Memphis Bioworks hotel gets $2M boost from federal grant
The City of Memphis and Memphis Bioworks Foundation have received a $2 million grant that will be applied toward development of a a 167-room hotel at 969 Madison.
The grant comes from the U.S. Department of Housing and Urban Development’s federal Brownfields Economic Development Initiative. The total project is estimated to cost $33.8 million.
The BEDI grant program is designed to stimulate and promote economic and community development in abandoned or underused industrial and commercial facilities that may have environmental contaminants. The grant would be used to remove asbestos from the building.
When the project was first announced in June, it was billed as a Hyatt Summerfield Suites Hotel. However, negotiations for a franchise agreement are still ongoing, said Steve Bares, president executive director of Memphis Bioworks.
Pruett Architects is designing the project. John Pruett, a principal with the firm, said it would incorporate several LEED specifications and would seek LEED Gold certification.
While funds are still being raised for the project, construction could begin sometime in the fourth quarter of 2010 or in the first quarter of 2011. It would take an estimated 18 months. The hotel would create 126 jobs.
John Gemmill, director of the Memphis field office of HUD, said the $2 million represents “a drop in the bucket” as far as total funding for the project is concerned.
The city also will apply for $4 million from the Section 108 Loan Guarantee Program that will be used toward the project, according to Robert Lipscomb, administrator for the city of Memphis. Section 108 loans are allotted for economic development and rehabilitation of public facilities to prevent them from becoming slums.
In June, Bioworks applied for $17.4 million in recovery development zone funding from the Memphis and Shelby County Industrial Development Board. The funding received preliminary approval from IDB, but it is contingent on the city and county receiving additional recovery zone funding from the federal government later this month.
Private equity would finance $6 million of the project, while new market tax credits would provide another $8 million and traditional debt would pay for the balance.
The property was built in the 1960s and served as a Holiday Inn before it closed in 1985. It has been abandoned for the last 15 years. Bioworks acquired it in 2005 for $500,000 and opted not to demolish it when it demolished the old Baptist Memorial Hospital Downtown that same year.
Bares said the organization “made a big mess” when it blew up the old building, but decided there could be a role in the future for the hotel.
“You can’t have a research park without a hotel,” Bares said. “The school brings in thousands of students (to interview for admission) every year that would like to stay close by, but they can’t. A hotel will not only become a valuable asset to the medical center, but to the whole area. Once you have that, all of the other facilities can come in.”
Memphis Business Journal - by Michael Sheffield
Date: Thursday, September 9, 2010, 1:47pm CDT