Is the proposed NBA arena in big trouble?
It looked that way last week as various parties took turns talking tough and threatening to block the deal if they don't get their way.
Calling the proposed $250 million project a potential "disaster," Don Smith washed his hands of the business and resigned as executive director of the New Memphis Arena Public Building Authority (PBA) because he thinks the Memphis Grizzlies have too much control over it.
His resignation set off a round of equally blunt comments from other quarters, most of them negative, against a backdrop of leaks about the Grizzlies possibly moving to Charlotte with the NBA's blessing if Memphis balks. Erstwhile supporters began talking like opponents, while opponents, once a small minority of elected officials, were energized. Minority contractors and union leaders threatened to kill the golden goose. Arena supporters resorted to some gratuitous bashing of The Pyramid, which was curious since the 10-year-old building was enjoying its busiest and most profitable year ever, even before the Tyson-Lewis fight was announced (see related story in City Beat,).
The upshot is that a decisive vote on bond financing that could have come as early as next week will now probably be moved back at least two weeks, endangering the construction schedule and the PBA's mission to build the arena on time and within budget.
Despite the tough talk, odds still favor the arena being built but only slightly. Behind the threats and posturing, Memphis is buying the upside with the Grizzlies, a young team built around Shane Battier and Pau Gasol and a league satisfied, if not entirely happy, to be in one-team markets. For the Charlotte scenario to happen -- and Flyer sources say it is not idle speculation -- the Hornets would have to move to New Orleans or somewhere else. Charlotte would also have to agree to build a new arena, possibly after a public referendum. And the Grizzlies would have to move for the second time in a couple of years.
Not that that is unheard of. Anyone remember the Titans?
The unions and minority contractors would lose $250 million or more of work. Local corporate and government leaders would lose face. And Memphis would lose its first -- and probably last -- major-league team.
On the other hand, thousands of tax-paying citizens of Memphis and Shelby County would probably be delighted.
"In my district, they hate it," county commissioner Clair VanderSchaaf said of the arena proposal.
VanderSchaaf, a Republican, says he'll probably support the arena financing anyway, so long as there is no pro-union agreement and the property tax stays off-limits. But his ambivalence is typical of practically every group involved with the project. Here, based on several individual interviews as well as public meetings and press conferences over the last two weeks, is a summary of where the key players stand this week.
The Mayors: Shelby County mayor Jim Rout and his wife, along with mayoral aide Tom Jones and Convention and Visitors Bureau president Kevin Kane and their wives, were in Australia last week. Memphis mayor Willie Herenton was in heaven, or something like that, because Memphis was chosen for the Tyson-Lewis fight due, in no small part, to his efforts.
Both mayors are pro-arena. But neither one can control his legislative body, and both are under suspicion of trying to bypass elected officials and the legislative process by setting up the PBA.
"I think the PBA intent has merit," said city councilman Jack Sammons, "but in actuality it has turned out to be another layer of bureaucracy, which equates to additional cost, unfortunately."
The mayors have representation on the PBA, but the council and commission don't. One of the most visible demonstrations of the balance of power came two weeks ago when a three-man screening committee of the PBA met to select a lead contractor. Herenton special assistant and PBA member Pete Aviotti sat at the front table flanked by Jones, city CAO Rick Masson, and Grizzlies counsel Stan Meadows. The power play failed thanks to blocking maneuvers by PBA member and state Sen. John Ford, who came within a single vote of supplanting the mayors' choice with his own the next day.
The PBA: Supposedly consisting of informed and independent-minded citizens, the PBA is in fact packed with politicians and their stand-ins and representatives of special-interest groups. Ford is the most vocal. As he likes to remind his colleagues, he knows the law on the PBA. He should because he helped write it, giving himself and state Rep. Larry Miller seats on the PBA in the process.
Sometimes bombastic, Ford appears to be on solid ground when he asserts the independence of the PBA and its stewardship over public dollars. He is far from alone in his concern that the Grizzlies have too much power. His position is opposed by Aviotti and PBA chairman Arnold Perl, who believe the authority is accountable to the mayors.
Precedent would seem to support Ford. The Pyramid was built with a public building authority chaired by FedEx founder Fred Smith. It made important decisions on the location and size of the arena that went against the wishes of two of the key players -- Mayor Dick Hackett, who wanted to expand the Mid-South Coliseum, and the University of Memphis, which wanted a smaller on-campus arena.
Ford fell one vote short in his attempt to award the job of lead contractor to the Beers-Flintco-Bricks partnership. Instead, the job went to a Minneapolis-based contractor, M.A. Mortenson.
Perl, a successful lawyer who doesn't mind the publicity, gives as good as he gets in exchanges with Ford. His mantra, inscribed on a red business card and repeated at every meeting, is the seven-point charge to build the arena right, on-time, within budget, etc. But he lacks the clout of Smith, builder of the most powerful economic engine in town, without whose support The Pyramid probably wouldn't have been built. There is no such overriding voice in the NBA arena debate, which is one of its problems.
Don Smith: Politically connected, savvy, experienced, and not impetuous, Smith rates a whole category to himself because he was once the ultimate insider and is now, potentially, the most dangerous outsider. He is not off the stage yet. On Tuesday, city councilman Myron Lowery, an arena opponent, invited him to speak to his committee. Smith could provide cover to arena supporters thinking of changing their minds.
