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Union Men

Part 1: Meet the Unlikely Business partners behind largest memphis development ever

An inside look at the deal to reshape Downtown Memphis

Site clearing for the $500 million-plus first phase of Union Row (seen here to the left of the LaQuinta Inn) is expected to begin this fall on the south side of Union Avenue. It will give rise to roughly 700 apartments, 300 hotel rooms, 90,000 square feet of retail and possibly as much as 350,000 square feet of office space. (Patrick Lantrip/Daily Memphian)

On a sticky July day, David Dlugolenski and J. Kevin Adams paced the perimeter of their planned $950-million mega-development, Union Row. They stepped past razor wire, broken glass and a homeless man asleep on the sidewalk before finding the shade of a sycamore in a vacant lot.

More in this special series
Part 2: For Adams, a reset in Memphis
Part 2 Extra: Digging into the deal
Part 2 Extra: Plan get little scrutiny

Out here, in the open, their differences are pronounced. At 6-feet-5, Dlugolenski towers over Adams. He’s much younger, too — only a grade-schooler when his partner landed his first big deals in Memphis.

As Adams, 58, labored to build a respected commercial real estate business in the often-harsh local market, Dlugolenski, 43, traveled the world, first as a military brat and later as an investment banker who finally settled in Atlanta, where he advises ultra-wealthy clients.

Together, these two unlikely business partners — with money from a third — hope to reshape a blighted swath of downtown Memphis’ east end.

Under the sycamore they discuss the site’s diamond-in-the-rough potential, showing a visitor just how close it is to downtown’s major attractions:

Just across the street to the north is AutoZone Park. A half-block further west, the five-star Peabody hotel. Looking south, a block away, there’s Beale Street, with all its neon, and FedEx Forum, home to the NBA’s Memphis Grizzlies and the University of Memphis Tigers basketball team.

To the immediate east is a boarded-up car dealership where Elvis Presley is said to have bought Cadillacs to give away as gifts and just beyond that lies the reinvigorated Edge commercial district, the medical district and Sun Studio, where Presley cut his first records.

David Dlugolenski discusses his massive Union Row development at the Midtown offices of Loaded for Bear, a public relations firm. (Patrick Lantrip/Daily Memphian)
Union Row co-developer David Dlugolenski discusses his massive Union Row development at the Midtown offices of Loaded for Bear, a public relations firm. (Patrick Lantrip/Daily Memphian)

“The stars have aligned,’’ says Dlugolenski.

They delight in their good fortune in landing such prime real estate — an 11-acre patch Dlugolenski calls his great “piece of dirt” — but also in the lightning speed at which this project is moving.

They only met last September.

Just four months after Dlugolenski came up from Atlanta and stepped into Memphis for the first time, he and Adams secured a pledge of $150 million in incentives from local authorities hungry for renewal.

The project moved swiftly through Memphis’ often cumbersome dual bureaucracy — two mayors, two governing bodies — fueled by its many promises: Thousands of new jobs, millions in new taxes and the rise of an entire new city district.

Architectural renderings envision sleekly designed office complexes, hotels, apartments and eateries that could erase several city blocks of urban decay as it bridges major commercial zones in the downtown area.

Site clearing is expected to begin this fall on the still-evolving $500-million plus first phase — some 700 apartments, up to 300 hotel rooms, 90,000 square feet of retail, as much as 350,000 square feet of office space —and the developers expect to make some major announcements soon regarding the site’s design, building schedule and partners.

Few developers have attempted something so daring or so big in Memphis. But the wild card here is Dlugolenski’s ties to wealthy clients. His majority equity partner for Union Row is Third Lake Capital, which manages investments for the family of billionaire Ron Wanek, founder of Ashley Furniture.

“This is going to be a fantastic project,’’ says Third Lake CEO Ken Jones, whose enthusiasm for Union Row — and Memphis — appears almost unbridled. “Right time. Right place. Right economic climate, right regulatory environment. Right political will. The right players…

“We think it’s a winner.’’

