Pinch developer talks about ‘critical mass’ for investors in Downtown development boom
BILL DRIES | THE DAILY MEMPHIAN
The $1.1 billion development plan for the nine blocks between the Pyramid and St. Jude Children’s Research Hospital in the Pinch district would be on terms that are different from the tax incentives key to other elements of the ongoing Downtown development boom.
Tom Intrator, the developer, and Downtown Memphis Commission President Jennifer Oswalt told Memphis City Council members Tuesday the change is necessary to create a “critical mass” of development there and at the Union Row project that will draw investors.
Oswalt described the payment in lieu of taxes incentive to come for the Pinch under Intrator’s plan as an incentive that works more like a tax increment financing district because it would allow the tax increment the developers pay – at a higher percentage than normal PILOTs – to be used to finance the development. It has a different legal structure.
“Today is the start of a long process,” Oswalt told eight of the 13 council members present for the committee discussion. “Your approval starts the process.”
Oswalt said the goal of 10,000 new units of housing over the next decade in the Downtown area has given way to a push for 1,000 of those units within a five-minute walk.
“As we spread that out over our entire Downtown area, it really would feel different,” she said of the longer-term goal.
“With this, we have a great chance to show the country that we are investable with these two big projects as models,” she said of Union Row and the Pinch as bookends.
Intrator, who has experience with multi-family development, is concerned that a lot of high-end residential development might not be absorbed.
“Sure there’s natural demand here. But you need to create more demand from outside the city,” he said of housing that works with employment.
“In order for employers to get comfortable, they need to know that whether they are looking to attract pretty much any age range, backgrounds – they need to be able to have basic services,” Intrator said.
So with financing, Intrator would start redevelopment of the Pinch with hotels that aren’t just for visitors but also include plenty of retail on ground floors. His company, 18 S. Main, would then begin pre-leasing the retail and break ground on the first phase of office space or office towers as residential begins to come on line.
“Ultimately, that is to attract and create a neighborhood that is vibrant and can attract out-of-town companies and employers who will take up office space,” he said. “Then we believe we should be able to fill up a good amount of residential.”
Intrator says with his experience with hotel development in South Main and the apartments by others coming online, there is “a microcosm of what we should do in the Pinch.”
“I think it would be very challenging for us to fill up our office space – at least get it off the ground – if we are not committed to having it aligned,” he told the council. “Most of the office users we’ve talked to, especially from out of town – they don’t have a three- or four-year horizon. They want to know, ‘Where am I moving in 12 to 18 months?’ ”
The full council is scheduled to vote on the resolution at its first meeting in December.