In an interview earlier with the Flyer, Smith said independence was the last thing the mayors wanted from the PBA.
"I thought the city's and county's intent was to minimize input from the PBA," he said. "They wanted to limit the information provided to it, give it information at the last minute, that kind of stuff. In the last three or four weeks, Arnold Perl took on the same attitude. Previously, I felt like he wanted to be pretty independent. Then all of a sudden he seemed to think his job was to make sure the Grizzlies got what they wanted."
His other big gripe, he said, was the $3.5 million the city and county budgeted for consultants PC Sports, which used to work for the Grizzlies, while the PBA's budget is only $700,000.
"I felt it should be about opposite," Smith said.
Smith said he would not vote for the arena if he could. "I don't think there are enough checks and balances," he said. "That's $250 million of the public's money and the public needs some control over how it is spent."
Perl issued a statement regretting that "the shared responsibility set forth in the original project agreement between the city, county, and HOOPS [the Grizzlies] proved to be unacceptable to [Smith] as a basis for a teamwork approach to building this arena."
Smith's sentiments are shared by some elected officials.
"The PBA operates truly independently," said Commissioner Buck Wellford. "We don't want to see it controlled by the Grizzlies or any political faction. A lot of us don't like what we're seeing right now."
The Grizzlies (HOOPS): Legal counsel Stan Meadows has been at most of the public meetings and many of the private ones, never missing a trick, pleasant enough, even ingratiating but all-business in the crunch and, at bottom, an advocate. He was a strong Mortenson supporter and a big fan of their executive John Woods, who he thinks has the toughness to keep subcontractors in line.
Meadows makes absolutely no bones about the fact that the Grizzlies' future in Memphis is contingent upon the new arena. He has not publicly broached the possibility of the team moving to Charlotte, but two council and commission sources said they have been told that the NBA would not be unhappy with that possibility.
Labor: A group of minority contractors rallied at the arena site last week.
"We're team players here and we want to be involved in this arena," said spokesman Ron Redwing. "We're not here to antagonize."
Some members of the group want Mortenson to identify subcontractors now, before the bonds are issued and the project is approved. Others appear to seek only assurance that there will be no backsliding on the recommendations of minority consultants.
A project labor agreement would be a victory for unions, but it appears to be a deal-breaker for seven Republican county commissioners. Michael Hooks Jr., a consultant for the unions, says Mortenson has done the majority of their jobs with such agreements. Without one, he suggested last week, the project might fail (he doesn't have a vote) and the money could be spent on education instead (he is a city school board member).
More likely is a so-called prevailing wage agreement with benefits, negotiated in meetings this week.
The County Commission and the City Council: This is where it gets really interesting and really confusing. The elected officials still have to approve the bonds to finance the arena and extend the hotel-motel tax and car-rental tax that are part of the financing plan. In other words, they get at least two more shots.
When the commission approved the arena last year, conservative Republicans voted with Democrats (on the commission, Republican means white and Democrat means black). In so doing, they set aside concerns about county debt, big government, sports subsidies, and conservative financial assumptions. That could change.
"My feeling is that the black commissioners, except for Walter Bailey, really want this more than the white Republicans," said Wellford, who recused himself from last year's vote because of a law partner's involvement but plans to participate in upcoming votes. (He says the work was completed and the partner has been paid.) "By no means do I think Republican votes cast for the arena are assured votes. My vote is not assured," Wellford said.
Last week the six Democratic/black commissioners held an "announcement" to which their Republican/white colleagues were invited at the last minute or not at all. In any event, only the six Democrats were there as soft-spoken Commissioner Cleo Kirk read this statement: "It appears that the proposed plan is filled with questions and concerns that need to be addressed before we can move forward. This group of commissioners will not be in a position to support the proposed enabling legislation as the proposal now stands until we receive additional clarification."
The announcement, 30 minutes behind schedule, was itself short on specifics.
Commissioner Michael Hooks said "it is a known fact" that attorneys for the city, county, Grizzlies, and PBA met last month to write the document that binds the construction process.
"It wasn't in that final form when we voted a year ago," said Hooks, whose son is working as a consultant to a pro-union labor group.
Julian Bolton, who organized the announcement, got impatient with reporters' questions.
"It is difficult to negotiate specifics at a time like this in a forum like this," he said. "But the bottom line is there is too much negative apprehension among this body about what the result of what the project would be if we let it go."
Bolton said it appears the project "is going to be an embarrassment to us" and to the business community and the public unless "everything is on the table and these major issues are resolved."
Commissioner Bailey, the arena's most consistent and forceful opponent, noted that the enabling legislation (the car tax and hotel tax) requires nine votes instead of seven.
"Though we may be in a minority in terms of sheer numbers, we're not a minority when it comes to that enabling legislation," he said. "That is where we've got some real muscle."
The council and commission votes that once were scheduled for the week of April 8th are now likely to occur at least two weeks later.
City councilman John Vergos, an arena supporter, thinks the current storm will blow over by then.
"I don't think the commission or the council has the guts to vote this thing down in the name of minority participation," he said.