MEMPHIS, Tenn. — City Council members on Thursday approved a plan to use tax dollars as a financial backstop for One Beale’s Grand Hyatt Hotel.
Earlier this year, members agreed to cover half the project debt in a reserve fund. But now Memphis could be on the hook for all the money, if the revenue falls short.
In a worst-case scenario, the deal could cost taxpayers more than $160 million, and hurt the city’s overall credit rating.
Chief Operating Officer Doug McGowen says Mayor Jim Strickland is not ready to sign off on the new agreement.
“There’s a lot of risk, and again, I would like to come back and say this project is important. I would love to be standing before you to say we have a deal. I’d love to be standing before you to say let’s walk on down the street and cut the ribbon and break ground. But we’re not there yet,” McGowen said.
State Comptroller Jason Mumpower has said he has “grave concerns” about the way the deal is being financed.
Developer Chance Carlisle, the brother of Councilman Chase Carlisle, says construction crews are ready to break ground.
The entire One Beale project, which includes hotels to support the city’s convention center along with restaurants and residential units, has been granted a 30-year PILOT deal and has local sales tax rebated to the project’s debt, McGowen said.
