Update July 10, 2018

Fairgrounds Redevelopment

Transformation Phase 1: 2006-2017

2006: Special Committee formed, recommended vision of a family recreation, education, & entertainment center

2007: City sends letter of intent for TDZ to State Building Commission; Salvation Army acquires one parcel to develop

2010: Tiger Lane constructed after demolition of Libertylandamusement park and other structures – $19.5 million

2011: Series of improvements begins at Liberty Bowl Memorial Stadium improvements, including accessible seating & common thoroughfares – $38 million total

2013: Salvation Army Kroc Center opens

2015: 5,596 seatbacks added to Liberty Bowl Memorial Stadium

2017: Children’s Museum adds Grand Carousel pavilionMajor improvements to landscaping on E Parkway medians

Phase 2 Planning Process2007: City sends letter of intent for TDZ to State

Building Commission.

2013: TDZ application filed with State for mixed-use development and sports complex.

2015: Urban Land Institute confirms vision.

2017: Mayor re-opens planning process – a new look at all aspects of 2013 plan & TDZ application.

Public meetings & website collect 400+ ideas.

New team of national experts produce comprehensive plan.

2018: Amended TDZ application filed with State.

Design & development begin upon approval.

FundamentalPrinciples• Accelerate our city’s current momentum and

produce synergy with other new projects so the whole is greater than the sum of its parts.

• Fully activate the Fairgrounds into a vibrant place where the entire community is welcome, while simultaneously meeting Memphis 3.0 goal to create productive assets from underutilized assets.

• Create new jobs and expand our economy.

• Build a quality facility that will draw local, regional, and national visitors.

• Maximize revenues and economic impact, minimize capital costs, and create deal structure to mitigate financial risk to City.

• Submit a revised application that fulfills letter, intent, and spirit of TDZ law.

Evolution of Project Since 2013• Focus on filling a local & regional void in facilities for youth sport competitions.

• Baseball is out – indoor sports are in.

• Development area right-sized – down to 13-19 acres – and focused on mixed-use.

• Retail right-sized – from 500,000 SF down to 30,000 SF.

• Mix of funding reduces reliance on TDZ revenues.

• TDZ boundaries re-drawn in keeping with law’s instructions.

The Next Phase in the FairgroundsTransformation

Indoor PlayAll Year

• 185,000 square feet (SF)

• 200-meter Mondo Super X Hydraulic Banked Track and 8 sprinting lanes

• 12 hard courts (laid over top) for basketball or volleyball

• High ceilings to accommodate cheer & gymnastics

• Can accommodate fencing, wrestling and all types of indoor sports

Facility

Highlights

• 100,000 SF of column-free space

• Highly flexible space with full electrical capacity for trade shows & special events

• Mix of bleacher & mezzanine seating

• TV ready (press room, camera platform)

• Family entertainment center

• 9,000 SF of tenant space

Youth Sports is BIG Business

Powerful & growing sector of tourism industry:

• $15 billion/yr; growing to $30 billion in next 7-10 years.• Kept growing during Great Recession & prior recessions.• Labeled “recession-proof” by Forbes (2014).1

Memphis sports economy = $120 million, without a facility specifically designed for indoor youth sports competitions.

Annual economic impact of others:

• Gatlinburg’s Rocky Top Sports World - $35.4 million*• Oklahoma City - $42 million• Fort Myers, FL - $47.7 million• Pensacola, FL - $22.5 million• Myrtle Beach, SC - $186 million*• Hoover, AL - $27.5 million*

*Feasibility study conducted by SFA, consultant on Memphis project –all exceeded SFA’s original projections. 1 Cook, B. (2014, May 12) 7 Billion Reasons Why the Youth Sports Stadium Game Shows No Sign of Ending, Forbes, retrieved from https://www.forbes.com/sites/bobcook/2014/05/12/7-billion-reasons-why-the-youth-sports-stadium-game-shows-no-sign-of-ending/#7f9200f8957a.

Governor’s tourism committee: Tennessee should be “country’s leader in sports tourism.” (2014)

State Tourism Development Department annual report: state is delivering on its youth sports ambitions. (2017)

Memphis Youth Sports and Events Complex can supercharge Tennessee’s sports tourism economy.

Anchored in spirit of state-local partnerships which are the key to tourism success.

