|By Wayne Risher, The Commercial Appeal,
Memphis, Tenn.McClatchy-Tribune Regional News
September 15, 2010 --A $68.7 million luxury hotel won a tax freeze on Tuesday worth $15 million over 20 years and promised to deliver a much-needed spark for a distressed neighborhood in the shadow of FedExForum.
It would be the largest minority-owned development to date in the Downtown area, Center City Commission director of development and diversity outreach Jaske Goff said.
The Center City Revenue Finance Corp. approved the tax freeze for RPD Hotels LLC for an 11-story, 298-room Hilton Memphis Downtown Hotel at the southeast corner of Fourth and Linden.
The developers are working to complete financing and hope to break ground in November. The estimated opening date is December 2012.
The vacant lot overlooks the arena and Church Park and is a short distance north of one of the city's last public housing projects that haven't been revamped.
"It will probably be in the vanguard of redevelopment of that area," Goff said.
Tax freezes are usually for as many as 15 years by board policy, but RPD managing partner Bridget Chisholm said the project's pioneer status justified a longer term.
"It is a redevelopment area of Memphis that needs a catalytic thrust," said Chisholm, a partner with Marlon Phoenix in the project. "We're taking a risk in going first."
Chisholm said the 20-year term also aligns with the proposed franchise agreement with Hilton and financing.
Center City president and CEO Paul Morris said that by jump-starting the rebirth of the area south of FedExForum, "it would be a huge benefit to Memphis to have it go forward."
According to the investment banking firm M.R. Beal & Co., project costs would include $42.7 million for construction and $20.3 million for "soft costs."
The firm breaks down expected costs and funding sources in a letter to the Memphis and Shelby County Industrial Development Board, which approved the hotel to receive nearly $7 million of Shelby County's allocation of Recovery Zone Facility Bonds.
M.R. Beal said annual debt service over a 25-year term would be $4.39 million (interest only) in the first seven years and $5.1 million to $5.9 million per year in the last 18 years.
Phoenix rejected suggestions that Downtown can't support another upscale hotel.
"We plan on competing with the other properties -- the Westin, The Peabody, the Madison. That's the level of luxury," he said. "We plan on coming in and expanding the market and helping Memphis grow."
--Wayne Risher: 529-2874
Hilton Memphis Downtown Hotel
Location: Southeast corner of Linden and Fourth
Overview: 11 stories, 125 feet tall, 298 rooms, 257-space parking garage, 5,000 square feet of restaurant-retail and 20,000 square feet of meeting and banquet space
Price tag: $68.7 million
Timeline: Groundbreaking in November, opening in December 2012
To see more of The Commercial Appeal or to subscribe to the newspaper, go to http://www.commercialappeal.com.
Copyright (c) 2010, The Commercial Appeal, Memphis, Tenn.
Distributed by McClatchy-Tribune Information Services. For more information about the content services offered by McClatchy-Tribune Information Services (MCT), visit www.mctinfoservices.com, e-mail email@example.com, or call 866-280-5210 (outside the United States, call +1 312-222-4544).