But, you know, is this an
appropriate investment for the city? And give us your
thoughts on that. Sure, it’s a great question. It’s one I’ve thought a lot
about given the economic times that we live in. I think the most important thing
to recognize is a couple of things. One is the return
on the investment. So with a million square feet
that’s been empty for 20 years, that has huge negative
impacts on the neighborhood. That’s a neighborhood — one
ofthe poorest in our city and hugely disinvested. And we’re now gonna,
within a couple years, have 2500 people
there every day. So, the thousand construction
jobs that it creates, the 875 new jobs to the
economy that it creates, $1.5 million a yaer in annual
sales tax plus just putting people there and the development
— That’s going to catalyze around the building. All those folks are
going to need to eat, to get gas to do
their, you know, cleaners and all of
those kinds of things. And so, I think the return on
the investment for us asking, you know,
nine-percent of the total cost, you know, from the city — the
return on that investment is going to be huge and
it’s going to be quick. The other thing is just the
inspiration that the project is. And you’ve got eight wonderful,
local organizations who have come together to
really make this happen. You’ve got a local
philanthripist who has donated the building and the site
so that all profits from teh development go back in to the
building and the surrounding community. I mean this is a case study for
how to do development right in the city. And I hope that it can be an
example for what’s to come. So, I think the return on
investment both from in the economic standpoint but
also, just from a social goods standpoint — it’s well
worth the 15 million investment. And I want to come back
to some of the details, some of the partners and so on. But you’ve been talking about
this with potential investors, with city council folks
for a year — two years now. And so, is that
different for you? And I don’t know how
you voted it this week. So, you may have voted
against the project. I don’t know. I wouldn’t vote
against this one. Not against this one? Okay, so why? Well, I’m adding this project. I think Todd has spoken to it
and I think he’s done a good job. I mean I think this
project is tranformative. And it’s transformative
to those neighborhoods. I mean this project is.. I think the location to this
project — right in the core of the city of Memphis is just a
real psychological boost for the whole city and for
this whole region. I mean this project sits as
a gateway to north Memphis, a gateway to Midtown,
a gateway to Downtown. And before, it was a signal that
Memphis was not going to make progess. Before, it was the largest
assemble of blight in the city of Memphis. It was a million square feet
and it was delapidated and deteriorating even faster. And so, we’ve shown that we can
do something about that and that we can come together. And the partnership that’s been
created here is remarkable and never before seen. You’ve got private parties with
great reputations like the Cades Foundation and the
Cades and so forth. You’ve got the public, public
officials — city council and the mayor who’s been supportive. And you’ve got the
community involved. I mean we saw the presentation
at the city council. And he talked about how it would
impact Klondike and Smokey City — inner city
neighborhoodsthat I represent. And so, anytime you can
bring public officials, private parters and the
community involved all unanimously in approval
of a project like this. A million square feet. I tell you, you
really got to do it. You compare this to the last
large scale community project we did, which was FedEx Forum,
which is a $250 million project. Well, taxpayers
paid all of that. And this is $175
million project. Yeah, this is $175
million project at least. And the city is only putting in
— or city and federal resources are only coming to
about $15 million. So, it’s remarkable. It’s a no-brainer in my view. Bill? And in fact, the council was so
familiar with the goals of the projects that when this got to
committee this past Tuesday, I think the council members were
kind of anxious and were kind of saying, “Alright, we know that. “Tell us about the $15
million and where it comes from, which is kind of the
administration’s piece on this. And overlooked in that was
something that I had heard that I think you had
talked about before but, which I heard more detail about. And that was kind of the plans
for Jackson avenue and more of a business corridor there
than we’ve seen before. And Jackson, for those who
are unfamiliar with the area, is basically the northern
borth fo the Crosstown building. Right, it’s the northern
boundary of the Crosstown neighborhood and where Klondike
and Smokey City is located. Even though Klondike
C-D-C, Quincy Morris, calls, you know, Crosstown
the gateway to north Memphis. And I think that
that’s exactly right. It’s also, you know, the exit
off of 240 on to Jackson to get to the Sears building. That’s going to be
used a lot more. And so, the increased traffic
along Jackson is going to be impacted once this
