Jackie Welch sold a lot of suburban real estate for other people during the real estate boom. Now he's selling his own office in the heart of Germantown.
Harold Byrd and Bank of Bartlett were big lenders to blue-chip builders. Now they're scrambling to raise private capital in hopes of avoiding intervention by federal regulators.
Fed chairman Ben Bernanke said last week that the recession is probably over, but the predicaments of Welch and Byrd show that the aftershocks will continue for some time in Memphis and its suburbs. Welch Realty has been in business for 46 years; Bank of Bartlett for 29 years. Welch and Byrd are hard-minded, politically active businessmen. Byrd plans to run for county mayor in 2010. Welch has raised money for the last three county mayors, including A C Wharton, who is running in the special election for Memphis mayor in October.
Welch Realty has been a big player in the commercial and residential real estate market in Germantown and southeast Memphis for nearly 30 years. Welch sold several school sites to the county board of education, thousands of land parcels to homebuilders, and commercial sites along Winchester and Germantown Parkway. His personal loans to former city councilman Edmund Ford's funeral home were the focus of a federal criminal investigation in 2008. Ford was acquitted.
Last week, Welch put his office building on Wolf River Boulevard near Germantown Road on the market. The asking price is $1.6 million. He hopes to stay in it as a tenant for three more years. He said two things prompted him to sell: "One, we're not doing any business, and two, the doctors and their offices have run the prices up out here."
The office is near Campbell Clinic and other medical facilities. Welch said "one or two patients a day wander in here."
Welch said his company will stay in business, but he doesn't expect things to improve much until 2011, and he sees no return to the high-flying days of a few years ago. In an interview, he ticked off several names of builders he worked with who have gone out of business — Beezer, Matthews, Sweeney, Bronze, Vander Schaaf, Edwards.
"The ones who are left are working out of debt," Welch said. "Really, what we're doing is working for the banks."
He said the underlying problems were subprime loans, loose lending standards, and packaged mortgage products.
"Thieves got us into this situation, but we all benefited from it," he said.
Bank of Bartlett, a $435 million family-run bank, was listed last week as being in the "danger zone" in a report issued by msnbc.com and the Investigative Reporting Workshop at American University and first reported in The Memphis Business Journal. The bank is in the bottom-10 percentile in its peer group of 1,200 banks in several categories of the FDIC's latest rankings, including net income and capitalization.
"That article caught us by surprise," Byrd said. "We are not under any federal action, but we do recognize that we need to raise capital."
Byrd's mayoral candidacy has a prominent group of supporters, including former county mayor Bill Morris, Anfernee "Penny" Hardaway, Maxine Smith, and Welch. Byrd, head of the University of Memphis Rebounders booster club, was hosting a benefit with basketball coach Josh Pastner on Monday. Byrd said the bank will rebound. It lost $8 million last year and projects a loss of $2 million or less this year. The loans that led to the losses were made in 2006. Of 28 foreclosed homes in the bank's portfolio, 17 have been sold, as has a 90-lot subdivision.
"We're a local bank that lent money to the top folks in the Memphis community," he said. "As they have been stressed, so have we. We've taken our hit and are on the way back up."
Local banks like Bank of Bartlett face special challenges.
"We're all in a tough business right now," said homebuilder Jerry Gillis. "The big banks got TARP money to save the banking system, but the little guys have got to raise capital privately."
A West Tennessee banker who asked not to be identified said finding investors isn't easy.
"They can stand around and wait for the FDIC to close you and get the bank for free," he said. "The Byrds probably have time to work it out because there are so many other banks out there with problems as bad or worse."
Henry Turley has been called a visionary developer in his 40-year career in real estate, but his vision of the old Mid-South Fairgrounds is looking increasingly less likely.
An alternative option — call it the public option, in today's parlance — would have many of the sports elements as Turley's proposal but with a quarterback combo of architect and former city councilman Tom Marshall and Housing and Community director Robert Lipscomb.
On Monday, Turley conceded that he has "no votes" on the Memphis City Council, which will have the final say on which proposal, if any, moves ahead. Among other problems, Turley was out-politicked. Council members and city division directors are friendly to boards and agencies such as the Riverfront Development Corporation and the Center City Commission on which they have representation.
Turley's proposal, called Fair Ground LLC, was chosen as developer last year by the city's appointed fairgrounds reuse committee chaired by Cato Johnson. Former Mayor Willie Herenton confirmed the selection, but his endorsement was never clear even before he left office in July.
In other words, Turley has the half-blessing of an unpopular former mayor and an appointed committee. Backing like that, along with $1, will get you a cup of coffee in Memphis.
