MEMPHIS, Tenn. — Memphis Mayor Jim Strickland is taking a firm stand against a proposed funding plan for a new luxury hotel downtown. He's drawing a line in the sand, which is at odds with the city council, saying he will not put Memphis' financial health at risk
The One Beale project comes with a glitzy video, showcasing the fine dining and two Hyatt-branded hotels that are already up and running. But it's the project's third Hyatt hotel - a nearly 400 room, skyline-changing 20-story Grand Hyatt, that's in jeopardy.
The Carlisle Corporation said the nearly $200 million project is the kind of luxury hotel that could bring events like the NBA All-Star game to Memphis, not to mention hundreds of jobs.
But the mayor said what the developer wanted from Memphis was just too much.
"This is just a huge ask of the taxpayers of Memphis. We've offered them more incentives than of any project in the history of this city and apparently it's not enough,” said Strickland.
In addition to other tax breaks, the most controversial was asking the city to basically co-sign or back 100% of the loan to build the hotel - something called a backstop. Back in April, Memphis agreed to a 50% backstop. But with bond rates and inflation rising, developers now want a 100% backstop.
That got the attention of even the state comptroller, who warned that Memphis would be putting its financial health at risk if the hotel failed and investors walked away, because it would leave taxpayers on the hook.
"The experts are saying it's a bridge too far and I have to listen to them,” said the mayor.
Strickland said he still doesn't understand why the developer didn't break ground back in April when the 50% backstop deal was done.
"Why didn't they issue the bonds then? Why didn't they start construction back then?” he asked. “We're now months down the line and through no fault of anyone else the bond market has changed."
Strickland said the city even offered a $5 million low-interest loan to help close the financing gap, but that was rejected.
"Where does this project go from here do you think? I really don't know. I hope it works,” he said.
Mayor Strickland said other cities have taken on the full cost of building a major convention center hotel, but that Memphis just isn't in the financial shape to take that on.
ABC24 reached out to the Carlisle Corporation to see if it still holds out hope for the project, but have not heard back.