The question of who’s in charge of the proposed NBA arena became even more clouded this week as Don Smith resigned as executive director of the New Memphis Arena Public Building Authority (PBA).
Smith’s resignation came four days after the PBA chose a Minneapolis-based construction firm, M.A. Mortenson Co., as lead contractor for the $250 million project. Attention has now shifted to the specifics of subcontractors, the cost of benefits packages for workers, and minority participation.
“I cannot in good conscience continue in this capacity for one reason only,” Smith said in a statement he faxed to PBA chairman Arnold Perl. “I do not believe it is in the best interest of the citizens of Memphis and Shelby County to build the NBA Grizzlies Arena under the current arrangements and practices.”
The Shelby County Commission voted 7-6 Monday in favor of using non-union as well as union labor on the project. The resolution is nonbinding on the PBA but could foretell more problems next month when the commission and Memphis City Council vote on approving bonds to finance the arena project.
Close, surprising votes have been the order of the day for the proposed arena. The PBA also divided last week by a single vote, 6-5, in opposing a Memphis-based partnership — Beers Flintco Bricks — as lead contractor. And the 8-3 vote in favor of Mortenson came only hours after the firm failed to get a seconding motion of support.
All of this activity sets up an endgame in which the city council could decide the fate of the project in April. “The council has positioned itself as the final decision-maker on this thing,” said Councilman Tom Marshall, who has been working behind the scenes with the PBA.
Marshall interpreted Monday’s commission meeting as a message that the county commission has the votes to head off a union-led project-labor agreement. He said a joint session on or around April 8th is “quite possible.”
The issue is not simply the role of union labor. It also consists of cost controls and the extent to which minorities will participate in the construction. Mortenson senior vice-president John Wood told the PBA he put up $500,000 of his fee to guarantee compliance with minority-hiring guidelines, but politicians want more specific assurances.
“Mortenson is going to have an uphill battle with the council until they start naming the names of their subcontractors,” said Marshall. “The participants should be disclosed. You’ve got to disclose them and you’ve got to mobilize them.”
City council chairman Rickey Peete was guarded in his comments after the PBA chose Mortenson last week. “[The council has] never been one-contractor specific,” he said. “Mortenson has as good a chance as anybody.”
The overriding question of who’s in charge has hung over the project since it was announced a year ago. The powers that be include: the Memphis Grizzlies (operating as a business entity called Hoops); the Memphis ownership group which owns 30 percent of the team but commands considerably more respect and influence thanks to the credibility of AutoZone founder Pitt Hyde; the city and county mayors; the Tennessee General Assembly, represented on the PBA by state Sen. John Ford; the city council and county commission; and the PBA.
One of the earliest indications of dissension came last summer when the PBA chose Smith as executive director instead of Mike Ritz, favored by the mayors. Smith sealed his fate when he publicly criticized what he sees as inordinate influence by the Grizzlies.
The choice of Beers Flintco Bricks as pre-construction manager also did not sit well with the mayors. Last week, county mayoral assistant Tom Jones said Beers had not performed well, but Ford took strong exception, calling the comments “totally out of order and inaccurate and made solely for the purpose to influence in the wrong direction.”
The role of the PBA has also been an issue. Arnold Perl, chairman of the PBA, believes it was created by the city and county and “if we’re not going to accept this assignment then let this body go away right now.”
Ford, who helped draft the legislation that created the PBA, insists it is in charge. “This PBA created by statute can’t be disbanded by the city or county,” he told fellow members of the authority last week. “If the Public Building Authority goes away, you cannot spend a dime.”
Hoops, represented by attorney Stan Meadows, favored Mortenson as lead contractor. Meadows seems willing to play hardball if it comes to that. He reminded the PBA last week that the Grizzlies have “approval rights” over the lead contractor.
“We have to pay all arena losses,” he said. “Last June, we negotiated a detailed project agreement and lease. We would not have moved here without that.”
Asked what it was like dealing with two local governments, Meadows told me it is actually more like four governments, given the independence of the council and commission. Even after the PBA awarded Mortenson the job, Meadows remained wary that labor agreements could put the project over budget and jeopardize its future.
After last Friday’s morning session of the PBA construction committee failed to agree on a consensus choice, I asked Hyde if this is how business gets done in the corporate world.
“We’d go out of business,” he said with a laugh.
