Presenting the Golden Shovel Award for groundbreaking ceremonies symbolizing imminent prosperity:
In the category of Best Wish-I-Hadn't-Said-That about the Horizon, the 16-story downtown condo development on the South Bluffs that broke ground in November 2007, the nominees are:
Former mayor Willie Herenton, who stated, "I know a little bit about development, and this was a great risk. We will make possible what you naysayers have said wasn't possible."
Gary Garland, development manager for the Horizon, who said, "There were naysayers in Memphis, Tennessee, who said, 'Y'all will never get this done.'"
Jeff Sanford, executive director of the Center City Commission, who proclaimed, "The Horizon will be the queen, I predict, of this terrific downtown neighborhood."
Steve Bryan, developer of the Horizon, who said, "We're going to change the horizon of the Mississippi River and downtown Memphis in a very positive way."
Garrison Partners, the marketing firm for the Horizon, who called it "an oasis of elegance, seamlessly integrating the tranquility of an upscale riverfront residence with the style and seduction of downtown nightlife."
And, finally, the Memphis Flyer, which assembled these and other comments in a story that said, "The Horizon is ready for liftoff."
The envelope, please. And the Golden Shovel goes to — what's this? — the naysayers.
The Horizon is the $67 million, brand-new, almost finished, red-and-tan building that bookends the southern end of the downtown skyline. It is, as its backers predicted, the gateway to downtown, if you're coming from the south on Interstate 55 and Riverside Drive. The developer was the Bryan Company, based in Ridgeland, Mississippi. The lead lender was Capital One bank, known for its humorous television commercials with the "what's in your wallet?" tag line.
There's nothing funny about this deal, however, unless you're into black humor. If the definition of government make-work projects is digging a hole and filling it in, the private enterprise corollary is building a tower and closing it before it is occupied.
Construction came to a screeching halt a year ago and hasn't resumed since, leaving
parts of the building exposed to the elements. It sold at a foreclosure auction in July to Capital One for $17.4 million. Meanwhile, there are rumors that it will soon be sold "as is" for $10 million or less.
After several requests for comment on this story and questions e-mailed to them, Capital One spokesman Steven Thorpe said, "We are evaluating options with regard to the property." Steve Bryan, founder of the Horizon's development company, said he could not comment at this time.
Neighbors would like to see something happen.
"We had looked forward to it being the centerpiece of the community, and we would share the amenities like the swimming pool and exercise facilities," says Walter Bailey, an attorney who lives in Founders Pointe just west of the project. "As it turns out, for the time being, it is an eyesore."
John Gary owns a service station and convenience store across the street from the Horizon, where business boomed for more than a year, thanks to hundreds of construction workers who were daily customers. In mid-2009, with the building roughly 80 percent finished, work stopped. It was not that much of a surprise. The recession was going full bore, and there were — and are — scores of vacant condos in downtown's South End neighborhood.
"It shut down with a vengeance," says Gary, who adds that speculation about what went wrong and what will become of the building are now "the subject of urban mythology with every rumor more fantastic than the last one."
No one knows why the building was left in the state it is in. Moisture and mold, if present, could be a time bomb that would make the building a money pit for years to come. "No work has been done for over a year," says Tony Bologna, a Memphis architect who consulted for the developer of the project. "It was not sealed up, so it has been open to the elements and the change in temperatures. That's got to have a negative impact on the building."
He says it is "very unusual" for work to stop so suddenly at this stage of construction. He says the last thing he heard is that Capital One wants to sell the Horizon "as is."
The Horizon has become the symbol of an era of luxury in downtown Memphis that came crashing down, along with the Dow Jones Industrial Average, bank stocks, high-end restaurants such as Encore, proposed hotel/condo developments like Number One Beale, and the bankruptcy of Looney Ricks Kiss Architects.