building is up and running. And so, we’ve been working with
Director Lipscomb and his staff who have done. You know I should pause and
just simply say thank you to Councilman Harris and all the
city council and the mayor and Director Lipscomb and his staff. They’ve been working hundreds
of hours over the last — particularly Director Lipscomb
and his staff — in making this happen. So, you know they’ve been
thinking about the communities to the north and what needs
to happen now in order to take advantage of all of the
purchasing power and traffic that’s going to be coming
to this building every day. Mhmm. Lee, from a council
member’s perspective, two very different projects. Some similarities though. The difference between the city
buying a ballpark and the city investing in the
Crosstown project. Well, there’s a whole lot
of difference in my view. For one thing, this is a private
public partnership as you actually see some leverage. So, the city puts in $15
million and we get leverage of, you know, $160 million at least
of private investment and so forth with respect
to this project. So, that’s a huge difference. The other huge difference is is
that the Crosstown project is a project that the community wants
and there’s community support for. And so at the end
of the day, I mean.. You know Wanda
Halbert says it well. It’s those folks out there. The voters are my boss. And the voters want something
done with Crosstown almost unanimously. In fact, I don’t think I’ve ever
met a voter in this neighborhood that did not want the
Crosstown project done. And so, some folks
can carp and so forth. But the people who live in
north Memphis and Midtown and Downtown, many of
whom I represent, they want this project done
and they want it done as soon as possible. And my only regret with this
project is that we waited until December to green light it. I wish we would have voted on
it many months ago becuase Todd and, you know, his other
colleagues have been working so hard to make sure they introduce
the project and make sure every detail is out there and in the
public space and that we know everything about the project. So, you know that’s also a third
difference is that you know all the “I”s are dotted on
this project and all the “T”s crossed. I know there’s not a.. I don’t want to speak for Todd. But I don’t think there’s not a
council member who’s not been invited to a presentation
with respect to Crosstown. And I’ve received at least
three or four presentations for Crosstown. And the last one, I turned
down becuase I had too much information. I said I know everything
I need to know about it. It’s a remarkable
project, right? So, there are
lots of differences. And Todd, with the $15 million,
which will be secured with then council approves the
minutes of this past meeting, your other investors are now
signing on the dotted line even though they’ve been
committed to it as well. So, what happens next and
what specifically does this $15 million go for? Okay, good. So, yes. Every, you know.. We have… MjcClain Wilson, my
counterpart, calls it. You know we’re all running a
race and there’s eight to ten people in the race. And we’re just looking over
our shoulders making sure that everybody’s moving at the same
pace toward the finish line. And so, we have banks. We have tax credit consultants. We have, you know, a number of
these folks who’ve just kind of been waiting. And so, the city investment was
the last big piece for them to say okay. We can now justify starting work
and structuring the deal and teh development — all of thsoe
things to be able to start construction in the spring. So, we now have
enough, you know, momentum. The uncertainties
are less, right? — so that people can actually
invest their own time and energy and money and
closing the project. In terms of what’s
happening right now, we’ll finish construction
documents 100% by this Friday. Grinder, Taper, Grinder and
All-Well Project Management — who Grinder is our contractor. We’re working with Micheal Hooks
Junior and All World in terms of our minority and women owned
business to be involved and have that representation. Those construction documents
will hit the streets in the next couple of weeks. And that bidding process that
that will start will take abouta couple of months due to the
holidays and those kinds of things. So, we’ll have the pricing
adn everything done by early February so that we can move
towards financial closing. And you talk about the
partners for a second. The founding partners, the folks
who have committed on some level to be tennants because.. And this is partly my fault. I mean and the media’s fault. When this project
first came along, there was a lot of
focus on the arts element. And that was the first
thing that got off ground. Crosstown Arts and
just a kind of.. There’s an
exhibition space and so on. And I think to some degree,
the media — and you and I have talked about this before —
presented this as this kind of hippie comune in
teh Sears tower. And so, there was a certain
amount of skepticism like how are you going to have a
bunch of artists pay for this, you know, million square
feet and $180 million project. It has evolved. There’s a big arts component. But when you talk about