Jones is the ultimate insider: a longtime Republican Party lawyer involved in the 2000 Florida recount that put George W. Bush into the White House; and chief legal counsel to former Senate majority leader Trent Lott of Mississippi.

Though Union Row’s first phase spans 11 acres, the development team “controls” about 20 acres through deeds or options, Jones said, and he envisions a final project as large as 30 acres or more; something nearly as big and splashy as the multi-billion-dollar Water Street redevelopment in Tampa where he’s based. He hopes to replicate the sort of trendy, dense “live, work, play’’ mega-urban developments attractive to young professionals such as the emerging Centennial Yards in Atlanta and the planned River District in Chicago.

“This is going to be a fantastic project. Right time. Right place. Right economic climate, right regulatory environment. Right political will. The right players. … We think it’s a winner.’’

Ken Jones, Third Lake CEO

Just as Union Row is a mixed-use project that blends work and play, inside and out, the partnership is a colorful blend of personalities, experiences and business records. And the financing to make it happen — still emerging — is a similarly diverse mix: massive public incentives blended with out-of-town private equity, bank loans or publicly issued bonds and, perhaps, tax credits from two federal programs that handsomely reward investors who target distressed urban neighborhoods.

“We view Memphis as a sunrise city,’’ Jones said of his investment the size of which is not publicly known. “We always want to be involved with sunrise projects.’’

Perhaps the single greatest indication so far of the Union Row team’s financial wherewithal is this: The partners snatched up 17 separately owned parcels this year to assemble the Phase One site, paying $25 million — much of it with cash.

“It’s a special opportunity,’’ says Dlugolenski. “You really don’t get a canvas like this to paint on that often in an urban location.’’

Beginning today, and continuing tomorrow, the Institute for Public Service Reporting at The University of Memphis explores this unprecedented deal to reshape Downtown and the men behind it, particularly Adams, the public face of what, potentially, could be the city’s largest ever mixed-use real estate development. The Institute also explores how the project lassoed so many public incentives — perhaps $150 million worth — with so little public vetting or scrutiny of the principals’ business backgrounds.

An idea born

Elvis used to regularly frequent this part of town. As even the most half-hearted fan knows, the King of Rock ‘n’ Roll made his earliest recordings just a short walk away at Sun Studio.

But he also regularly patronized Madison Cadillac, located at the corner of Union Avenue and Danny Thomas Boulevard, where Union Row is planned.

“One salesman there sold him sixty to seventy Cadillacs,’’ says Billy Stallings, who runs a popular Elvis-oriented channel on YouTube under the name The Spa Guy and says Elvis simply handed over many of the cars to friends and fans. “He gave away cars like water.’’

<strong>Union Row co-developer Kevin Adams discusses some of the finer details of his pivotal development at Loaded for Bear’s Midtown office. </strong>(Patrick Lantrip/Daily Memphian)
Union Row co-developer Kevin Adams discusses some of the finer details of his pivotal development at Loaded for Bear’s Midtown office. (Patrick Lantrip/Daily Memphian)

Today, the dealership is long gone: boarded-up and painted a gaudy shade of goldish-yellow. That’s pretty much how it looked when it caught Adams’s eye several years ago.

“That area has always been bad,’’ Adams said of his years driving past the site. He and many others wondered if it could ever be redeveloped.

Then, in late 2016, the dealership site went up for sale. Adams began to think harder about it. He recalls getting a call sometime in early 2017. Some colleagues asked if he’d be interested in building apartments there. Just catty-corner and a bit up Danny Thomas lies The Edge District, bustling today with new residential and commercial development including apartments in the old Wonder Bread factory and the relocation of the headquarters of Orion Federal Credit Union, which Adams helped arrange.

It’s a special opportunity. You really don’t get a canvas like this to paint on that often in an urban location.

