(Memphis) The Sears Crosstown Building has been mostly vacant for 30 years, and revitalizing the building is so big the owners say it will take multiple partners and big tax breaks or it may fail like revitalization attempts in the past.
The Downtown Memphis Commission typically gives a maximum of 15 years for property tax breaks for big revitalization projects.
They’re making an exception for Kemmons Wilson Companies by adding 5 years to the max, which is about $8 million extra in breaks.
The private owners say they would have defaulted on their loan payment without the extension.
“It could have had very negative consequences for the projects. So now we’re looking forward,” said McLean Wilson with Kemmons Wilson.
Construction is set to begin at the beginning of next year and is expected to pump over $300 million into the local economy and create more than 1,000 construction jobs.
Paul Morris with DMC says it’s not just about money but the revitalized building will start a wave of revitalization in the entire neighborhood.
Here’s how the tax breaks work:
When a property is rundown, like the Sears building is now, the property value is low so the taxes on it are low.
When you start improving the property the taxes go up with the value.
This deal keeps the rate low for two decades, but some argue with a city strapped for cash tax breaks aren’t the way to go.
Morris says it makes sense in the long run.
“The property value increases and the county gets more money from property taxes after the first year. The city gets money from the sales tax immediately from the construction project, and once the program rolls of the city and county see a huge increase from taxes,” said Morris.
It’s expected to take two years to finish the project and the owners say they want everything that makes up a good neighborhood to be in that building including retail space, medical offices, over 200 apartments and entertainment space.