the founding partners, it’s a whole different — gives
it a whole different look and feel. So, name them if you can. Well first of all,
it’s all your fault. It is. It definitely is. Let me go back. I heard you. Sorry, I didn’t answer your
question about what the money is going for. And if you don’t mind, I’ll
run thrugh that real quick. All infrastructure needs. So, think sewer, blight
abatement — blight removal and abatement and things like that. So, it all goes towards
preparing the site for us to be able to do the work
that we need to do. And to the partners? And to the partners. So, we have eight
founding partners in arts, education and healthcare. So, Crosstown Arts. The first ones to come on
board were Crosstown Arts. Gestalt Community Schools is
gonna start and operate a high school — Crosstown
School for Arts and Sciences. And Memphis Teacher
Residency Program. And then, Church
Health Center, of course, came on board. And then, Rhodes College
and Methodist Healthcare, as well as Saint Jude
and ALSAC Saitn Jude, the funding arm of Saint Jude. So, those are the eight in
arts, education and healthcare. And now, we’ve got four
others who are committed. Southern College of Optometry,
Christian Brothers University, Goodwill Excel Center, which
is going to be a charter high school for adults for folks who
have dropped out of high school. And then, the fourth
is V-O-2 Networks, an I-T company that’s going to
be moving their headquarters. Okay, okay. And Lee, you know we talk about
the strengths of this project, you did, and the presentation
and the time and the education that you and other city council
members could go through. Why do you think that hasn’t
happened with Autozone Park? Because the park has been. The financing of the park
adn the Redbirds has been problematic for some years now. There’s been talk of coming to
the city to buy the park for quite a while. There are some very
philanthropic people involved with it. John, who represents Pitt Co
and Pitt Hyde and clearly, one of the more
philanthropic families in town. Ray Pullman, who couldn’t be
here today but was gonna be becuase of scheduling
issues, from Autozone. And he’s been involved in
all kinds of efforts in the community. What is your guess,
if nothing elsel, of why there wasn’t a more
time given and a mroe coherent presentation that would give you
guys — that was mroe along the lines of what you’re describing
you got from Crosstown? Yeah. And yeah. So, I would be guessing. And I should also say you know
Sint Louis Cardinals are also involved. And some of those Cardinals seem
to be a pretty honorable outfit. I’ve met with the
general manager and so forth. And certainly the Hydes and so
forth are very honorable people and contribute a lot
to the city of Memphis. So, you know it’s just either.. The question is why has
this happened like this. Why did they, you know, put a
steak on a garbage can pail? You know I don’t know. You know the New
Yorkers involved. And I don’t know the New
Yorkers and I don’t the culture. The ones that ultiamtely — even
thought they may not be title holders right now. But they
ultimately own the team. The question is is whether or
not their culture is different. And I think that from what I’ve
hears is is that they’ve got things that are going ont
hat are different from, you know, the city of Memphis. They’ve got bonuses to
pay at the end of the year, for example. And so, that kind
of, uh, interests.. Yeah, a Wall Street mentality. A Wall Street culture — it’s
probably a big contrast from the kind of mentality we see
when you have locals involved. The Cades over here or
the Hydes and so forth. Or the Saint Louis Cardinals —
even regional players involved in the city of Memphis. I think that there’s just a
different way to doing things probably. It’s just a guess. Yeah, do you want a
venture a guess at that, Bill? You’ve watched this thing. I mean we’ve known. We’ve written about it. I mean why did it all come out
publically in a not particularly coherent presentation without
a lot of answers and with this really short deadline. I think part of it is is it’s
the nature of this particular financing deal, as Lee said. This is a Wall Street mentality
that we’re dealing with, to some degree, to get this
done by a certain deadline. And a lot of times, the players
don’t move until you’re right up on the particular deadline. The problem with that is the
government just doesn’t operate like that. Government, especially
with 13 member elected body, needs more clearance, needs more
time going in to it and needs more detail about it. Because you’re not dealing with
people who work in these kind of high financed matters every day,
especially when they’ve got a $15 million piece of
Crosstown on the agenda, a 60- to 80 million dollar piece
of unfunded pension liability on the agenda. And they meet twice every month. You have to have more
lead time for this. Right. Go ahead. And I should also say this
cultural class plays on so many ways. Because a presentation is mostly
— the presentation we saw mostly wad about
the financing of it, which is very important. That was in the forefront
