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Elvis’ Graceland Makes Front Business Page Of Wall Street Journal

October 6, 2015

Smart public investments are something that can work and should be encouraged by local governments looking to add jobs and needed revenue base.  I was most emphatic over the need for Madison to work at making sure Exact Sciences was located on our isthmus.  Last week the city council took the vote that will make sure the finances are in place to allow the job-producing business to start construction later this year.

So it was a real pleasure to open my paper and see above the fold on the business section of The Wall Street Journal the face of Elvis in front of his beloved Graceland. It made me glad to read that Memphis is also making their tax dollars work for future growth and added revenue.  That city, is after all, much in need of finding new and innovative ways to grow economically.

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Now the company that manages Graceland is making it even bigger, with a $125 million expansion that includes a new hotel and entertainment complex. But some people aren’t thrilled by one part of the project—the $79 million in local and state tax breaks through which taxpayers are helping to pay for it.

The Graceland incentives are the latest in a string of tax breaks handed out by Memphis, Tenn. to spur economic development, and they have made the city a flash point in a broader debate: Are the $70 billion that state and local governments award in such deals each year a smart way to boost economies, or a giveaway to private businesses which share too few of the risks?

Memphis officials expect the Graceland project to create hundreds of jobs and boost the city’s struggling economy. They say the tax incentives were critical to making the expansion a reality, and that ultimately the city will make back more than what it is laying out.

The Graceland expansion centers on the Guest House at Graceland, a new hotel adjacent to the mansion, with 450 rooms and 16,000 square feet of meeting space. Already under construction, it will open in October 2016, replacing Graceland’s smaller, aging Heartbreak Hotel. A planned 200,000-square-foot entertainment complex would house Elvis memorabilia, shops and restaurants.

Memphis and the state of Tennessee are helping pay for the project in three ways. Some of the sales taxes collected at Graceland, half of future increases in Graceland’s property taxes and a new 5% surcharge on merchandise sold at the site will all be steered toward paying off the project’s upfront financing, which was led by J.P. Morgan Chase JPM 0.05 % & Co.’s Highbridge investment arm.

Together, the three tax breaks have a present value of about $78.6 million over 30 years, said James McLaren, an attorney for Elvis Presley Enterprises Inc., which manages

3 Comments
  1. October 15, 2015 2:14 PM

    A bump in the road, perhaps? Not the best news for sure, but no one is counting this company out, and you should not either.

  2. Solly permalink
    October 15, 2015 1:54 PM

    Memphis would do well to be careful about following Deke’s advice on public investments in private projects: “Smart public investments are something that can work and should be encouraged by local governments looking to add jobs and needed revenue base. I was most emphatic over the need for Madison to work at making sure Exact Sciences was located on our isthmus. Last week the city council took the vote that will make sure the finances are in place to allow the job-producing business to start construction later this year.” AKA privatize the profit, and socialize the risk. In 30 years, when the public investment is supposed to be paid off in Memphis, the owners (or new owners after the builders have depreciated and cashed out) will say, “This is a 30 year old piece of crap, we need new money.” Professional sports team owners do this all the time. As a Madison taxpayer, I’m sure glad the city council took Deke’s advice and slammed through the Exact Sciences project, NOT! It should be a warning sign when a developer and company need the city to break it’s new TIF policy and rush through approval. http://host.madison.com/wsj/news/local/govt-and-politics/mayor-paul-soglin-wants-answers-on-decrease-in-exact-sciences/article_aed9fb0a-28d8-5174-80a6-a98857abd9b6.html It sure didn’t take long for the poop to hit the fan, so to speak.

  3. October 6, 2015 7:20 PM

    He always loved Memphis, and it is so awesome that Memphis is loving him back.!!!!

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