Several Horizon subcontractors have filed lawsuits for nonpayment in Chancery Court in Memphis, including Aztec Construction Services for $164,000, White Plumbing and Mechanical for $892,000, Regional Drywall for $748,000, Southern Door and Hardware for $354,000, and River City Sprinklers for $163,000. Attorney Linda Mathis, who represents some of the subcontractors, says there are at least 26 lawsuits seeking a total of more than $8 million.
Separately, Bryan and eight co-defendants were sued by the U.S. Department of Justice for violation of Fair Housing regulations and the Americans With Disabilities Act. The lawsuit was settled in November, with the defendants agreeing to retrofit 800 apartment units and pay up to $117,000 to affected individuals. Bryan also agreed to pay a civil penalty of $12,000.
The Bryan Company was founded in 1977. According to an application at the Center City Commission, the firm has built 24 apartment projects with at least 150 units in Memphis and other cities, including the South Bluffs apartments downtown.
Bryan bought the property for the Horizon for $2.7 million from Ronna and Hal Newburger. It has a colorful history. In the 1950s, it was the site of an artists' colony whose residents included the writer Shelby Foote, who said the bluff "could be the most beautiful thing outside of Rio." Part of his novel September September takes place there.
The neighboring 12-story high-rise built in the 1960s was the flagship hotel of Holiday Inns until the early 1980s. The Newburgers hoped a new high-rise would bring instant density as well as a luxurious ambience to the Founders Pointe neighborhood of single-family suburban-style homes.
"We're still hoping the dream will come true," says Ronna Newburger.
She says the style of the building, which others have described as Destin-like or resembling a casino hotel, "did grow on me, although I didn't know if it would." She describes Bryan as direct in manner and a man of his word.
"Whatever he said he sincerely believed and intended to follow through on," she says.
Bryan unveiled plans for the Horizon in 2005.
Downtown, particularly the South End, was enjoying a housing construction boom, thanks to easy money, the opening of FedExForum, and an apparent surge of interest in urban living. A few months before the groundbreaking in 2007, the stock market indexes hit all-time highs, from which they quickly crashed. The Horizon was the most ambitious project on the boards. The 16-story tower — one of two in the original proposal — was the first high-rise residential project built downtown in 25 years. The average price of a unit was $600,000.
The location of the Horizon, which is separated from the rest of downtown by Riverside Drive and several blocks distance, was marketed as an advantage. It would have great river views and attract a different kind of buyer to a self-contained community.
There were supposedly 74 presales, which is a way of showing a lender that a project is viable. But it is unclear how firm those sales were. Ronna Newburger says she noticed that many of the buyers had connections to the developer or his associates. She says she believes everyone who put down money on a condo got it back. Harold Byrd, president of the Bank of Bartlett, says his bank had no investment in the project but did issue letters of credit to three or four would-be condo buyers. They were never drawn on, because the project was not completed. "That would have been a great thing for Memphis to have that big of a deal go over well downtown," Byrd says.
Bryan put in $7 million in equity and borrowed a little more than $60 million from Capital One National Association, in partnership with Bank of America, Trustmark, and U.S. Bank. The parent company, Capital One Financial, entered the retail banking market by purchasing Hibernia National Bank in New Orleans in 2005. Capital One got $3.56 billion in the government bank bailout in 2008, which it has repaid to the U.S. Treasury.
"This was an unusually challenging project in scope, price, and size to begin with," the CCC's Sanford says. "Some would call it high-risk; some would call it daring. Couple that with the unexpected fall of the economy, and it was a recipe for trouble if not disaster. It's no secret that they had to work very hard to get financing."
By law, the CCC cannot grant tax freezes to condominiums or single-owner residences. But Sanford and his staff worked with Bryan to get his bank backing, and when the project floundered and switched from condos to apartments, the CCC granted an unprecedented tax freeze to a development that was already under way.
Now that the project has failed, the tax freeze has been revoked. A new investor would have to reapply. Meanwhile, the Horizon joins the Pyramid and the 29-story Sterick Building as "big empties" on the downtown skyline.