The Memphis City Council has approved a $215 million financing package to turn The Pyramid into a Bass Pro Shops destination store and to invest in full ownership of the neighboring Memphis Cook Convention Center.
The council voted 12-0 Tuesday in favor of the measure with little discussion. The Center City Revenue Finance Corp., the finance arm of the Downtown Memphis Commission, will issue bonds to fund the project, which are to be paid back through increased sales tax revenue collected Downtown.
Beyond transforming the now-vacant Pyramid, both Bass Pro Shops and the city say they hope to create an active convention center district, focusing on the connections among The Pyramid, the Mississippi River, Memphis Cook Convention Center and the historic Pinch District.
"This is bold action that will completely transform the face of the city," said Mayor AC Wharton. "Although there have been rough obstacles to overcome and high doubt, we're going to get this done."
The city plans to buy Shelby County's 50percent share of the convention center for $65 million to $75 million so it can gain full control of the Downtown Tourist Development Zone, which takes advantage of retail sales for most of Downtown, including Beale Street and the medical district immediately east of Downtown.
Tourist Development Zones divert new state tax revenue from businesses within the designated areas to specific public-use facilities, such as The Pyramid or the convention center, instead of sending that revenue to the state.
"That money would be going to Nashville if we didn't use it," Wharton said. "So, we can use the increased tax revenue from the project to pay for the project."
A draft version of a resolution that goes before the County Commission today says that selling its share of the convention center would save it $1 million in annual operating costs and reduce the county's outstanding debt by about $50 million.
"We will essentially be made whole," said Harvey Kennedy, Shelby County chief administrative officer. "We won't make anything, we won't lose anything."
A new "gateway" entrance to the Pinch District on the north end of Downtown would be created for the project. Currently, the historic district is separated from the convention center and the rest of Downtown by Interstate 40, which tourism officials have said creates a "dead zone" that acts as a barrier.
"Bass Pro insisted upon this," said Tom Marshall, a former council member and principal in O.T. Marshall Architects. "They really wanted connectivity to the convention center."
The project includes $19.5 million to retrofit The Pyramid and $5.5 million to stabilize the soil on the west side of the building closest to the Wolf River Harbor, which would satisfy Bass Pro Shops' concerns about seismic stability.
The city also expects to purchase the old Lone Star Industries property, which displays neon "Memphis" signs, for $12 million to $15 million.
The city plans to issue Requests for Qualifications to find a master developer for Pinch District redevelopment.
Housing and Community Development director Robert Lipscomb predicted the area would see increased interest from retailers once the Bass Pro Stores facility opens.
"Bass Pro is the linchpin," Lipscomb said. "It's not just Bass Pro; the residual and ancillary development that will come with this project will be fantastic."
Lipscomb and his team members are slated to meet over the next two weeks with credit-rating agencies Moody's and Standard & Poor's to go over the financing package. The bond issuance is slated to close Sept. 29.
Bass Pro Shops and the city will send initial construction plans out to bid Oct. 1, with a target date for opening the retail store on Aug. 1, 2013.
The entire project is expected to cost about $170 million, with Bass Pro Shops investing about $33 million.