Since the first coronavirus case was discovered in Shelby County, the pandemic has killed hundreds and sickened thousands, spiked unemployment, shuttered schools and businesses, and spurred uncertainty about the fate of Downtown Memphis' biggest projects.
Kevin Adams, the developer behind the Union Row project — which has been renamed The Walk on Union as a nod to the creation of a walkable Downtown, said his project is back on track, though a bit delayed.
Adams initially planned to begin construction in the final quarter of 2020. The pandemic has pushed the start of construction to the first quarter of 2021, he said.
"What did COVID do? Obviously, it stopped everything for a while," Adams said, adding that once it became more clear how the pandemic would impact the economy, he went back to the planning table.
He partnered with New York-based firm Turner Construction to crunch numbers to make sure the project could still happen on budget. He met with architects, designers and engineers to consider small changes — contactless doors, small office nooks in the apartments, more powerful air filtration systems — to create spaces built for a pandemic that is still far from over.
"I think we have a better project today than where we were when we were getting ready to go out to pricing before," Adams said. "The project has not shrunk at all. If anything it may have gotten a little bit bigger. ... There's no stopping."
The Walk will bring apartments, two hotels, office space, retail and at least one grocery store to Downtown.
Another change brought on by the pandemic will be a reworking of the public funding of the project.
Late last year, Adams was approved for a $185 million Tax Increment Financing (TIF) incentive. With that, he would be required to pay his full property taxes, but 75% of that money would go back into the project to fund infrastructure work.
This week, Adams will ask the Downtown Memphis Commission to rescind the TIF and grant a 30-year payment-in-lieu-of-taxes (PILOT) benefit instead. This incentive is similar in that it saves Adams about 75% of his property tax obligation, but there are no requirements on how the savings can be spent.
Adams said the change makes sense because as the project has progressed, he anticipates that construction costs will outstrip infrastructure costs.
According to Jennifer Oswalt, president of the DMC, the value of the PILOT will likely be less than that of the TIF.
"I look at it as we're getting the same overall investment from these folks — $741 million — for less public money," Oswalt said.
The $741 million is the first phase of the project. The full project value is expected to be near $1 billion.
To make up for the lowered public incentive, Oswalt said Adams will take on more debt and will also request to use money from a hotel surcharge collected in the Downtown Tourism Development Zone.
Oswalt said every developer, large and small, is in the process of reevaluating their finances the way Adams has as banks become risk averse and lending dries up. No Downtown projects have been canceled because of COVID-19 so far, but it is possible that some may not survive the pandemic.
Desiree Stennett covers economic development and business at The Commercial Appeal. She can be reached at desiree.stennett@commercialappeal.com, 901-529-2738 or on Twitter: @desi_stennett.
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'There's no stopping': Union Row gets new name, lays out plan for continuing amid pandemic - Commercial Appeal
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