Youth Sports is State Tourism Priority

Youth Sports Leads to Healthy Outcomes

Source: Aspen Institute’s Project Play

Fairgrounds’ Place in National Youth Sports Facility Market

Fairgrounds’ Place in Regional Youth Sports Facility Market

Facility City State Facility Details

Memphis Cook Convention Center Memphis TN 20 VB courts

Statehouse Convention Center Little Rock AR 14 VB courts

Cape Girardeau SportsPlex Cape Girardeau MO 6 BB/ 12 VB courts

Music City Center Nashville TN 29 courts

Hooptown Smyrna TN 4 BB/ 6 VB courts

Birmingham Crossplex Birmingham AL 9 VB courts, 200 M hydraulic track

Southern Performance Volleyball Acad. Irondale AL 6 VB courts

Hoover Met Complex Hoover AL 11 BB/ 17 VB courts

DeSoto Legacy Volleyball Southaven MS 8 VB courts

The CompetitiveNiche• Our sports building would be in top 5-10% of youth

sports complexes in U.S., as proposed.

• Fewer than a dozen comparable tracks in U.S.

• Premiere tracks mostly on east or west coasts.

• No indoor sports complex within a 210-mile radius.

• More playing court space than other regional facilities.

• Central national location with convenient access to N-S and E-W interstates and to airport.

Recent tournament in Hoover attracted 40 teams/400 youths and family from Memphis.

Events & Economic Impact

Facility breaks even in 5th year. Future profits will go towards operational & maintenance reserve funds and other eligible uses.

Cumulative Economic Impact• 5 years $120.5 million• 10 years $267.5 million• 20 years $596.6 million• 30 years $978.5 million

Year One Year Five

Events 50+ 80+

Event days 95+ 145+

Non-local days in market 137,000+ 221,000+

Room nights 33,000 52,000

Enhancing End-to-End

Stadium Improvements

Principal project is to replace west tower containing press box and team suites.

Developing 10 year improvement plan with University of Memphis:• Increase access to east & west suites.• Improve ability of visitors to move around Stadium.• Enhance field access thru north tunnel.• Improve gate access & ticket booths.• Upgrade signage & digital displays.• Improved concessions & restrooms.

Enhance customer experience thru pre- and post-game programming in the “halo”.

Additional Site Improvements

• New exterior track & soccer/football field (relocated from Central Ave).

• Pipkin Building exterior improvements.

• Creative Arts Building repaired, prepared for future tenant to be identified.

• Play areas installed in southwest corner.

• Lighting & beautification improvements to Southern Ave underpasses (E Pkwy, Josephine, and Boston St).

• Improvements to site entrances, wayfinding, bike access & safety.

Parking Gains & LossesWill lose about 2,300 spots on greenfields.

285-car garage attached to sports building.• First floor dedicated to buses.• Team buses to load/unload.• MATA 4-bay electric bus charging station.• Will be on 15 min north-south MATA route.

300-car surface lot next to exterior field.

Re-stripe existing parking lots to maximize spaces.

Some parking may be returned as retail area develops along Central Ave.

Opportunities to acquire land adjacent to site for parking.

City committed to identifying alternate parking spots & transit options for game days.

Mixed-Use• Hotel (80-key)• Retail (30-50,000 SF)• Restaurant• Residential

Possible development of 2nd garage & area west of Early Maxwell (with classrooms on upper

floors & school gym replaced) would be in future stage.

City would provide supportive infrastructure.

Developer selected after TDZ approval.

Private Development

These projects may be done in future if/as TDZ surpluses and other funds become available.

• Improvements to Tobey Park

• Additional structured parking on north end (driven by private developer)

• Iconic entrances & public art similar to the Bike Gate at Overton Park (pictured)

• Pipkin Building expanded to facilitate events & community gatherings

• Second building added to Fairview campus –possibly with classrooms over retail

• Fairview gym replaced, in new location to accommodate expansion of classrooms & retail

Transformation Phase 3: 2022 and on

The FinancialFramework

Project Costs

• $95 - 100 million – Total Project Cost*

• $55 - 60 million – Cost of Sports Building & Garage*

• TDZ is largest/primary contributor = $40 - 50 million contribution to capital stack

• Remaining capital stack is dependent on & leveraged by existence of TDZ:• Naming Rights, Sponsorships, Philanthropy, Stakeholder

Contributions ($25 - 35 million)• Tax Credits ($4 - 5 million)• Transit contribution to garage ($2 - 4 million)• City infrastructure & park funds ($10 - 15 million)

*These are full project costs, including soft costs, furniture & equipment, escalation & contingency.

