Board OKs Graceland arena, with a caveat
An economic development board on Thursday approved a privately financed, 6,200-seat arena for Graceland contingent on court guarantees that it doesn’t violate the FedExForum’s non-compete agreement.
The arena was one of two Graceland projects, valued at about $40 million, approved by the Economic Development Growth Engine (EDGE) of Memphis and Shelby County.
The action came amid a rare public dispute between the city and a beneficiary of public incentives — in this case, Graceland — as well as a reported spat between two of the city’s most prominent institutions: Graceland and the Memphis Grizzlies.
Before a 5-3 vote, some EDGE members said they’d vote for the $20 million arena project so that the issues surrounding it could be sorted out in court and dealt with by the City Council and Shelby County Commission.
City Chief Operating Officer Doug McGowen and Chief Legal Officer Bruce McMullen told the board the city administration believes a 6,200-seat arena at Graceland would violate the FedExForum agreement.
Graceland has repeatedly blamed the Memphis Grizzlies for blocking the arena project. While the Grizzlies have been largely silent on the issue, Graceland has cited the team’s belief that public financing of the arena would violate the FedExForum agreement.
Graceland previously filed two lawsuits in Shelby County Chancery Court dealing with the arena issue.
The Grizzlies’ lease agreement for the FedExForum says in part that city funding can’t be used for a new venue that could compete with the facility or that seats more than 5,000.
The EDGE board also set a condition that Graceland would be required to divert $1 on each ticket of $15 or more sold for the arena, with the money going to a loan fund for the Whitehaven community that surrounds the tourist attraction.
Graceland representatives told the board that the arena project would ultimately require public incentives to be built. They asked that the $1 diversion from tickets be stripped from the resolution.
Graceland’s lawyer, James McLaren, and majority owner Joel Weinshanker said after the vote that they welcomed the opportunity to have arena-related issues vetted by council members, county commissioners and a judge.
McMullen said it could take two to three years for the dispute to proceed through legal channels.
The arena resolution included a recommended increase in Elvis Presley Enterprises’ share of new property tax revenues generated by Graceland redevelopment under a tax-increment financing (TIF) district.
McGowen said the city objected to the increase and he noted that Graceland had given no accounting of where it would spend the extra revenue. He indicated that the increase could be seen as an indirect way of subsidizing a privately funded arena, by adding to incentives that Graceland received for projects already completed.
Graceland has used public incentives over the past three years for a $137 million expansion including a luxury hotel, The Guest House at Graceland, and a new visitor attraction, Elvis Presley’s Memphis.
The Graceland TIF sets aside 50 percent of any increase in taxes from pre-development levels, with that money going to pay off project debt. The city and county get the other 50 percent.
The board’s resolution asks the council, commission and state officials to approve a change giving Graceland 65 percent of the incremental increase, with the governments keeping 35 percent.
The company has been talking to the EDGE board since last year about incentives for further expansion, but the arena project never made it to a board vote until Thursday.
In a separate resolution, the board voted unanimously to approve a $20 million bond issue for an 80,000-square-foot exhibit space to be built on the site where the Heartbreak Hotel is slated for demolition. The approval was contingent on the facility having fixed seating for no more than 1,700 people in one event space.
Reach reporter Wayne Risher at (901) 529-2874 or wayne.risher@ commercialappeal.com.