Tuesday, October 13, 2015

Midtown Market Project Gets $10.5 Million Tax Deal

Posted By on Tue, Oct 13, 2015 at 10:43 AM


The project to transform a blighted corner of Union and McLean in Midtown into a four-story apartment building and grocery store got one step closer Tuesday morning.

The Memphis Center City Revenue Finance Corp. (a board of the Downtown Memphis Commission) approved a 15-year tax break deal for the $43.5 million project, which developers call “Midtown Market.”

The PILOT would shield Belz Enterprises and Harbour Retail Partners [Belz HRP Partners] from paying $10.5 million in city and county taxes over the 15-year period of the deal. But the developers said the project would yield about $35 million in new taxes over those years, taxes that would otherwise not be there at all.

Belz HRP Partners want to raze the vacant, blighted buildings at the south west corner of Union and McLean in Midtown and construct a shiny, mixed-use building.

Developers say the building would house 188 apartment units, parking garages, some smaller retail bays, and one, large retail space. Belz HRP Partners say they are currently courting a “gourmet grocery store” for that bigger space. The developers have not yet divulged which grocer they are recruiting.

DMC staff gave the project a positive review and recommended the project’s approval for the payment-in-lieu-taxes deal.

Jaske Goff, DMC’s vice president of planning and development, said he hasn’t seen “substantial, ground-up, multi-family development in Midtown since I can remember.” He called the project “transformative,” “catalytic,” that it would clean up a major Memphis intersection, and put some big properties back on the city and county tax rolls.

Still, Goff noted that the project falls outside of the typical DMC boundaries. While the DMC’s legal boundaries are the city’s Parkways, the DMC has traditionally focused on Downtown Memphis.

Providing a DMC PILOT outside Downtown does have precedent, Goff explained, pointing to Crosstown Concourse and the Legends Park project.

CCRFC members deliberated policy changes for PILOTS. Some noted that Midtown needs new housing stock to attract new Memphians. Others noted that Midtown feeds Downtown in many ways and should be supported through the DMC.

However, many hoped that giving PILOTs to Midtown projects would not “open the floodgates” for developers seeking tax breaks for every project in Midtown.

But the board members agreed that not every interested developer would get a PILOT. For example, DMC president Paul Morris said the DMC would not seek to incentivize suburban style projects in Midtown Memphis. Also, smaller projects might not be transformative enough to merit public investment.

The Midtown Market project would activate the corner, developers said. The project would yield $250,000 in annual taxes to the city and county. Two of the three properties in the three-acre site are not yielding taxes at all. Back taxes of about $1.1 million on those properties will also be paid.

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