- (female announcer)
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Behind the Headlines
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- A look at development and
redevelopment in Memphis,

tonight on Behind the Headlines.

[intense orchestral music]

I'm Eric Barnes with
The Daily Memphian.

Thanks for joining us.

I'm joining tonight by
Paul Young, President and CEO

of the Downtown
Memphis Commission.

Thanks for being here again.
- Thank you for having me.

- First time in person.
- Yeah.

- Actually since--
- In a long time.

- In a long time,
in a long time.

Thank you.

Along with Bill Dries,

reporter with
The Daily Memphian.

I wanted to start,

I mean, Downtown
Memphis Commission,

actually, it's
not just Downtown.

You guys have actually
a much bigger footprint

and influence.

But I did wanna start talking

about one specific
project, 100 North Main,

not just cause it's an
iconic building in Memphis

and it's a big, you know,
multi, a hundred million,

two hundred, three hundred
million redevelopment

but also in a lot of ways,

it's emblematic of a
lot of what's going on.

So it's about a 100 North
Main but it's about others.

And we'll talk about other
things going on big and small

throughout Downtown,
Midtown, Medical District

and really citywide.

But one of the interesting
things about a 100 North Main

was it was, you know,
essentially blighted.

It was sort of abandoned
by all its tenants.

It was in great disrepair
to the frustration of many,

you know, just again,
it's a bad look

when this iconic building
Downtown is empty and dark.

Ultimately, and it wasn't
you, it was your predecessor,

DMC bought that building.

And it's a little controversial
because the developer

who had let it go dark and
let it get really blighted,

ultimately kinda made
money on the deal.

And also people question
should DMC be buying

and selling buildings?

I mean is so, but it's worked
out it seems like, right?

Billy Orgel has come forward.

He's had a very
successful track record.

Other locals, Kevin Woods,
and others involved with it.

Is that a successful
model for redevelopment

of blighted
buildings in Memphis?

And do you think you might
end up doing other things

like that, big or small?

- Yeah, I do think it's
a successful model.

It's a building that was stuck.

And in some instances,

particularly in
Downtown Memphis

where you have these
large buildings,

you have some
people that believe

that they can make
a greater return

if they just sit on the property

and it's to the detriment
of the whole community.

And so we have a building
that went dark in 2014, 2015,

been dark ever
since, had no future.

There was no hope
for the building,

for the structure at
least in the short-term.

And so it was important that DMC

and the city step
up to the plate

and find a way to get
this property unstuck.

The way that we did that was
we acquired the structure

and you're absolutely correct,

it started before I got there.

Jennifer Oswalt and the
team began the process

of activating the acquisition.

They acquired the building
shortly after I got there.

I think it was March, April

when we actually got the
building in our hands

and we aggressively put
forth an RFP for developers.

We didn't get into this saying

that we want to develop
the structure ourselves.

We knew that we weren't
quite suited to do that,

but we knew that we could
facilitate the development.

And it was really,
really exciting.

And it was a great
testament to Memphis.

The fact that we got 11
teams, 11 qualified teams,

many of which were outside
of the Memphis market

were interested in developing
the tallest structure

in Memphis, 37 stories.

We went through a very
competitive process.

It was probably the most
difficult, competitive process

that I've been a part of

because there were so
many good qualified teams,

great ideas.

And I was grateful that we
had a home team that came

and put forth a
competitive application.

And they're the ones that are
going to take this property

into the future.
- But, quick question,

will the city actually
make money on the deal?

- We won't make money.

The team did agree to pay

what we paid for the property.
- Okay.

- So we look at that
as an opportunity

to be able to
continue to reinvest.

And if there are other
properties that are stuck

in the future, we
can use those funds

to try to do a similar
process if needed.

- One more question,
I'll go to Bill.

Does the fact that 11 teams,

again, local and all around
the country come forward

with, you know, very,
very robust proposals.

Does that speak to maybe
a turning point in Memphis

as Downtown development, in
Memphis development generally?

And that maybe some
of what you have to do

when you have to
unstuck a building,

unstick a building or the
incentives that you all do

and others do, are those maybe
not as nest necessary now

for there is that
level of demand?

Or are we still in that business

where you guys are
gonna have to step in

and have to do the kinds of
incentives you have to do?

- Yeah, I definitely think
we're still in that business.

There's still an economic
reason for the incentives.

We were getting to the point

where the rental rates and
I'll just talk about housing.

