MEMPHIS, Tenn. — The Memphis City Council voted 9-0 to buy the 600-room Sheraton Hotel Tuesday, a long-awaited purchase that will cost the city $22 million. But Memphis taxpayers wonder if the funds will come out of their pockets and why this project is a priority for the city.
Mayor Paul Young has garnered many positive responses about the acquisition and is backing this purchase. He proposed using non-property taxes to pay back the millions in bonds this project requires, while other city leaders insist that they will not reach into taxpayer's wallets.
City Council Chair JB Smiley and other council members visited the hotel site on Tuesday.
"We stopped and talked to some of the folks who were visiting from out of town, conferences like the AutoZone conferences going on right now," he said. "And we spoke to one of the guys who said some of his folks checked into the Sheraton hotel, but before they put their bags down, they checked right out of the hotel. Now that's the type of business that we're losing. We can't afford to lose those types of conferences."
He said this hotel is anticipated to garner lots of revenue for the city and put the Sheraton in the same league as other significant conventions and hotels nationwide.
However, this purchase does not come without some pushback, as taxpayers are worried that the funding for this hotel will come out of their pockets. Smiley said the recently approved tax increases for Memphis were not a result of this project development.
"This is a bond that will be taken out to support the project, essentially saying, 'Hey, let's borrow some money so that we can pay for this particular project,'" he said. "It's going to use the revenue that we generate - that's how the bond is paid. So it's not something that's going to say, 'Hey, let me tap your pockets.'"
The tax-exempt bond financing, supplied through an affiliate board of the Downtown Memphis Commission, will be limited to $30 million, and the city will have ownership of the hotel for two years. Following this timeframe, the city plans to sell the hotel to a nonprofit organization at a market rate of around $40 million.
"That's the reason that we are looking at this project," said Mayor Paul Young. "We're trying to do things that are ambitious, that are trying to move our community forward. And we know these are tough decisions, and these are important investments, but we're confident and ready to double-down on our city."
The council has discussed having checkpoints with Mayor Young to see where the city is in every phase of the renovation process. Young said he anticipates acquiring the hotel by the end of this year, focused on not only attracting tourists, but also retaining major business conferences already within Memphis.