Memphis Mayor Jim Strickland comments on hotel financing

0

Strickland spoke to ABC24’s Richard Ransom about his decision in this exclusive story.

MEMPHIS, Tenn. – Memphis Mayor Jim Strickland has strongly opposed a proposed financing plan for a new downtown luxury hotel. He draws a line in the sand at odds with the City Council and says he will not jeopardize Memphis’ financial health

That A Beale project comes with a dazzling video showcasing fine dining and two Hyatt-branded hotels already up and running. But it’s the project’s third Hyatt hotel — a 20-story, nearly 400-room, skyline-changing Grand Hyatt — that’s in jeopardy.

That Carlisle Corporation said the nearly $200 million project is the kind of luxury hotel that could bring events like the NBA All-Star Game to Memphis, not to mention hundreds of jobs.

But the mayor said what the Memphis developer wanted was just too much.

“This is just a big request to the Memphis taxpayers. We’ve given them more incentives than any other project in the history of this city, and apparently that’s not enough,” Strickland said.

Among other tax breaks, the most controversial was requiring the city to co-sign or pay back essentially 100% of the loan to build the hotel — something called a backstop. Back in April, Memphis agreed to a 50 percent backstop. But with bond yields rising and inflation rising, developers now want 100 percent backing.

That even caught the attention of the State Comptroller, who warned that if the hotel failed and investors pulled out, Memphis would be jeopardizing its financial health because it would leave taxpayers hooked.

“The experts say it’s a bridge too far and I have to listen to them,” the mayor said.

Strickland said he still doesn’t understand why the developer didn’t break ground as early as April when the 50 percent backstop deal was in place.

“Why didn’t they issue the bonds then? Why didn’t they start building then?” he asked. “We’re months old now and through no fault of anyone else, the bond market has changed.”

Strickland said the city even offered a $5 million soft loan to fill the funding gap, but that was turned down.

“Where do you think this project is going? I really do not know it. I hope it works,” he said.

Mayor Strickland said other cities have funded the full cost of building a large convention center hotel, but Memphis just isn’t in the financial shape to do it.

ABC24 reached out to Carlisle Corporation to see if they still have hope on the project, but have received no response.

READ: Memphis Center City Revenue Finance Corporation A Beale Project

RELATED: Tom Lee Park completes 40 percent of construction

RELATED: A look inside the first-ever Caption by Hyatt in downtown Memphis, now open to the public

RELATED: The Historic Falls Building in downtown Memphis has been bought by a luxury hotel developer

Share.

Comments are closed.