When you talk about apartments
in Downtown Memphis,

we were getting to the
point where the rental rates

were starting to tick up

and it looked like
the incentives

will be less necessary
than they had been in the past.

But right as we got to that
point, the pandemic hit

and the construction
costs have skyrocketed.

And so even with the
uptick in the rental rates,

it's still difficult for
project to pencil out.

And so those incentives
are still very critical.

- Ah, Bill.

- 100 North Main, the
city's tallest building

is just less than a block away

from what was going
to be the site

of a second convention
center hotel.

That's not gonna happen
at least with Loews

and at least at this point.

Does that change the outlook
for that general area

around 100 North Main?

- I don't think it necessarily
changes the outlook.

Obviously, we were
all looking forward

to seeing Loews come in
that space and it's no for now.

We're hopeful that
as things settle down

and the economy moves back
in the right direction,

that, that project could
potentially move forward

or come back in
some different form.

We still have projects
like the Hyatt Grand

which is getting close.

And so we're really
excited about that.

That's the project at 1 Beale,

which is adjacent
to the Hyatt Centric

and the Hyatt Caption which
is under construction.

I know that's a little
bit of ways away

but that just gives us
optimism with regards

to our convention aspect.

In terms of that
area in particular,

we still have the size of
that 100 North Main structure

still gives us
significant activity.

It livens up that block.

And remember it's not just
the building 100 North Main,

there are the four adjacent
structures that are next to it

along Main Street.

And so when you activate
those structures,

it still creates a very, very
vibrant scene on that block.

- Has the pandemic made
financing hotels more difficult?

- Yeah, from what we've heard,

we've heard that it is more
difficult during the pandemic,

you know, as hotels and tourism
is starting to move back

into a positive direction,

I think that financers will
have more confidence in markets.

But yeah, it's definitely
been more difficult.

- And yet on the other hand,

we've got the
hotel construction.

You mentioned that
it's part of 1 Beale.

And there has been some
talk that I've heard

that maybe this could lead
to other hotel developments

further east, maybe
at Main and Beale,

possibly south on Beale

where I think there
had been plans

at Fourth and Beale for it.

What can you say about that?

Namely, Main and Beale.

- Yeah, I can say that
there's always people looking

at different projects
and initiatives

in Downtown Memphis.

I actually haven't heard about
the one in Main and Beale

that you're you're referencing

but I do know about the one
that's over near FedExForum.

There's a group that's looking
at acquiring some property

in that area that has
some ideas around hotels.

I still think that we
have a very strong market.

There's still a lot of demand.

There's still a lot of
developers that are circling

and trying to figure out the
right project for Downtown

whether it's a
hotel or apartments

which tend to do very
well in Downtown Memphis

and other retail amenities.

So I have a lot of
confidence and optimism

that Downtown is gonna
continue to be strong

well into the future.

- Well, our offices are located
in the South Main District

and after being at Fourth
and Jefferson initially

for our offices,

and the contrast has
been pretty interesting

with South Main coming along,

development going up to Crump

in some cases on the
other side of Crump.

Has that kind of
altered the geometry

of Downtown development?

- It's definitely
stretching Downtown out.

You know, the
entertainment district,

that area around Beale Street

was traditionally the
heart of Downtown.

Now, you have South
Main being activated.

You have more activity happening
in the core with projects

like the Commonwealth
on Madison.

And then when you look
in the Uptown area,

the work that's happening
with Conwood that Billy Orgel

has been a part of or
Malone Park Commons

which Andre Jones has initiated.

There's a lot of things that
are happening in Downtown

that stretching it out
and adding that vibrancy

in more parts of Downtown.

- All that is
against the backdrop,

you mentioned COVID and how
things changed or stopped

and it obviously had a
huge impact on tourism.

It's also had a huge
impact on offices.

Memphis already had an okay
office market Downtown.

I mean, there was a
certain amount of vacancy.

100 North Main
was an office tower.

There are others, the former
Morgan Keegan building

right on the water and so on.

The Morgan Keegan building,

I'm gonna call it the
Morgan Keegan building

'cause I can't
remember apparently.

Raymond James, Morgan
Keegan, it's all the same.

But right down,
overlooking the water

at, you know, the
end of Jefferson

is now I think gonna be
turned, I think I heard,

or I think we wrote that
it's gonna be turned

into residences, into
apartments and there's rumors

of other office buildings
being turned into residential.

Do you see more of that?

And do you all get
engaged in that

in terms of supporting those
kinds of transformations?

