Ten months into a good-faith bond agreement, anxious members of the Memphis City Council Economic Development, Tourism and Technology Committee pressed for information on the stalled purchase and renovation of the Downtown Sheraton Hotel during their Tuesday, Aug. 5, meeting.
“I think we were all hoping we would be at a ribbon cutting on renovations at some point this year,” said Committee Chair Jerri Green. “To hear that we haven’t even signed the paperwork is beyond troubling.”
Last October, the council approved a $30 million bond at the request of Memphis Mayor Paul Young to fund the renovations and eventual sale of the hotel to a third-party nonprofit. Both are contingent on a sale of the property to the Carlisle Group.
“This was $30 million, and that’s more than we put toward public transportation,” Green said.
The slow pace has been attributed to the complexity of the deal. The agreement involves as many as 12 entities, including subcontractors. The takeover of a functioning hotel adds further complications, including several indemnifications in the current contract with Sheraton Hotels.
Along with the usual legal language, negotiations have dragged over word choices in various documents. Previous timelines and deadlines also need to align. Council members were assured the delay is part of “normal negotiations.”
Furthermore, the various pieces of the deal are reportedly close to falling into place.
“We anticipate having all the documents done by the end of this month and hope closing will be no later than Sept. 15,” said Andy Jones, an attorney with Burch, Porter & Johnson. “What you don’t want is to sign a bunch of documents, and then a year later, everyone is shocked by the results.”
The promise of progress did little to mollify the committee. Many had anticipated a quicker turnaround on the project. Meanwhile, the second half of an annual $3.8 million bond payment is due Oct. 1. The city paid the first $1.9 million on April 1.
“There’s other things we could have done with that money in the meantime. We could have invested it and made interest on it. Yes, it’s all very frustrating,” Green said.
During discussion of the bond last year, council members were warned of a potential auction if the deal wasn’t approved. That threat by the owners, Starwood Hotels, turned out to be a bluff. The city was always the most logical buyer.
“For Starwood, that hotel is losing money every month over there. It’s not a part of the portfolio they want to keep. They also understand the city is by far the best purchaser of that hotel,” Jones said.
When the sale is complete, the Carlisle Group will oversee the renovations and eventual sale of the property to a third-party nonprofit. The hotel currently remains under the control of Starwood. Hotel staff are employed by Davidson Hospitality Group, and the Carlisle Group plans to retain them.
Documents related to the transaction are expected to be presented at the next committee meeting Aug. 12.
Adding to the pressure to finalize the deal is the state of the Downtown Sheration, which serves as the primary hotel for the nearby Renasant Convention Center. Due to its poor condition, many potential customers have chosen other cities to host their events.
The list includes former frequent visitors like the faith-based organization COGIC.
One organization that did return this year is Ducks Unlimited. The environmental nonprofit recently hosted its annual convention at the Downtown Sheraton. There was only one complaint.
“We got an email Monday morning about how bad the hotel was,” said Renasant General Manager Dennis Dean.
