Hickman Building wins tax incentive
Madison Street site has been vacant since 1971
The historic Hickman Building at 240 Madison has the dubious distinction of sitting empty almost as long as it was occupied.
But a Downtown board voted Tuesday to secure a $16.3 million redevelopment — new apartments, office space, retail — by granting its owners about $3 million in tax savings over 15 years. Completion is scheduled for winter 2018.
Officials called the tax savings hypothetical or fictional, saying the project wouldn’t happen without a partial tax freeze, also known as a payment in lieu of taxes (PILOT). Compared to current tax payments on vacant, unimproved property, the project would generate an estimated $504,385 more in city and county property taxes over the term, officials said. PILOTs don’t apply to the full value of a completed project.
Walk-Off Properties LLC, led by investor Michael W. Cook, proposes to convert the nine-story building into 40 apartments, ground-floor retail and offices for SouthernSun Asset Management, of which Cook is founder and chief executive officer. Cook is the only investor who has been publicly identified.
The group says a principal investor has committed to finishing rooftop space for a penthouse in a separate venture. The project also includes 80 garage parking spaces.
The Hickman Building was built in 1925 as the Medical Arts Building and has been vacant since 1971. An adjoining parking structure and a former American Legion building at 251 Court are also part of the project. The buildings are across Madison from the Fogelman YMCA and the back of AutoZone Park.
The Center City Revenue Finance Corp. approved the PILOT after Downtown Memphis Commission vice president of planning and development Brett Roler gave a litany of justifications. The building is on the National Register of Historic Places, it’s one of Downtown’s higher-profile vacancies and it has been a priority for the commission for years.
“There’s a lot of activity in this neighborhood, and this building has sat vacant and blighted for some time,” Roler said.
Staff analysis concluded “a PILOT is needed for the project to be viable and attract financing. The benefit figure does not represent lost tax revenue to the City or County.”
The application said the owners plan to borrow about $11.2 million and use about $2.4 million in historic preservation tax credits to fund the renovation, with owner equity and tenant-funded office finishes rounding out the funding.
Project consultant Scott Bojko said the building has sat unimproved so long partly because it has a lot of surface area that needs repairs and a relatively modest 60,000 square feet of leasable space.
“Some of the things that this run at the project has done to make it economically viable, with the PILOT and historic tax credits, is the mix of uses, the way they are earning income day and night. And so the very things you would want to animate your city are also the things that are making (the project) work,” Bojko said.
Contact reporter Wayne Risher at 901529-2874 or wayne.risher@commercialappeal.com.