Friday, June 8, 2007

The ABCs of TDZs

Can the Fairgrounds fairly be seen as a "tourist zone"?

Posted By on Fri, Jun 8, 2007 at 4:00 AM

What do condos and a golf course in Pigeon Forge in the Smokies, a Bible theme park in Middle Tennessee, and Graceland have in common? They're all proposed Tourism Development Zones, the latest craze in financing big public-private projects in Tennessee.

On Thursday, the state legislature approved TDZs, as they're called, for Graceland and, tentatively, the Mid-South Fairgrounds.

The government jargon is confusing, but the idea is fairly straightforward: a hot tourist destination generates enough property and sales taxes to fund public improvements around it.

Lawmakers, apparently fearing a cascade of "me-too" requests from small-scale projects across the state, as happened with the payment-in-lieu-of-taxes (PILOT) program in Memphis, set a threshold of at least $200 million of investment.

Expect to hear a lot of debate about this. Gatlinburg and Graceland are clearly tourist-driven attractions with worldwide reputations, although Graceland counts annual visitors in hundreds of thousands while Gatlinburg counts them in millions.

The proposed Bible theme park near Murfreesboro is, to put it mildly, a new wrinkle. There are church-state issues as well as questions about whether the developer or taxpyers will own the improvements. And so is the Mid-South Fairgrounds. Whatever happens there, with the exception of a few football games and possibly the Children's Museum, will primarily be for the benefit of Memphians, not tourists, especially if Libertyland stays closed and the Mid-South Fair moves to Millington or somewhere else.

Say there is some combination of a renovated or new football stadium, a minimally renovated Coliseum, the Children's Museum, the Salvation Army/Kroc recreational center, a school, new housing and blight removal in the Beltline neighborhood east of the fairgrounds, and one or more big box retailers such as Wal-Mart or Target. Where's the tax windfall going to come from, other than the stores and a handful of football games that draw decent crowds? A typical University of Memphis football game crowd is about 30,000, and unless Conference USA gets in the Bowl Championship Series (BCS) that isn't likely to change. And if the retailers fail or don't come, everything else is either publicly owned or nonprofit, and that means no tax revenue, and taxpayers left holding the bag for whatever improvements are made.

Maybe I'm missing something, but this doesn't look much like Gatlinburg or even Beale Street or FedExForum. When I think of a big tourism windfall I think of Tunica. A county with 10,000 residents gets to impose a four-percent tax on the casinos, netting over $50 million a year. Even a cursory survey of license plates indicates at least half of the customers are from out of state. The taxes fund new schools, roads, law enforcement, fitness centers, a quaint downtown mall, and part of an airport. And the city and county literally have to think up ways to spend it all.

Property taxes in Tunica were cut to zero. Now that's tourism-driven development, even if they don’t call it a TDZ.

Anyone who proposes to develop Graceland or the Mid-South Fairgrounds (including Henry Turley, who is a board member of the parent company of this newspaper) has their work cut out for them, even with TDZ approval from Nashville.

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