Germantown Town Center plan stalled by anti-growth faction

Division over building more apartments in Germantown is shaking a developer's confidence in building the proposed Germantown Town Center.

A rancorous meeting of the Board of Aldermen and Mayor in January and talk of lawsuits "disturbed'' the majority partner, Atlanta-based Carter, said minority partner John Elkington of Elkington Real Estate Group.

The development team that includes Ohio-based Anderson Properties is also concerned whether the suburb's climate for development would enable support for about $30 million in public incentives, either through tax-increment financing (TIF) or payment in lieu of taxes (PILOT), Elkington indicated.

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At stake is a 32-acre development — on the Arthur Property immediately west the Shops of Saddle Creek's south section — valued at $164 million.

Developers have recently downsized Town Center from $220 million in part to allay concerns by reducing the number of apartments, parking garages and retail, Elkington said.

The latest plan calls for 307 apartments instead of 332, one parking garage instead of two, 143,000 square feet of retail space, 30,000 square feet of restaurants, an increase to the originally planned 56,400 square feet of office space, entertainment and a 130-room hotel.

"What has disturbed (Carter) is the meeting in Germantown,'' Elkington said of a Jan. 22 Board of Mayor and Aldermen meeting. "The conflict on the moratorium on apartments and things of this nature. While we think (Town Center) is exempted, there has been a lawsuit brought against those who thought they were exempted, too.

"When dealing with a $100 million loan and putting in $30 million equity, it's concerning,'' said Elkington, who formerly was the longtime manager of Beale Street.

In early January, the affluent Memphis suburb approved a moratorium on construction of new apartments outside smart code zones where more density is planned.

However, at the Jan. 22 board meeting, Alderman Dean Massey sought unsuccessfully to change and strengthen the new moratorium. He proposed replacing the words "apartment buildings'' with "multi-family'' buildings that could include condos, townhomes, duplexes and brownstones. Massey also proposed making the moratorium broader by prohibiting multifamily in the entire city instead of just smart code districts.

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"When I'm fighting against apartments I'm really fighting for my family,'' Massey said at the meeting.

"Put ourselves in the shoes of mothers and fathers with children or their grandparents who just want to retire in their homes and live out their lives in the Germantown we all knew and loved growing up,'' he said.

The existing moratorium "does little to protect the city, especially our schools, from becoming overcrowded,'' Massey said.

City Atty. David Harris told the board that the new moratorium was not intended to stop projects like Germantown Town Center that had already received some level of approval in the planning process. Germantown Town Center's outline plan was approved about a year ago.

But last spring the developers withdrew their preliminary plans, saying they wanted to tweak the project. They have neither re-submitted the plan nor filed an application with the city's Industrial Development Board for tax increment financing — in which a portion of the increased property taxes it generates goes to pay for project infrastructure — or a payment in lieu of taxes (PILOT).

"The ball's totally in their court,'' City Administrator Patrick Lawton said of the developers. Their next steps would be to submit the Town Center plans to the Planning Commission for preliminary and final site plan approval, and to submit an application for tax increment financing to the city's Industrial Development Board.

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Despite the board-meeting debate, the apartment moratorium does not affect Germantown Town Center, Lawton said. And the only relevant lawsuit he's aware of was filed by residents of the Forest Hill Heights area over development in general, not against any specific project, he said.

"Doing business in Germantown is a very difficult process because of all the conflicting groups out there,'' Elkington said.

From the outset, he said, developers have told the city they would need to plug a project financing gap with about $30 million in public assistance through a TIF or PILOT, Elkington said. The developer is concerned about spending more money preparing the TIF application without more support in the suburb, he indicated.

Lawton said he hopes the developers will move forward because ''it's an exciting project. Until they take the next step with the Planning Commission or the city's (tax increment financing) application process, we won't know.''

Mayor Mike Palazzolo echoed Lawton said the city has developed guidelines in place, and it follows them.

"That is what has always been the good checks and balance for our community. We welcome them making an application for any of those economic development partnerships. We can't give feedback or a commitment — firm or soft — until an application is made,'' Palazzolo said.