Because it doesn't seem like
there's gonna be as much demand

for offices anywhere
in the country.

Obviously, cities like
New York and San Francisco

are being hit really hard.

In some ways we have
the benefit of not having

as much office, you
know, space Downtown

and so that doesn't
hit us as hard.

But these transformations
are gonna be more of them.

- Yeah, so we certainly are
engaged in those conversations.

We're not quite ready to
give up on offices just yet.

We know that there's a lot
of flux as a result of COVID,

but we are starting to hear
more large employers say

that they want to move
back into offices.

So our large Downtown companies
like AutoZone or Terminix,

all of them have been thinking

about when they're going to
bring people back in the office

and they're in the
process of doing that.

So while we know that
some of those buildings

like you referenced are having
some tough times right now,

we are not necessarily
pushing them

to make those conversions.

Obviously, if they want
to do it on their own,

we're supportive
of them doing it.

We're not necessarily
looking to incentivize it.

But if they're looking to
do that, then, you know,--

- That's interesting.

Why so explicit that you
don't wanna incentivize it?

- Well, we don't want to
give up on the opportunities

to bring large
employers to Downtown.

- Got it.

- And when you see large
structures like that

where there's the potential
for Class A office space,

for us to incentivize
that transition

would not necessarily be the
best use of public dollars.

- But then you've got the risk

that a building like
that goes dark, right?

I mean, a 100
North Main coming--

- It's definitely a risk.

It is definitely a risk.

But we believe that
it's important for us

to maintain opportunities

to bring those large
companies back to Downtown,

at least in the short-term.

- Yeah, you've mentioned
before the incentives structure

and that rental rates
were getting to the point

that those incentives
weren't quite as necessary.

Obviously, COVID kind of
turned everything upside down.

We did a show back in
the fall with a bunch of

housing advocates
including Dorcas Young,

a woman I think you have
known for quite a while.

- Heard of her.
- Heard of her, heard of her.

That's his sister, who
works for the county

and she and others,
you know, talked about,

yeah, there is this boom among
middle and upper middle class

and, you know, higher end
staff across the city,

but there isn't enough
affordable housing, you know,

and that, that is a
dynamic that, you know,

I can't remember
how many thousands,

it might have been
tens of thousands

that they need in terms
of affordable housing,

that people can get into it,
that even people, this is not,

I mean, this is
people with jobs.

This is people, maybe not
the best credit report

but they're working,
they have the money

and they simply can't
find a place to live.

You used to run, you know,
Housing/Community Development

for the city.

You're very close
to these issues.

How does DMC and how
do you balance that,

these high end expensive
apartments going in

for which there's
a lot of demand,

which pay a lot of taxes,

which makes sense with the
need for affordable housing?

- Yeah, so the demand
for affordable housing

obviously is very high.

And if we wanna
go down that lane,

I can talk pretty
in depth about it.

The way we balance it
with Downtown Memphis

is we ensure that any property
that receives an incentive,

our biggest incentive
being the PILOT program.

But any property
that receives a PILOT

must have at least 20%
of their units serve

families that earn at least
80% of the area median income

which is a, you know,
working class wage.

We believe that it's
really important

that we have a diverse mix
of housing in Downtown.

We wanna make sure that the
people that live Downtown

reflect the culture and
the character of the city,

that we continue to have
the vibe of Memphis.

We don't wanna be a city
where all of the people

that make Memphis, Memphis,

aren't able to
afford to live there.

And so we balance that by
ensuring that the projects

that we incentivize have
that affordability component.

In addition to that,

we also have some larger
affordable housing developments

like South City which is
a mixed income development

which is right on
the cusp of Downtown,

is kind of the bridge between
Downtown and South Memphis.

You also see projects like
what Elmington Capital

has been doing in Downtown.

So Forum Flats, Patterson Flats,

there's some other
properties in Uptown

which are truly affordable
housing developments

with low income
housing tax credits.

And so as long as we
continue to see projects

like that take place along
with the higher end projects,

we believe that we'll
have a good mix Downtown.

- And to that end,
I think South City

is just about to
start its last phase.

- Yeah, it's getting close.
- Yeah.

And as that's happened,
well, the thought initially

was all of this is
going to link up.

South City is going to link up

to what's happening further
west toward to toward the river.

And these things certainly
don't happen by accident

or by osmosis either.

So in South City's case, I
think a lot of this was informed

by other HOPE VI
federally funded projects

which does to your housing

and community development
background again.