and extremely imporant. But the community benefit
part of it was an after thought. I mean I don’t think
I’ve seen any kind of real, coherent, persuasive
presentation of community benefit. Now, some of the documents talk
about an inner city baseball program. But again, we haven’t had a very
coherent presentation about that inner city baseball program, how
mnuch the New Yorkers going to put in. I suspect not a lot. But how much the New Yorkers
may be willing to put in to the inner city baseball program to
actually create some sort of community benefit
from this whole project. Because without a
community benefit, I mean that’s what council
members are thinking about. I’m not an expert on finance. I’m an expert on what
my community needs. And that’s what I
want to hear about. And whenever there are
sort of stadium proposals.. I remember back when FedEx Forum
and the Grizzlies were first proposed. And you’ve seen
follow-up numbers. Whatever you think
them of, you know, return investment. And Todd mentioned
that with Crosstown. Of all those people who come
Downtown and go to a baseball game and they come out and go to
a restaurant or they go to a bar or they buy a certain amount. You haven’t gotten those kind
fo return on investment numbers? I mean.. We’ve heard return on
investment and so forth. But that’s, you know,
those numbers are.. Those numbers are
moving targets. I hear them all the time. They’re moving targets. Just a couple of minutes left. And I want to talk
about the financing. And sometimes when we talk about
financing and the $15 million, you know we make it. The media makes it
sound like – okay, there’s out of the tax pool. You know the city of
Memphis, Mayor Wharton, you know, writes a check for
$15 million and gives it to Crosstown. And just to got through the
complexity of the funding side on Crosstown.. And I’m just going to
skim from Bill’s article. The largest bloack — $6 million
in qualified energy conservation bonds. Four million in federal section
one oh eight bonds from economic housing and rehab loans, federal
grants and the EPA’s Brownfield program for another $2 million. Another 1.5 million woudl come
from the city of public works street budget and $950000 from
the city’s storm water fund fee. I think there’s another
$500000 from M-L-G-W. So, there’s a huge amount. And maybe a turn to you, Bill. — of complexity just in
the financing that has to be presented and understood. And you know some people have
criticisms of Director Lipscomb for being maybe too secretive. But I don’t think anyone would
ever sya that he isn’t able to pull together a lot of
different funding sources, a lot of creative funding to
make these kind of projects happen. Yeah, and that was actually
part of the problem here, too. Because some of pieces didn’t
come in to play until the last minute. Yeah. The city was looking at
some different scenarios. And some of them didn’t pan
out with bond council on this. So, they had some back up
plans for some other pieces. And even if the Autozone
ballpark deal is done, um, the city for the next two
months is probably going to be looking at ways to shift some
of the sources of funding to something that they
feel is more secure. So, even if the council
approves the ballpark deal, there still might be
some changes in funding. And if there are, they’re gonna
be some council members who are gonna say wait a minute. That’s not the deal we voted on. The funding for the ballpark.. I don’t know if I
should look at you, Lee. — is coming from
Center City Finance. It’s that/ It’s bonds? Yeah, and the description
of these things is complex. But the reality is we’re
gonna borrow $25 million. And we’re gonna
try to pay it off. And that has consequences. I mean that’s rela money, no
matter how you look at it. That’s real money. And at the very least, that’s
gonna reduce our borrowing capacity as a city. For other projects
that might come up? Yeah. Now, these bonds might be a
little bit different in the sense that we’ve got dedicated
revenue sources and so forth. But borrow $25 million and you
still have to evaluate whether or not that’s a good idea. And you actually questioned
whether or not it would be better for the city to take
that money out of it’s reserves. Yeah, they didn’t
have an answer for that. And I think there is an
answer out there for that. But they didn’t have an answer
for that for why we would put something on a charge account,
which is what we’re doing. We’re borrowing. And there’s gonna
be an interest rate. Although a low one I think
because we’re a municipality but there’s still an interest rate. And the question is
why are borrowing money, $25 million, when we could
just take it out of our savings account and pay no
interest rate adn then, pay ourselves back from the
dedicated funding source. And it gets back to that idea
of a comprehensice plan because maybe, you know.. Where do those
reserves go and so on? Alright, that’s all
the tiem we have. Councilman Lee
Harris, Todd Richardson, Bill Dries — thank
you all for being here. Thank you for joining us. Join us again next week. Goodnight. CLOSED CAPTIONING
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