Adams and Reese Partner and Transactions Practice Group Leader James McLaren was featured in several recent stories in The Commercial Appeal and The Daily News that covered the approval by the Memphis City Council of city tax revenue for Elvis Presley Enterprises Inc.’s plans make Graceland a tourist development zone and use an estimated $40 million worth of future tax revenue to help pay for a proposed 450-room hotel.
Presley Enterprises, which manages the Elvis brand, was acquired late last year by a New York marketing firm that pledged to ramp up activity at Graceland, which attracts about 600,000 visitors per year.
The tourist zone is hailed as an economic engine able to generate jobs and new investment at one of Tennessee’s largest tourist draws. The tourist zone now awaits approval by state officials. In addition to the tourist zone, the company will seek a 5 percent tourist surcharge on its visitors, as well as a tax increment financing plan called a TIF. The TIF would steer some of the future gain in property taxes at Graceland to Presley Enterprises to help retire the hotel construction loans. The council is expected to take up both at later meetings.
McLaren said the bonds would be structured in such a way that the city would not be obligated to pay the debt service in the case of a default. Initial figures put the bond issue at $40 million, but that number could change, McLaren said.
According to a master plan released by Elvis Presley Enterprises, the new hotel is expected to generate between $20 million and $25.5 million in revenue each year. That would equate to $1.8 million to $2.4 million in incremental state and local sales taxes each year. If designated as a tourist development zone, Graceland would be entitled to use most of that money to pay off bonds issued to build the hotel.
Graceland estimates the hotel expansion would generate 150 to 180 jobs that pay an average of $16,966 a year. Graceland also plans to create 200,000-300,000 square feet of attractions on the west side of the Graceland Campus, but cost projections for that future phase were not available. The first part of Graceland’s expansion, a $1 million archives studio, is slated to open this week.
At Adams and Reese, McLaren provides transactional counsel primarily for economic development, public finance, real estate development, commercial lending and mergers and acquisitions.
He has been Lead Counsel for the Memphis Center City Commission, the downtown development authority for Memphis, for more than 20 years where he has supported revitalization of downtown Memphis through planning and implementation of redevelopment initiatives such as tax incentives, tax increment financing, public-private partnerships, project development, land assembly and transactions involving historic tax credits.