David Dlugolenski, Union Row partner

Adams liked the idea of turning the dealership into apartments, but felt it was too limited in scope. “You’ve got to think of everything that’s around you, of not knowing what’s going to happen,’’ he recalls telling an old friend, construction contractor Montgomery Martin.

The area in question — some 11 acres roughly bounded by Union Avenue on the north, Danny Thomas Boulevard on the east, Beale on the south and Fourth Street on the west —comprised 20 individual parcels with diverse owners and interests: An auto repair shop. A 1950s-era motel. A boarded-up marine supply store.

“It was such a consortium of different personalities and owners with different interests it couldn’t be put together,’’ he said.

Still he tried. He was, after all, the recent CEO of the Memphis affiliate of CB Richard Ellis, a widely regarded commercial real estate brokerage, management and consulting firm. Real estate was his bread and butter.

The Downtown Memphis skyline rises behind a vacant lot. The property will be a crucial piece of the proposed Union Row project. (Patrick Lantrip/Daily Mempian)
The Downtown Memphis skyline rises behind a vacant lot. The property will be a crucial piece of the proposed Union Row project. (Patrick Lantrip/Daily Mempian)

By May 2018 he’d formed a company, Union Avenue Investments LLC, and began buying some of the parcels there. That June, he shelled out $1.6 million for the former Cadillac dealership and two adjacent lots. This was still months before the partners entered the deal. There was no huge injection of outside cash then. Adams acquired the property with a $1.3 million mortgage from FirstBank.

“When you start putting something together you just make it work however you can,’’ he said.

Search for investors

Around the time Adams was sizing up the old Cadillac property, he approached the Downtown Memphis Commission with a suggestion.

The agency is responsible for promoting Memphis’ inner core, and it offers plenty of incentives to developers: some small loans and grants and, more controversially, a property tax abatement program known as Payments In Lieu of Taxes. The DMC had long had the authority to approve Tax Increment Financing, or TIF, an incentive that can significantly reduce a developer’s costs and put life in a project that otherwise isn’t economically feasible. However, despite the program’s growing popularity across Tennessee, DMC had never issued a TIF.

Jennifer Oswalt is the Downtown Memphis Commission’s president. (Daily Memphian file)
Jennifer Oswalt is the Downtown Memphis Commission’s president. (Daily Memphian file)

Adams knew a TIF program operated by the Downtown Memphis Commission would be gold, and he asked DMC president Jennifer Oswalt about it.

“It was just a thought,’’ said Oswalt, who says Adams was still busy trying to assemble the diverse parcels at Union Row and had no detailed plans. But other developers had been inquiring, too, and members of the County Commission were pushing for the program.

“We had certainly begun this discussion before (Adams) came to us,’’ Oswalt said. “But knowing that their project could be on the horizon certainly spurred us also to get it formally done.’’

Meanwhile, Adams continued his search for private investment, tapping his many contacts.

“I went through all my relationships,’’ he recalled, describing how one name popped up — K.O. Kennedy, a debt and equity specialist in CBRE’s Nashville office who referred Adams to Third Lake. As Adams recalls, when Third Lake sent a representative to Memphis, he was so impressed he referred Adams to one of Third Lake’s real estate partners —Dlugolenski, a towering former beach volleyball player.

Touring Memphis

Dlugolenski has been all over the globe — Hawaii, Europe, Hong Kong, New York, Chicago, Japan, Seoul, South Korea. As the son of a lieutenant colonel in the Army’s military police force, he moved 13 times by age 18 and several times again during his career in finance.

But somehow, he’d never stepped foot in Memphis.

When Adams showed him around the city last September, Dlugolenski got an itch. The tour started in the eastern suburbs and wound 25 to 30 miles into Downtown, covering all the major sites, places like Beale Street, Mud Island and Crosstown Concourse, the massive former Sears distribution warehouse where a $200 million renovation created a “vertical urban village’’ of shops, offices and apartments credited with igniting much of the recent spark in Memphis’ inner core.

