Thursday, April 24, 2008

A Memphis Fable

How Mr. Memphis and Ms. Shelby used their 5,000-acre inheritance.

Posted By on Thu, Apr 24, 2008 at 4:00 AM

I know this couple. So do you. Let's call them Mr. Memphis and Ms. Shelby.

They've lived together a long time, but they never got married.

Like all couples, they fight sometimes, and they worry about making ends meet. In hard times, they love to say that they have no options but to increase their expenses and borrow money from their children and grandparents. Like most couples, they also have some assets. A long time ago, their grandparents gave them 5,000 acres, which they called Shelby Farms.

About 40 years ago, Mr. Memphis and Ms. Shelby decided to keep half their land for parks and sell the other half to build houses for their children and make some money for current and future needs. They hired the best bankers, developers, and park planners that money could buy, and they thought it through for at least five years.

By 1973, they were ready to do the deal. The master developer would be the Rouse Company, a developer of planned communities. The local developer would be Boyle Investment, developers of River Oaks and Ridgeway Center. The banker would be First Tennessee National Corporation.

The planned community would be inside the city limits of Memphis, which would get the sale price plus an estimated $11 million a year in tax revenue. The community would include housing for 25,000 people and offices on some of the prettiest rolling country in West Tennessee. The park would be more than twice the size of Central Park in New York City, plus there would be five more regional parks throughout the city and county as part of the deal. The two local newspapers thought this was a swell idea.

The Memphis Press-Scimitar said, "The idea of a model community has many appealing features. It has been described as a once-in-a-lifetime opportunity. ... Development would produce tax revenues which could be diverted to the establishment of the 2,100-acre regional park. Using the entire acreage for a 'total recreational complex' would entail an expenditure which we don't believe the taxpaying public is ready to accept."

The Commercial Appeal said, "We favor the proposal to sell 2,900 acres of the total 5,000 acres for a model community development and retain the remainder for public use. ... The remaining 2,100 acres are ample for all manner of recreational facilities."

Of course, not all of Mr. Memphis and Ms. Shelby's children agreed, because some of them were going to make out better than others. And a grandpa named Abe Plough, who ran one of the biggest companies in town and had a lot of influence, said it should all remain a park, even though he hardly ever went to one himself. But some other grandpas with big companies, like Kemmons Wilson and Wallace Johnson of Holiday Inns, thought it was such a good idea that they bid against Boyle before dropping out.

By 1974, the deal had soured. There was a bad recession, sort of like today, with trouble in the Middle East, gas rising to the awful price of 55 cents a gallon, and the price of groceries up and the stock market down. And it turned out that some of the children of Mr. Memphis and Ms. Shelby had larceny in their hearts and went to jail.

The plan died, but the Memphis/Shelby family kept growing. Instead of moving to Shelby Farms, the children moved to Cordova and Hickory Hill and Germantown and Collierville. Getting them there cost a lot in new roads, sewers, schools, debt, and trees.

Meanwhile, Mr. Memphis and Ms. Shelby still had their 5,000-acre inheritance. They decided to "invest" in a prison, some buffalo, a landfill, Agricenter International, Ducks Unlimited (a nonprofit which pays no taxes), and — most recently — a conservancy.

When the recession ended and the economy got better in the 1980s and 1990s and this decade, and the Dow went from 700 to 14,000, and the price of a nice house went from $25,000 to $250,000, and companies like FedEx built big offices in the suburbs, Mr. Memphis and Ms. Shelby didn't make a dime off their inheritance. They told their children that developing part of Shelby Farms was a crackpot idea by a wayward son named Joe Cooper, which was a lie, but you know how parents can be. The graybeards and big dogs at Boyle, First Horizon, the country clubs, and The Commercial Appeal knew better but remained silent.

So today Mr. Memphis and Ms. Shelby are hurting, and they don't have many options. But they sure had opportunities.

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