Marshall, on the other hand, is a former colleague of interim Mayor Myron Lowery and chief administrative officer Jack Sammons. He had a reputation as an adept compromiser during his nearly two decades on the council. Lipscomb and Marshall have worked closely together on the stalled Bass Pro/Pyramid proposal, and Marshall's firm had a contract with Memphis City Schools under former Superintendent Carol Johnson to do a facilities needs study and design new schools.
Last week, FedEx CEO Fred Smith gave his blessing to the Marshall-Lipscomb fairgrounds plan, and The Commercial Appeal gave it front-page coverage. Turley was "stunned."
Turley (a stockholder in the investment group and member of the board of directors of Contemporary Media Inc., the parent company of the Memphis Flyer) is the co-developer of Harbor Town, South Bluffs, Uptown, and other downtown projects. His Fair Ground partnership includes Art Gilliam, Robert Loeb, Derrick Mashore, Eliot Perry, and Mark Yates.
Both proposals envision a grand entrance on East Parkway, add acres of grass, and keep Liberty Bowl Memorial Stadium. Turley would use any sales tax increment in stadium revenue above a base number for general fairgrounds improvement. If attendance remains flat or falls, there would be no increment.
The public option includes housing on the fairgrounds property but the kind and amount are not specified. Turley's plan has no housing "because we do not want to compete with housing in the surrounding neighborhoods and because we believe the entire Fair Ground should encourage public use."
Turley's proposal includes at least $50 million in "national brand" hotels and retailers such as Target. Small-scale retail, he said, would harm existing Midtown stores and restaurants. Under a financing plan known as a Tourism Development Zone (TDZ), the sales taxes from new development would be used for $75 million in public improvements. Target already has several stores in greater Memphis, and dedicated tax streams mean less tax money for someone else in the recession. The financing of the Lipscomb-Marshall plan is vague, but Lipscomb has backed a TDZ for Bass Pro at the Pyramid and Triangle Noir south of Beale Street.
Youth sports and athletic facilities are central to both proposals. The Kroc Center, financed in large part by a grant from McDonald's founder Ray Kroc, has a piece of property on the west side of the fairgrounds. Neither proposal makes a strong case that additional sports facilities beyond that would be competitive with new mega-fields for soccer and baseball or older playing fields like the ones at the fairgrounds and behind the board of education offices nearby.
The Coliseum eventually comes down in both proposals. Turley said two weeks ago he would replace it with an indoor multi-sports building. Marshall's firm, O.T. Marshall and Associates, drew up futuristic plans for an indoor stadium and covered facilities on the fairgrounds more than 30 years ago. The current plan is to make the fairgrounds greener and cleaner as soon as possible.
Turley said he and his partners have invested $277,000 cash and 5,000 hours of work so far. He said the last city-developed public space was Mud Island River Park, which loses money and is closed half the year. Lipscomb (and now Herenton) said Turley's fees are too high.
College football doesn't need more hurry-up offense. It needs more hurry-up games.
Sunday's nationally televised game between the University of Memphis and Ole Miss started at 2:30 p.m. and ended shortly before 6 p.m. If you parked, walked, arrived on time, stayed for the final ticks of the clock, and battled the traffic jams — admittedly a welcome problem to have at a football game — you put in a five-hour afternoon, six if you tailgated.
The French eat lunch, go home, make love, and smoke a cigarette in less time than that, and there's more action.
The busiest guy on the field was the one in the red shirt charged with halting and starting the game around the commercials. Nothing like 22 finely tuned athletes and a team of officials standing idly at the line of scrimmage for two minutes several times a quarter to shift the crowd's attention to their cell phones. Blessedly, neither team used all of its timeouts in the first half or the game might have ended in darkness.
Hockey and soccer, two sports that get their share of criticism for being un-American and low-scoring, at least keep the puck or ball moving for several minutes at a time. Soccer is basically two 45-minute halves with a 10-minute halftime. Hockey has three 20-minute periods of up-and-down action and two Zamboni breaks.
Televised college and pro football has become the glacier of spectator sports. Nobody watches just one game on television, of course. They switch back and forth between kitchen and television(s), watching two or three or four different games, while keeping an eye on the scroll at the bottom of the flat screen to see who's doing what to whom somewhere else.
The University of Memphis is in a tough spot. There are no more nationally ranked or Southeastern Conference teams on the home schedule this year. Ole Miss fans in red clustered in the north end zone appeared to be outnumbered at least three to one by U of M fans in blue, but 10,000 or so visitors is still a nice bump in a stadium that seats 60,000 and change.
Super-fan Harold Byrd and the Bank of Bartlett hosted 3,000 people for blues and barbecue at a pre-game party at the old cattle barn. "On a Sunday when it was hot as the devil and the game was televised, I was proud of that," Byrd said.
