Kevin McKenzie

kevin.mckenzie@commercialappeal.com

Lures of cash, up to $2,000 for renters and $15,000 for homebuyers, are being used to convince more employees and students in the Memphis Medical District to live where they work and study.

Five health care and education “anchor institutions” in the medical district east of Downtown are stimulating demand for residential growth with a new “Live Local 901” program managed by the Memphis Medical District Collaborative.

Only 3 percent of employees and 6 percent of students live in the district, while 22 percent live within four miles, said Tommy Pacello, president of the collaborative. The population in the 2.5-square-mile area has declined to about 9,500 from about 30,000 in 1970.

“We’ve had a huge out-migration of people and one of the things that really makes trying to build a vibrant district is it requires people,” Pacello said.

Methodist Le Bonheur Healthcare, St. Jude Children’s Research Hospital, Regional One Health, the University of Tennessee Health Science Center and the Southern College of Optometry are making “significant investment” in the district, said Gary Shorb, chief executive officer for Methodist.

Those investments range from a master-plan remake of the UTHSC campus to a $280 million modernization project underway for Methodist University Hospital and expansion plans at St. Jude that will cost more than $1 billion.

“In the '70s the Downtown area was just a ghost town and the medical district was in similar shape,” Shorb said. “It was feeling the effects of what occurred in the '60s and '70s. The out-migration was pretty significant and continued for some time.”

“As ‘anchor institutions,’ we want to do all we can to get people to begin the migration back, and that has begun,” he said. “Downtown has really come back. The medical district is looking better than it ever has and it’s really just beginning to get even more investment in things like new signage, sidewalks, landscaping, things like that.”

The Live Local 901 incentives, with “forgivable loans” for homebuyers and details that vary by institution, are designed to prime the pump to provide more apartment dwellers and homeowners in the district. Its boundaries are roughly Poplar Avenue, Interstate 40, Vance Avenue and Danny Thomas Boulevard, between Downtown and Midtown.

However, the available housing has a 98-percent occupancy rate, Pacello said. Stimulating more residential, retail and office development is another goal and the institutions have just the place to start: 270 acres of surface parking lots in the district, of which 110 acres are owned by the institutions.

“As we develop our plans, both individually and collectively, we're going to be examining all of the space that currently is parking and really to work with developers and see if we can't transition a lot of that parking into residential or retail or other commercial use,” Shorb said.

The cost of parking, including expensive parking structures, and reducing the need for it by encouraging employees to live nearby, help fuel the initiative.

The Philadelphia-based consulting firm providing guidance for the “anchor strategy,” U3 Advisors, has honed the theory with projects including health care systems and universities in Midtown Detroit.

In Detroit, a pilot program that began in 2011 offered incentives up to $25,000 for homebuyers, $2,000 to renters and incentives for employees already in the neighborhood to stay and for exterior home improvements, said Alex Feldman, a U3 vice president.

Beginning with about $1.2 million, the incentive money ran out in nine months and the institutions committed to a five-year program that has attracted well over 1,000 participants, Feldman said.

The Hyde Family Foundations is matching Live Local 901 incentives dollar for dollar, with a total of $500,000 for the Memphis pilot, Pacello said.

It already has attracted two participants, but in a “secondary area” just outside the normal boundaries of the medical district, where payments to buy and rent are reduced.

Methodist, which does offer incentives for existing homeowners and renters, set aside $50,000 for the pilot program.

“If it looks like there's big demand then I think we'll find more money to put into it,” he said.

A survey of 2,200 employees, students and residents in the district found that 47 percent of those who responded made less than $50,000 a year. About half of those said an incentive of $5,000 or more would motivate them to move to the district, Pacello said. Institutions in the district enroll 8,000 students and employ 17,000 workers.

The Live Local 901 program is one tactic in a strategy that includes harnessing the “anchor institutions” as the economic engines of the medical district.

A “buy local” program is designed to help local firms, particularly those owned by women and minorities, win a larger slice of $1.2 billion that the institutions spend a year.

A planned “hire local” program will allow the total of eight institutions in the collaborative to target and cultivate neighborhood job candidates.

“These are big economic engines, these institutions, and it’s really about connecting them better to their neighborhood and their city,” Feldman said.