2006 Section 108 Project Summaries - Tennessee

Court Square Center Project
Memphis, TN
Section 108 Guaranteed Loan- $8,500,000

The City of Memphis will provide financial assistance to a for profit Developer, Court Square Center, Limited Liability Corporation (LLC), for the rehabilitation and redevelopment of three contiguous, blighted, historic buildings totaling approximately 150,000 square feet into 74 market rate residential condominiums, as well as commercial restaurant, retail, and office space. The buildings are in downtown Memphis in an area designated by the city as a blighting and dilapidated area pursuant to Tennessee law. These buildings have been abandoned for approximately twenty years and are contaminated with asbestos material along with various other environmental contaminants due to the long term vacancy and abandonment.

The City will re-lend the guaranteed loan funds through a New Market Tax Credit (NMTC) financial structure to an Investment Fund, a for profit, limited partnership, which will in turn use these monies and other funding to make capital contributions (equity investment) in a Community Development Equity (CDE), a for profit, limited partnership. The CDE will use this equity investment to make loans to Court Square Center, LLC, the Qualified Low Income Community Business (QLICB) to fund the rehabilitation and redevelopment costs. In conjunction with the Section 108 Guaranteed Loan funds, the City will utilize a 2003 fiscal year $2,000,000 Brownfields Economic Development Initiative (BEDI) grant award from the Department of Housing and Urban Development along with approximately $22,000,000 in NMTC equity from the US Bank for a total development cost of $40,203,800.

The Community Development Block Grant (CDBG) national objective for the City's use of its guaranteed loan funds is to benefit low-moderate income persons through job creation and to aid in the elimination of blight on an area basis. The project will create an estimated 140 new full-time jobs.

The City will repay the Section 108 Guaranteed Loan from revenues it receives from the project Developer over a twenty-year period, paying interest only for the first nine years. To secure repayment of the guaranteed loan funds, the City pledges its interest in its loan to the Investment Fund which is secured by the assignment to the City of the Investment Fund's partnership interest in the CDE, and a second lien position on the real property. The City also pledges its CDBG funds as security for repayment of its Section 108 Guaranteed Loan.