But what have we seen
so far from South City

in terms of living
up to that promise?

- I think it's
definitely lived up.

Obviously it's a very
attractive development

if you drive by there.

The structures look amazing and
it feels like a neighborhood

and it feels like a neighborhood

that's integrated with
the community around it.

I think we're already
seeing the impact.

I don't think you would
see a project like the Walk

which was proposed
a few years ago

and they are getting very close.

You wouldn't see
projects like the Walk

but for projects
like South City.

You wouldn't see
projects like Butler Row

which was just
proposed at the corner

of G.E. Patterson and Second.

You wouldn't see Wiseacre

which is located
on B.B. King rather.

You wouldn't see those
things take place.

You have projects that COGIC
are doing along Vance Avenue.

Also on Vance, you have a
project that I was involved with

before I came to DMC
at Fourth and Vance

where Tyrone Burroughs
and Scott Bojko

are working on a new
development right there.

There are a lot of things
that are happening adjacent

to South City that would
not have taken place

but for the investment that
the city and HUD and others

made into that project.

- And this is one
of those projects

where there's been a lot of
discussion about displacement.

And in this case, there
are actually more units

on the sites of the
two housing projects,

public housing developments
that were there

than there were before
this transition.

- Yeah, I think there
were 420 units on the site

before the property
was demolished.

They're rebuilding 712 units,

four hundred and sixty of
which will be affordable.

So there's actually
more affordable

housing on the site
than previously existed.

And back when I was
involved around a year ago,

in terms of the numbers of
people that had returned

to the property,

that number was well beyond
what we had seen return

at other projects that
had been done in the past.

So I believe that it's
a positive for Downtown.

- In terms of Memphians
adapting to this new thing

of mixed income housing,

because we did tend in this
city and in other cities

to segregate ourselves
economically and racially

without there being
laws involving that.

Have Memphians changed
their mind about that?

Are they more willing
to look at mixed income,

mixed use neighborhoods as well?

- Yeah, I think so.

I mean, if you look Downtown,

any residential project
that gets completed,

fills up relatively quick

because people like
that lifestyle.

And always take it back
to how my parents grew up.

My parents grew up
in South Memphis.

Both of them grew up
in different parts

of South Memphis.

And in their neighborhood,

they had the janitor living
next door to the teacher,

next door to the doctor,
next door to the lawyer.

And so we had mixed
income communities.

It's the way neighborhoods
were traditionally made.

And we're just
going back to that.

- You mentioned we could
talk a lot more on...

Well, we've got
seven minutes left

so let me move along and
we'll get you back soon

to talk more about this
affordable mix and so on

because it's a fascinating
development we did.

Archie Willis who you
were on the show with,

who's developer, South City,

and Roshun Austin
were on recently.

We talked about the
area around Northside

and just what it takes
to rebuild neighborhoods

and people like you who've
been in the heart of it.

But we'll move on.

You mentioned Union Walk
was originally Union Row.

And so, you know, for
people who don't live

or work Downtown,

maybe just come down
sometimes for a game

or for, you know, whatever,

a restaurant or
Orpheum or something.

As you're coming down
Union towards Downtown,

the big vacant lot, right?

That they're, it's a,
what, billion dollar plus

proposed development
over 20 years.

But it's been stuck.

You said it's looks like
they're about to move on that.

- Yeah, they're getting close.

- Do you worry about,

I mean, there's still empty
spaces in Downtown, right?

As much, I mean, I've worked
down there for 20 years.

It lived down there off and on.

How do you approach that, the
projects that get delayed?

You know, I mean, we
sometimes are guilty

of running a headline, you
know, billion dollar proposal,

two hundred million
dollar proposal.

Really though, it's not
done, it's not cooked,

it's not ready and it's
years from breaking ground.

How do you handle that?

Do you keep pressure
on the developers?

Do you just kind of
stay in touch with them?

Do you ask them
to mow the lawns,

and, you know,
paint the surfaces,

you know, keep things tidy?

I mean, how, how does that work?

- Yeah, I mean for
The Walk specifically,

obviously, we have a very
close working relationship

because there's a lot of nuance

that goes into a
project that big.

There are a lot of steps
and obviously they ran

into the pandemic as a part
of that so that didn't help.

But in terms of how we
handle it in general,

people come to us relatively
early in the process

when they have an idea.

Because if they're not
able to get the incentive

then the rest of the
deal doesn't work.