The stadium staff did a good job of getting people in and out. We were out of range of the scalpers and outside the crowded Gate 1 off of Hollywood by 2:15 p.m, through the turnstile at 2:20 p.m., and sweating profusely in our sunny-side seats by 2:25 p.m. (and moved to the abundant empty seats on the shady upper west side by the middle of the first quarter). The concourse was clear, the rest-rooms reasonably clean, and there were plenty of concessions if you didn't want Hawaiian shaved ice. Beer was on sale for the first time at $7 a can, which tends to tamp down on overindulgence. The marching bands did the first of what will surely be 1,000 tributes to the music of Michael Jackson, and the U of M golden girl was the best of the baton twirlers.
The "jumbotron" screen at the south end zone, however, is as outdated as a 24-inch television set. Most of the skyboxes on the east side had tenants, but they're a long way from the field. My colleague Greg Akers, who covered the game, said the press box did not have wireless, and the revamped media room looks like it used to be a visitor's locker room with old wood cubbies and folding chairs. The Americans With Disabilities Act-mandated handicapped seating, the focus of much attention and expense, was at most one-third full. The stadium surroundings leave much to be desired. There are still remnants of the fairgrounds and not much green until you get over to East Parkway. A walk through the Grove (or the very attractive U of M campus) this was not.
Memphis, even if it can't execute a quarterback sneak, has some good players like running back Curtis Steele and defender Deante' Lamar and a decent team. But decent won't be good enough to draw anything close to 45,000 with Tennessee-Martin, Marshall, and UTEP next up on the home schedule. The scalpers' profits will sink like a subprime mortgage, and we'll be bemoaning the lack of traffic jams soon enough.
Memphis police are trying to figure out why an unusually big crowd of teenagers gathered at Malco's Paradiso movie theater in East Memphis Saturday night, causing a swarm of police cars to respond and rattling patrons and neighbors.
The incident has prompted Malco to change its policy toward underage teens being dropped off by their parents. They will no longer be allowed in the building.
Police spokesman Karen Rudolph said an initial report that three squad cars responded was wrong. In fact, 23 cars responded, including every available car in three substations, plus special units. She said the crowd in the parking lot numbered at least 500 people between 7 and 10 p.m., when police began closing entrances on Mendenhall, Sanderlin, and Poplar Avenue.
The Paradiso is a something-for-everyone multiplex that shares the parking lots west of Clark Tower with Houston's, Ben and Jerry's, Whole Foods, McAlister's Deli, and other popular businesses. The center is common ground for different ages, races, high schools, and neighborhoods and is especially popular with teenagers. Patrons are accustomed to lines, traffic snarls, and crowds of kids hanging around outside, but Saturday was different.
Rudolph said one possibility is that two horror movies showing that night were sold out, leaving hundreds of teens with nothing to do and time to kill. But Ann Forbis, who was there for a 7 p.m. movie, is skeptical.
"It takes a lot to rattle my cage, but that rattled me big-time," she said. "We could not go out the exit door, the lobby was packed, and there was an ocean of kids outside and cars cruising in the parking lot. They were not in line and were not there to see a movie. If I had been a parent trying to pick up my girls, I would have been mortified."
As she and two friends walked to their car, they saw a group of young men kneeling on the ground and thought that someone was hurt or performing CPR. When they got closer, they saw "six or eight guys were shooting dice."
Rumors began spreading Saturday night and Sunday. Cyndi Blair, who lives in East Memphis, said people on her neighborhood watch have been talking about a "fight club" outbreak. A man leaving the theater broke up a fight between two girls that was being videotaped. He reported that three security guards were "trying in vain" to tell people to disperse. A police report that night says 10 teens were charged with misconduct for fighting.
Jane Williams, an East Memphis resident, said there's a lot of buzz among neighborhood groups.
"We are now being urged to e-mail Mayor Lowery to see if we can get him to make a public statement and take action. What upsets many of us is that incidents like this in the Paradiso and Ben and Jerry's area have gone unreported for at least six weeks. This is dangerous."
Malco spokesman James Tashie said the crowd was drawn by a promotional flyer sent out by a local disc jockey touting the R-rated horror movies Halloween II and Final Destination.
Malco employees are instructed to card young people and deny them a ticket if they are underage, but teens skirt the policy by having someone else buy a ticket for them.
The flyer from "G. Webb & S.O.H.K." touts "Hanging With The Stars Part 2" at Paradiso "08.29.09."
"We were aware of it [the promotional flyer] and beefed up our security but had no idea it was going to bring in such a large number of underage kids," Tashie said. "Parents are dropping kids off and they are not old enough to go to the movie, so they are out there for two or three hours with nowhere to go."
Malco executives have been meeting about the incident for two days. They say they believe the Paradiso is drawing some of the rougher segments of the crowd that went to the Muvico theater downtown in Peabody Place before it closed. "We are going to hit [the situation] with all the firepower we have, because our investment there is so great," Tashie said. "We don't have car break-ins or muggings. The perception is worse than the reality."