Financing Phase 2 TDZ: Tourism Development Zone

Convention Center & Tourism Development Financing Act of 1988.

Allows capture of sales tax increase above baseline amount, adjusted every year, to secure debt or fund projects for Qualified Public Use Facilities (QPUFs).

Fairgrounds (and Graceland) were designated as eligible projects for TDZs by State Administration in 2007.

Memphis has proven TDZ track record – exceeding projections from conservative analyses, a good steward of TDZ revenues, and a great partner with the State of Tennessee.

Memphis has last TDZ application pending in Tennessee but it sunsets at end of 2018.

New TDZBoundariesTDZ boundaries have been redrawn in accordance with State law:

• Residential areas excluded

• Commercial areas included

• Includes areas where Fairgrounds visitors likely to stay, eat & shop

Fairgrounds

Park/Airways/Lamar retail area

Old Melrose School

Union AveOverton Square

Cooper Young

Crosstown Broad Ave

2.97 square miles

TDZ Shapes

Pigeon Forge

Music City CenterNashville

Other TDZs have boundaries that are just as complicated or far more complicated than proposed Fairgrounds TDZ boundaries.

TDZ RevenuesTDZ revenues fueled by business growth and visitor spending.

Visitor spending breakdown:

• 100% of on-site spending captured by Fairgrounds TDZ

• 15% of off-site spending captured by Fairgrounds TDZ

• 75% of off-site spending not captured by TDZ, but inside Memphis/Shelby County

• 10% of off-site spending projected to be outside Shelby County

Projected Revenue Collections:

• Year 1 $ 284,062

• Year 5 $3,930,130

• Year 30 $5,886,987

• Cumulative 30 year total $133,792,622

Net present value $50 - 60 million (including costs of issuance)

TDZ Impact on State & Local Tax RevenuesNo loss in current revenues. State, City and Schools will continue to receive the same amount of sales tax revenue from the Zone as they do now (the “Baseline”) for 30 year life of TDZ.

• For every $100 in taxable sales, State gets $7 and $2.25 is split 50-50 between City & Schools (after admin fees).

• Baseline is adjusted each year by the percentage of growth in taxable sales County-wide (“the Adjustment”).

New sales taxes collected in Zone (the “Increment” ) are divided:

• 0.5% goes to Schools off the top.

• Rest used to pay construction costs for TDZ project

Taxes collected on visitor spending outside the TDZ offset any loss of taxes on natural growth occurring inside the TDZ. For example, Schools might lose an estimated $5.37 million in tax revenue over 30 years from natural growth inside the Zone, but they would gain an estimated $6.46 million from visitor spending outside the Zone.

The Road To State Approval

Support of Council & Commission

State requires City Council resolution authorizing submission of revised application to State Building Commission and approving new Zone boundaries.

State requires County Commission – as local funder for schools – to send resolution expressing their opinion on project – whether in support, neutral or against.

We hope to have immense support from both bodies.

TimelineCity Council Resolution - July 24

County Commission Resolution – July 23

Q&A with State staffSupplemental info provided as needed

Summer

Submit application to

State in late July

SBC MeetingSept 13

SBC MeetingDec ??

Due diligence work will continue in search for architect, facility management company,

philanthropic and corporate sponsors, private developer, & tenant for Creative Arts building and on structuring of financial transactions

TDZ expires on

Dec 31

SBC MeetingNov 8

SBC MeetingOct 11

After Approval of TDZ

Approval of the TDZ is just the first step in assembling the project funding.

After approval, the City of Memphis can:• Obtain commitments from stakeholders, foundations, corporate sponsors, and others.• Determine developer, architect, management company, and tenants.

Multiple checkpoints along path of project finance:• Scrutiny by underwriters as bond issuance is prepared.• City Council must approve bond issuance.• State Building Commission must approve bond issuance and debt service schedule.

Opportunities for City to stop if not satisfied with project financing.

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Concept Image

Update July 10, 2018

Fairgrounds Redevelopment