“I felt kind of the momentum, the energy,’’ said Dlugolenski (the first ‘l’ is silent: it’s pronounced doo-go-len-ski), who soon returned to Memphis with Third Lake’s Jones.

“The excitement level was just incredible,’’ Jones recalls of furtive meetings the Union Row team held with local business people as well as Mayor Jim Strickland and County Mayor Lee Harris.

Memphis Mayor Jim Strickland (Jim Weber/Daily Memphian file)
Memphis Mayor Jim Strickland (Jim Weber/Daily Memphian file)

Strickland was sold.

“It’s absolutely incredible,’’ he said of Union Row. “Some Memphians I’ll run across … say it (sounds) so good that they doubt it’s actually going to happen. And they’ll say, ‘Oh, is it real?’ I say, ‘Absolutely it’s real.’ I’ve met with the out-of-town investors. The local folks. And I think they’re very serious about it.’’

The enthusiasm seemed contagious.

Dlugolenski said Adams originally focused on a smaller portion of the 11-acre site. But after seeing the buzz of development already ringing the area, the team’s vision grew.

Amid the razor wire and vacant lots, Dlugolenski conjured images of Avalon, a glamorous, $1 billion mixed-use development built on 86 acres in suburban Atlanta and marked by sweeping open spaces, fine dining, apartments, offices and a luxury hotel — a “walkable’’ community where residents “live, work and play.’’

“We kind of realized collectively with Kevin that there’s probably a bigger opportunity. We got a little bit more aggressive with our land acquisition strategy,’’ Dlugolenski said.

“It’s absolutely incredible. Some Memphians I’ll run across … say it (sounds) so good that they doubt it’s actually going to happen. And they’ll say, ‘Oh, is it real?’ I say, ‘Absolutely it’s real.’”

Memphis Mayor Jim Strickland

Where Dlugolenski saw Avalon, Jones saw Water Street, a $3 billion development underway in downtown Tampa. Backed by Microsoft billionaire Bill Gates and Jeff Vinik, owner of the National Hockey League’s Tampa Bay Lightning, the project features Tampa’s first “trophy” office towers to be built in years along with retail and entertainment, parks and open spaces – another “walkable’’ community that its developers say will “introduce a dynamic new lifestyle’’ to the city.

Jones says that can happen in Memphis.

“I’m not a guy who wants to step off the sidewalk just a little bit. If we’re going to step off the sidewalk, we’re going to step off full on into the fray. We’re going to do the whole thing,’’ he said. Union Row’s development team has purchased or optioned nine acres beyond the 11 acres comprising the project’s Phase One site and has its eye on another 10 acres. 

“We view this as a comprehensive redevelopment of a significant tract of land in a great part of Memphis,’’ Jones said.

<strong>The Memphis skyline as seen from Tom Lee Park on the evening of Sunday, Aug. 11, 2019.</strong> (Patrick Lantrip/Daily Memphian)
The Memphis skyline as seen from Tom Lee Park on the evening of Sunday, Aug. 11, 2019. (Patrick Lantrip/Daily Memphian)

Dlugolenski’s evolving career

As excited as the Union Row team was, Dlugolenski was equally energized by an opportunity in East Memphis to build a senior retirement home. Senior living development is a recent business focus in his ever-evolving career. So, when a contact at Third Lake told him about a 17-acre site south of the Dixon Gallery and Gardens art museum — a site owned by a company controlled by retired Saks Inc. CEO R. Brad Martin — he took a look.

Dlugolenski became so interested, he and Adams soon won approval from the Memphis and Shelby County Land Use Control Board to build a facility there with up to 240 units. Plans approved in May include apartments and independent-living cottages. Dlugolenski said he has a contract to purchase the land in the fall.

His path into senior living development follows a circuitous route that winds through New York’s financial markets and the politics of his adopted Georgia.

After graduating in 1998 from the University of Connecticut with a degree in finance and accounting, Dlugolenski launched a career in New York where he analyzed real estate portfolios for a time for Ernst & Young before hiring on with the French financial services company, Societe Generale, serving much of his 11 years there as chief of staff to the head of the investment banking division for the Americas.

