The Big Empties 

Vacant commercial properties are all over Memphis. WHY are developers ignoring them?

Clarissa Davis moved to Memphis for two reasons: her husband and the Whitehaven neighborhood where he lived. The lush green lawns, large backyards, and sociable residents in the Holmesdale subdivision appealed to the Chicago native. The nearby woods also provided just enough nature for walking expeditions and an escape from the sounds of the city.

So when signs were placed at the edge of her property signaling a proposed zoning change, Davis was concerned. She learned that the ETI Corporation wanted to construct three warehouses on the adjoining 81 acres, destroying her beloved forest. Davis immediately organized residents to fight the proposed construction. They waged letter-writing campaigns to City Council members and other government officials. "This is my Garden of Eden," says Davis, pointing to the woods through her window. "And that's my Tree of Life."

It isn't the first time that developers have coveted the land. A few years ago, residents hired a lawyer and successfully fought a proposed mobile-home park. The land remained undeveloped.

Will they win again? It's anyone's guess.

Residents say they have no aversion to development, but with the existing Patterson warehouse just across the road, they fear another warehouse development will destroy the neighborhood. They say the developers could build on land further north or south on Airways or could make use of the many vacant buildings already in the area.

Davis and her group challenged ETI before the Memphis and Shelby County Land Use Control Board. The board, composed of 12 city and county appointees, is responsible for hearing all zoning requests and recommendations of the Office of Planning and Development. At one of the meetings, an OPD employee said that there were enough vacant commercial sites in Shelby County to accommodate any business wanting to move into the area for the next five years.

Which raises a question that many people ask: Why can't businesses buy or lease vacant property already zoned commercial instead of constructing new buildings? No one seems to have a definitive answer.

"I know for a fact that we have thousands of vacant lots," says Environmental Court judge Larry Potter. He sees property owners in his courtroom every day who have failed to maintain their properties. Empty buildings have become a citywide problem. Some are highly visible, like the Mall of Memphis, the old Sears building in Midtown, the Perimeter Mall along Summer Avenue, the Cossitt Branch Library downtown, and the old movie houses along Lamar. But there are countless smaller, less visible vacant properties, as well.

Potter's court levies fines on negligent property owners and establishes plans to maintain compliance. "My concept of environmental law is that if there is an environmental violation in the community, I can assess fines," he says. "But if I assess fines and don't rectify the problem, it doesn't do the community any good."

Many of the maintenance problems stem from current city laws, which Potter calls reactive rather than proactive. "The way code enforcement is now is that when people call and complain, then you go out and start looking. In a perfect world, owners would maintain their property. But we know sometimes that doesn't happen," he says. "It has been my philosophy that rather than being reactionary we need to be going out and finding the problem. Does that mean that [code enforcers] are not doing a good job? No, just that the system needs to be changed."

County assessor Rita Clark's office lists, classifies, and appraises a total of 336,000 properties in the county. Property owners are taxed on the appraised value. When properties go vacant, appraisal values go down and tax revenue decreases. But the number of vacant commercial properties is unclear, because properties are not categorized by vacancies. Assessors say this is because vacancies are constantly changing.

To maintain an accurate tax roll, the 50 appraisers in the assessor's office visit every property at least once during a four-year appraisal cycle to verify any change that may alter a property's appraised value. Even when a property is vacant, a minumum $100 assessment is levied on the building.

"[Property owners] are always going pay taxes on at least the land portion of a property, and there will always be taxes [on the building] until it is off the roll," says Clark. "An example is the Sterrick Building [in downtown Memphis] which hasn't been inhabited in years. The reason we require the $100 minimum is to keep it on the tax roll." Shelby County levies $7.27 for each $100 of assessed property value. In addition to keeping the "empties" on the tax roll, officials are also faced with the problem of maintaining them. City code mandates property owners must meet minimum requirements for securing their buildings when they are vacant. That can mean doing as little as nailing plywood over open doors or taping broken windows. Director of planning Terry Emerick calls these buildings "mothballed properties" vacant, unleased, and possibly not for sale. His office and other agencies, such as the Fire Department's Anti-Neglect Unit, work to ensure proper maintenance, but there are limitations on what the city can do. "The current [land-use regulation] ordinance has too much suburban orientation instead of inner-city development," says Emerick. "There should be easier ways to identify problems and change the process to be more productive." He points to cities such as Atlanta, which require owners to keep vacant properties in a "lease state." When a window is broken out on a vacant building, the owner must repair it, regardless of the number of repeat occurrences.