So it's only so far
that they're going to go

without coming before our board

and getting the approval
for the incentive

and then that kicks off
a lot of the other work

to do the financing,
complete drawings.

And so typically when
project comes to us,

they're about a year from
actually starting anyway.

And sometimes they're
a little bit closer,

but at least a year.

And so we just continue
to talk to them.

We do regular
check-ins, you know,

if we hadn't heard
anything in a while.

Most of the time they
keep us in the loop

because there's different
questions that they have for us.

- How often do you have
to go to a developer

and just say, hey, we're gonna
pull back those incentives

because you've
just taken too long

to get going on this project?

- It's happened.

It hadn't happened as
much since I've been there

'cause I've only been
there for a year.

But I know that it's
happened in the past.

And certainly when we
reached that point,

we certainly will do that.

For us right now, we are
reviewing our PILOT program.

So it's a big deal if we
change course on a PILOT

that has already been approved.

Because if they
had to come back,

then they would
have to be approved

under whatever the new
terms of our PILOTs are.

- Yeah, Bill?

- And, while the incentives
provide some assurance

to lenders and things like that,

that's not the green
light for these projects.

The lenders have a
lot more due diligence

past those incentives,
don't they?

- Absolutely, I mean,
the lenders want to ensure

that the project
is going to work.

They have to find, you know,
if there are retail spaces.

They have to be
sure that they know

what the tenants are going
to look like in that space.

They have to secure
the equity for the deal.

So they may have a
portion of the equity

and they have to go and
raise the rest of the equity,

whether they go into, you know,

large New York Wall Street
groups for that equity

or trying to find local
people to put in equity

on the projects.

They still have quite
a bit of work to do

in order to get those
deals finalized.

- Are they as leery
as Eric talked about

of, okay, there's all
this big bang of publicity

about this project.

And they're the folks who
have to get to the real meat

of the matter on this.

So I would imagine in some cases

that they can be pretty
skeptical about that.

- Yeah, sometimes,
but I don't think

necessarily the public
pressure influences the bank.

I think that, well,
obviously public pressure

influences everything,

but in terms of the
bank's decisions,

they are more rooted in
will the project cash flow,

will it be sustainable
for the term of the loan?

I mean, that's what they
wanna know is making sure

that the project will be
able to repay whatever debt

they're taking out.

And so they go through very
strenuous means to ensure that.

- Just two minutes left here.

I wanted to talk
about, we didn't talk

about the Mobility Center
which is the big, you know,

garage and retail space
and all kinds of things

going in right
next to The Orpheum

that people are down
there, they see that.

That will be finished
real quickly--

- Next summer.

- Next summer.
- Next summer, summer 2023.

- Okay, lemme talk for a minute.

This is not enough time to
talk about it, about crime.

You all don't have
a police force.

You don't run the police force.

I understand that.

But, you know, there's a
spike in crime nationally,

there's a spike
in crime locally.

And it's definitely at more
of a topic of conversation.

It's always been a topic
conversation in Memphis,

I think in most cities,
but more so now.

How do you coordinate and
what is your perception

of what's going on with crime

and what would you like to see
the police force do more of,

or the city do more of?

Or is that not even something
that you yourself with?

- Oh yeah, we certainly
concern ourselves with it.

We are funded by a
commercial assessment

on commercial property
owners in Downtown Memphis.

So when things are going awry,
they certainly let us know

and they want us to
act on their behalf.

And so we coordinate with
Memphis Police Department

on a regular basis.

I recently had a meeting
with Chief Davis and her team

and we talked about some
things that we can do

to make Downtown safer.

We're looking at some lighting
strategies being funded

by Shelby County Commission

where we're gonna increase
the light in different areas.

The MPDs looking
at bike patrols,

some things that they can add.

We're doing some things

to reduce some of
the chaotic activity

by having some of the
scooters cut off late at night

'cause sometimes the scooters
dart in and outta traffic.

On late nights, and that's
just not a good mix.

And so we concern ourselves
quite a bit with public safety

and our goal is to coordinate

with our Blue Suede
Brigade team, MPD

and even the
Sheriff's Department.

- Okay, well again, I
didn't give you enough time,

but I appreciate
you answering that.

Thank you for being here, Paul.

Thank you Bill.

That is all the time
we have this week.

If you missed any of the show,

you can get the full
video at wkno.org

or you can get the full
podcast of the show

at The Daily Memphian
site, iTunes, Spotify,

or wherever you
get your podcasts.

Thanks and we'll
see you next week.

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