When the real estate crash brought massive layoffs, he grew tired of “hundred-hour’’ work weeks and left in 2012 for a “soft landing” in Atlanta where his mother, Debbie Dlugolenski Alford, had remarried and become the budget director for the state of Georgia. Around the time her son relocated to Atlanta, she was appointed the $300,000-a-year president of the Georgia Lottery in a decision that critics said was unduly influenced by then-Republican Gov. Nathan Deal.

Dlugolenski went to work with his stepfather, Dean Alford, a former Georgia state representative and businessman whose interests included Southern Retirement Services. Soon, Dlugolenski broke out on his own. In 2013, he co-founded Aspire Development Partners, hiring away some of Alford’s staff to launch a new career building luxury retirement homes.

Teaming with experienced partners like Choate Construction of Atlanta, Aspire has built five such facilities so far in Georgia and Florida, the latest a $60 million senior living community near Jacksonville called The Lakeside at Amelia Island. Its website depicts an oasis of senior bliss: A palm tree dotted 12-acre campus where elderly residents dine, play and exercise, some residing in independent living units, others in assisted living and memory care residences.

“We’ve had great success with (Dlugolenski). He’s done what he said he would do, and he’s delivered. We usually give developers one shot. And if they (perform) we’ll do more deals. And if they don’t do that, we’ll move on to the next one. Because there are plenty of developers out there.”

Robert Kennedy, Wells Real Estate Funds

“It’s wildly successful,’’ said Dan Markee, founding partner of Forterra Capital Partners of Minneapolis, a minority investor in the project who said it was 70 percent leased before the doors opened.

Aspire’s chief equity partner in the deal is LFW Investments, a family office of investment mogul Leo F. Wells III, founder of Wells Real Estate Funds Inc.

LFW has teamed with Dlugolenski on five such projects starting with a smaller, 100-unit assisted living facility in Johns Creek, Georgia, said Robert Kennedy, president and chief operating officer of Wells Real Estate Funds.

“We’ve had great success with him. He’s done what he said he would do, and he’s delivered,’’ Kennedy said. “We usually give developers one shot. And if they (perform) we’ll do more deals. And if they don’t do that, we’ll move on to the next one. Because there are plenty of developers out there.’’

Dlugolenski said his senior living experience has prepared him for a big mixed-use project like Union Row.

“You’re building a hospital, a hotel, an apartment building and a restaurant all in the same building, right? And, so, the complexity in how those things all work together has allowed me to learn a lot in a short period of time,” he said.

It’s also prepped him for recruiting wealthy real estate investors. Building on his success, Dlugolenski, in 2017, founded SageStone, a real estate-focused private equity firm that partners with wealthy family businesses, including Third Lake, where he met Jones.

Game of chess

Kenneth P. “Ken’’ Jones, 47, has a politically robust resume: One-time personal attorney to George W. Bush, a legislative lawyer with top-secret national security clearances, president of the Republican National Convention host committee in Tampa in 2012. A year later, he went to work for the Waneks, a Forbes 400 family with an estimated net worth of $2.1 billion. By then, Jones had been working in private equity for years and had built a reputation as a skilled negotiator and investment strategist.

He’s hesitant to discuss private business but Third Lake made news in recent years for investing in skyscrapers in St. Petersburg, Florida, and a tony half-billion-dollar open-air mall off the Las Vegas Strip, as well as purchasing the popular WingHouse Bar & Grill restaurant chain based in Florida.

Overall, Third Lake owns 12 million square feet of commercial real estate valued at more than $2 billion. Its portfolio includes a mix of office towers, shopping malls, mixed-use retail, senior living facilities, hotels and restaurants in a dozen cities from Florida to California.