The city and county have contracted with a consulting team to overhaul existing property codes. There will be input from city and county agencies, neighborhood groups, business owners, and developers. The process is expected to take 18 months.

Meanwhile, Emerick's office is moving forward with other plans to combat the blight problem. Through the Commercial Revitalization Program established in 1997, his office has targeted four commercial corridor districts for redevelopment: Chelsea Avenue between Danny Thomas and Second; Jackson Avenue between Bellevue and Watkins; Florida Street between McKellar and Mallory; and McLemore Avenue between Mississippi Boulevard and Krayer.

"The largest problems in these areas were vacant lots and vacant buildings," says comprehensive planning director Wanda Martin. "We found that as people moved out east, there were disinvestments in the inner city." Initially, $1.5 million in city and county funds were allocated for the project, which focuses on demolition as much as renovation.

In conjunction with the Center City Commission and the Industrial Development Board, the city has lured some business owners to vacant properties downtown with grants and tax incentives. Revitalization of land and buildings is also occurring in other parts of the city, but sometimes renovation of a building isn't feasible. For instance, the former Cherokee Lanes bowling alley on Lamar closed in 2002. New owners Ashley Development of Little Rock plan to demolish the building. "The property has been underutilized because there are so many portions that are undeveloped. We see much more usable space than what appears there," says the company's legal counsel, Matt Hankins. "That one building sits on 15 acres. It makes much more sense to tear it down and build on the space." Ashley has plans for a 100,000-square-foot, open-air retail development.

The Lure of Virgin Land

"The sentiment of a lot of the neighbors was they're [ETI] going to do it anyway. But those warehouses do not go along with the Save the Whitehaven Area plan," says Angela Jefferson, who lives in a condominium complex adjacent to the planned development. She is a leader with Davis in the warehouse fight. "Although the land can't be used for residential property [because of its proximity to air traffic], there are plenty of other uses for that land that haven't been explored yet."

An ETI representative disagrees. He says one of the company's primary arguments for building the warehouses has been to utilize the underdeveloped land. "It's something that we're trying to get the neighborhood to understand," says ETI principal Ralph Smith. "We think it can be compatible with the area. There are warehouses that have been developed near residential homes, and if it's done right, with adequate screening, the homes really aren't affected. There's always land in other parts of the city and DeSoto County that would accommodate warehousing."

And therein lies another problem. If Memphis doesn't give in, some other local government will. There are plenty of appealing sites for developers where the land is cheap and there is no interference from residential developments. Emerick would love to live in a city where developers took over existing properties before they build new ones, but that's simply not reality. "There is the DeSoto County factor," says Emerick. "The northern area of that county has become a hot growth area and that attracts activity. DeSoto County has become like the suburbs of Shelby County."

Let the developers go there, says Colonial Acres neighborhood president Anne Shafer. Her neighborhood has been involved in an ongoing battle with a planned Kroger store. "We don't want them to have that particular place," she says. "It will be like a forest fire, with people selling their property to commercial developers. We've had a big push for code enforcement to keep property values up, and we have ample commercial developments around us already."

Developer Louis Loeb of Loeb Properties says he sees development as not just a business venture but as a responsibility. His company owns 150 properties totaling more than 205 million square feet of retail, office, multifamily, and industrial space.

"All of our industrial property has been developed through acquisition of existing property," he says. "But I don't think that one answer fits every situation. There are some users who can adjust to existing facilities, but other times you have the cost of developing new versus remodeling, and it's not cost-effective to do that. In a broad stroke you can say that there are enough vacant properties, but that's like saying there are enough clothes in Goodwill to outfit the entire neighborhood. Just because they are available doesn't mean I'm wearing a dress, no matter how many there are."

And not all neighborhoods are opposed to commercial development. When the Whitehaven community got news of a planned Wal-Mart store, residents were ecstatic. The Wal-Mart is under construction at the corner of Holmes Road and Elvis Presley Boulevard, not far from the controversial warehouse development. Glenn Hawley, pastor of the Holmes Road Church of Christ across the street, anxiously awaits the store's opening. "Considering what has been there in the past a vacant, dilapidated building and an empty parking lot we're excited about it. It will mean more visibility for the church," he says. "We talked with neighbors and they are pleased with it. They were a little concerned with the traffic, but they're excited."

For Davis and Jefferson, the fight continues. ETI's plan was turned down by the LUCB, but the company is taking its plan before the City Council next Tuesday, June 1st.

Davis says her group will continue to battle. "We will get organized and develop a group that stays ahead of these types of things. When those zoning signs went up, we were caught off guard," says Davis. "We won't get caught like that again."

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