New incentive could bring about Cleveland St. development boom
Crosstown Concourse neighborhood | DESOTO DRONE | GARY BOISS EAU FOR MBJ
Back when Crosstown was the often-overlooked neighborhood — before Crosstown Concourse became an iconic development symbol of Memphis on par with the towers of East Memphis or the glitz of Downtown's pyramids and streetscapes — there was a hope.
Todd Richardson, CEO of Crosstown Concourse, dreamed of a future where the $200 million redevelopment of the former Sears facility became an anchor to a booming neighborhood that saw Cleveland Street became a key city connector.
And though Crosstown Concourse has become vital since it opened in 2017— a place where thousands of Memphians work, eat, enjoy themselves, live, and more — the wider boom never fully materialized, at least not to the level many hoped.
But now, with the advocacy of the community, the Crosstown boom that was promised may come to fruition. The Cleveland Street Corridor Tax Increment Financing District (TIF) was approved unanimously for the third and final reading by the Shelby County Commission on Monday, April 14.
It’s a 30-year play, and it lets the community surrounding Crosstown Concourse control the destiny of the millions in tax dollars that will come into play in the coming years.
The new district is bordered by I-240 to the west, Jackson Avenue to the north, Union Avenue to the south, and McNeil and North Watkins streets to the east. Madison Heights and Washington Bottoms are within the district.
The need is clear: A large swath of the TIF district remains blighted and abandoned. Community stakeholders hope that the TIF will bring about the impact that the developers behind Crosstown dreamed of.
”There’s over 50 acres of blighted and empty real estate over here,” said Justin Gillis, president of the Crosstown Memphis Community Development Corp. (CDC). ”What we’re hoping will happen is that the TIF will help drive development, to stitch this community back together and make it more walkable and safer, so that people feel like they can walk around the corner to the restaurant, or go and see this new development over by [Mississippi Boulevard Christian Church] and hang out there and have some coffee. [We hope that] medical students can feel safe living here, and that we can really become the vibrant hub that the Concourse has started”.
How the Cleveland Street Corridor TIF will work
The newly passed TIF district will be the fourth overseen by the City of Memphis and Shelby County Community Redevelopment Agency (CRA).
The organization also oversees TIFs in Uptown and Binghampton, and one just getting started in Soulsville.
TIFs set boundaries, and within those boundaries, current values are measured and benchmarked. As new developments are delivered, the newly generated tax revenues, or increment, are put into a fund to be used to fund projects throughout the district.
CRA TIFs also often have a community board. In Cleveland Street’s case, the CRA will oversee it and the Community Advisory Committee will be made up of at least two-thirds of residents and/or business owners in the district.
”We’ve tried to make sure that the community has a voice and is able to maintain the integrity of the community," Gillis said. ”[We want to maintain] the architecture and fabric of how people live over here. What we were wanting to see is this TIF help stitch the community back together.”
TIFs also often have flexible organization and funding models. The Cleveland Street Corridor TIF will be ”pay-as-you-go,” meaning that rather than take out bonds or raise equity, the TIF will raise money as developments come online. That means that even with the TIF now in place, it may be years before the results start showing.
”A lot of TIFs have been suggested over the years for different neighborhoods, but you have to have a substantial level of new development happening because tax increment financing is the growth in taxes” said Andrew Murray, president of the CRA. “It’s important to note that TIFs don’t create value, they capture value.”
Murray pointed out that the Uptown TIF, a much-cited success often attempted to be duplicated elsewhere, has a key contributor to its success: Harbor Town.
“The problem with the Uptown TIF is that people are trying to replicate that without having Harbor Town,” he said. “The only reason why the Uptown TIF works is because we have an engine — a tax-creating engine.”
The Cleveland Street Corridor TIF has an engine, as well. When Crosstown’s PILOT (payment-in-lieu-of-taxes) expires in 2034, the jump from its payment to its fully realized tax bill will count as increment. Additionally, community partners are working to get major and infill developments to help provide critical early momentum.
Developments setting the stage
Several developments are taking place within the TIF, and only a few need to land to create the critical early funds.
There are the Court Street apartments, already developed and delivered by Austin Magruder, which will count toward the early increment count. There’s also Scott Kern’s Bellevue Montgomery housing project; the Crosstown Mound project that’s planning to move forward with Ed Apple and Eddie Kircher; and more in the wings.
“I think it could really make the Cleveland Corridor something special,” Kernmsaid. “It kind of gives Crosstown its due.”
Another key player is the Mississippi Boulevard Christian Church. The congregation approved plans for a new church down the street from its current facility and is actively looking at its current holdings and considering how it could develop it further.
And of course, Crosstown Concourse itself is looking at bringing in tax revenues. Its leaders are currently working to expand its footprint in the neighborhood with a concert venue aligned with LiveNation as it hopes to bring even more visitors to the neighborhood and build out the nightlife.
”Our goal right now is to focus on the venue, and bring 80,000 to 100,000 more people to the neighborhood [annually],” Richardson said.
With those developments clicking away, even with a few of them receiving PILOT incentives, the TIF could get critical funds. Eventually the developments will begin paying huge amounts of money into the TIF for its 30-year term. From there, infrastructure developments can be built to lure even more development.
There’s a plan to guide that development, as well, with guiding principles that all developments must meet in order to get the community board’s blessing.
”It’s making sure that we get that investment that we haven’t seen for decades into the fabric of our community,” Gillis said.
Crosstown community to guide priorities, development
A board made up of community members will oversee much of the TIF.
The board will have a say on where the funds are spent and will be able to approve projects in the neighborhood.
Five guiding principles will set the terms for development in the neighborhood.
Developments will need to fit within the context of its surrounding neighborhood and fulfill an area need while creating new opportunity.
The five principles are: encourage a sustainable framework; enhance the physical connections of the fragmented neighborhood; infuse local culture; improve the streetscape; and support multimodal methods of transportation.
”It’s about the people, right?” said Shayla Kolheim, VP of the Crosstown Memphis CDC. ”The blight demolitions, the new curbs, utilities, parking lots — those small things that make a neighborhood a pleasant place to be from the person experience is my focus. In addition, some of the money and infrastructure improvements will allow some of the social service agencies thatare in the neighborhood access to additional resources.”
It will be years, maybe even over a decade, before the major infrastructure
projects begin moving. But in the meantime, the neighborhood beckons with opportunity. Richardson said he hopes to see a lot more residential development of all kinds land in the area.
He said that one of his few regrets about Crosstown Concourse’s development is that he believes it could support significantly more residential units. He noted that the facility regularly sits at 97%-98% occupancy on its units.
“We want density, density, density,” Richardson said. “Every development— residential, multifamily, mixed-income, whatever it is — has public infrastructure aspects that the developer is responsible for: sidewalks, water, sewer, electrical, fiber. TIF dollars could be used for those things to help incentivize residential development that meets the needs of the community and can help make that development math work.”
And though the community will have a say on its future, huge swaths of land are available to build the community into the next great Memphis destination.
“We have 50 acres of land that’s ready to go” Gillis said. “It’s a huge opportunity. We don’t think of it as screening for development or screening for investment. We want the city and the county to see our community the way we see it and realize that we’re worth investing in.”
CREDIT: Stephen MacLeod | Reporter, Memphis Business Journal