But in Memphis, Jones understood Union Row was going nowhere without first getting an infusion of public incentives — it was simply too expensive. Adams’ early lobbying led to the Downtown Memphis Commission’s Center City Revenue Finance Corporation to adopt a new policy in June 2018 to begin Tax Increment Financing. Now, Adams had to sell Union Row’s bid for TIF money to decision makers.

Jones said Adams was the perfect fit for the job.

“He is a guy who can look across the chessboard and say, ‘OK, we need to get support from this person or that person.’ He understands the inter-relationships of the different players within the market. And that is so important,’’ Jones said.

Under TIF, a portion of the new property taxes generated by construction improvements is funneled back into a project to help offset the cost of development. The program tends to be less controversial than PILOTs. That’s partly because a TIF project generates new revenue while avoiding the PILOT stigma of tax abatement. TIF is also appealing because the very expensive cost of infrastructure needed with new development — road improvements, utility lines, storm sewers and the like — can be lowered to more manageable levels by TIF revenue.

But winning approval of a TIF is itself expensive. Union Row needed an economic impact plan. And architectural renderings. And it still needed to assemble those 20 parcels into a single, 11-acre site.

Aging buildings and vacant lots surrounded by razor wire comprise the land where Union Row will rise just south of AutoZone Park in Downtown Memphis. (Patrick Lantrip/Daily Memphian)
Aging buildings and vacant lots surrounded by razor wire comprise the land where Union Row will rise just south of AutoZone Park in Downtown Memphis. (Patrick Lantrip/Daily Memphian)

To cure the problem of sparse funds, Adams recruited help from old friends. Longtime associates like Looney Ricks Kiss architects worked for a time without pay, he said, while Dlugolenski was able to infuse some cash into the planning phase. The Union Row team produced a 38-page master plan and a professional study that predicted all those tantalizing benefits — some 4,100 jobs created during construction and another 4,300 permanent jobs upon completion along with $16 million annually in new property, sales and hotel taxes.

By Nov. 13, just two months after Dlugolenski first stepped into Memphis, the Union Row team unveiled its plans. Despite admonitions from County Mayor Harris, a lawyer who advised authorities to “proceed cautiously’’ and study Union Row slowly, its proposal for TIF funding sailed through:

The decision by Wilson and Rolfe was huge. State law typically restricts TIFs to 20 years and limits the use of TIF tax revenue to “public infrastructure’’ such as roads, storm sewers and utility lines. But with state approval, this TIF has been extended to 30 years and approved for private use, allowing the Union Row team to use up to $100 million in TIF tax revenue for things such as land acquisition, architectural design and engineering services.

The ease of those victories impressed Dlugolenski.

“That was what was attractive to us. Because a lot of these deals that involve public incentive packages, they get mired down in politics and bureaucracy,’’ Dlugolenski said.

“We were looking for good political leadership, good local partners and the right piece of dirt. … So, it really checked all of the boxes in terms of how we look at it from an investment perspective.’’

Now, everyone was all in. On Feb. 28, the Union Row team formalized its partnership. With Dlugolenski and Adams acting as co-developers and Third Lake as chief equity partner, they formed a new firm: a Delaware-chartered company called Union Row Development LLC.

Biking from Tulsa, Okla., to the Great Smoky Mountains National Park, Jerrod Horton and Frank Cypert chat on Aug. 9, 2019, at the Vista Inn. They were two of the last guests to stay at the motel on Union Avenue in Downtown Memphis. The inn closed its doors on Aug. 14 to make way for the Union Row development. (Patrick Lantrip/Daily Memphian)
Biking from Tulsa, Okla., to the Great Smoky Mountains National Park, Jerrod Horton and Frank Cypert chat on Aug. 9, 2019, at the Vista Inn. They were two of the last guests to stay at the motel on Union Avenue in Downtown Memphis. The inn closed its doors on Aug. 14 to make way for the Union Row development. (Patrick Lantrip/Daily Memphian)

Possible game changer

In the months since the TIF decision, the developers have been pushing toward an October start, when demolition is expected to begin at Union Row. Dlugolenski keeps an office in Memphis, where he stays two or three days a week. Adams maintains his full slate of work and contacts.

On May 29, Adams co-hosted a $1,000-a-person fundraiser for Strickland, who is seeking reelection, at the home of real estate investor Terry Lynch. A picture from the event shows Adams sharing a laugh with Strickland, the mayor’s glass raised as if making a toast. Campaign reports indicate the event generated 12 donations of $1,000 each, though specific amounts were unavailable.

Strickland said he was unaware of Adams’s role at the event but said he wholeheartedly supports Union Row.

Kevin Adams shakes hands with Memphis Mayor Jim Strickland during a May 29, 2019, campaign fundraiser. (Patrick Lantrip/Daily Memphian)
Kevin Adams shakes hands with Memphis Mayor Jim Strickland during a May 29, 2019, campaign fundraiser. (Patrick Lantrip/Daily Memphian)

“I think it has potential for enormous impact,’’ Strickland said, saying it adds to other major investments in Downtown including the $1-billion plus expansion of St. Jude Children’s Research Hospital and the recent relocations of the headquarters of ServiceMaster, Indigo Ag and FedEx Logistics. “I’d say all those together are game changers.”

Although Raymond James & Associates financial services firm passed on an opportunity to relocate as the anchor tenant in a planned office tower at Union Row, the developers are confident an anchor tenant will come given the number of inquiries they’ve received.

“We’ve been surprised by the amount of interest,’’ Dlugolenski said. “I think this is one of those things where success breeds success as well. Once you create the place and the environment our view of it is it will be one of the most attractive places to live, work, play for an office tenant within a short period of time.’’

Though there is the specter of a brewing recession – Forbes magazine in July reported four signals of a possible 2020 recession including declining consumer confidence and slowing growth in manufacturing – Jones said Union Row has no worries.

“I think there are also people predicting that the sun is going to become a death star and explode next year,’’ he said. “We have conviction on this project. If we listen to the naysayers you would never get anything done.’’

Dlugolenski says Union Row will be well insulated from lean times by its large private equity investments. He said his transactions typically keep debt levels between 50 to 65 percent of a project’s cost, and Union Row’s loan-to-cost ratio could be in the 50 to 65 percent range too, according to numbers presented last fall.

“I think there are also people predicting that the sun is going to become a death star and explode next year. We have conviction on this project. If we listen to the naysayers you would never get anything done.’’

Ken Jones, on the prospect of a 2020 recession

“Then, we’ve got good partners that have liquidity in the case that we need to kind of ride through a storm,’’ Dlugolenski said.

A large portion of the project’s private equity may be raised through a newly created federal tax shelter known as Opportunity Zone funds that shield investments from capital gains taxes. The area where the Union Row property sits is designated as an opportunity zone, or a distressed area where policymakers hope to encourage investment.

The program has come under criticism nationwide, however, assailed as more likely to help wealthy investors than poor people.

Nonetheless, Memphis Housing and Community Development Director Paul Young said he believes Union Row will help fight poverty because of job opportunities created by its planned hotels, grocery and restaurants. He said the project will complement another now underway, nearby South City, a public-private redevelopment of the old Foote Homes public housing project where 600 mixed-income housing units are planned.

“We’re excited to see Union Row come to fruition because one of the things we try to do when we invest in affordable housing is have affordable units in what they call areas of opportunity’’ with easy access to jobs, Young said. An added bonus is that Union Row involves no gentrification — no displacement of residents — because it is a commercial area.

“Union Row is going to help,’’ Young said. “It’s a wonderful match between what we’re trying to achieve.’’

This story first appeared at www.dailymemphian.com under exclusive use agreement with The Institute. Photos reprinted with permission of The Daily Memphian.

Marc Perrusquia
Written By

Marc Perrusquia is the director of the Institute for Public Service Reporting at the University of Memphis, where graduate students learn investigative and explanatory journalism skills working alongside professionals. He has won numerous state and national awards for government watchdog, social justice and political reporting.

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