MEMPHIS, TN (WMC-TV) - A decade long tug-of-war over Beale Street cash flow came to an end earlier this month, when the city of Memphis settled its lawsuit against Performa, the company that manages the tourist strip.
The City of Memphis sued Performa Entertainment, the firm that manages Beale Street, arguing that they used money owed to the city to develop entertainment districts outside of Tennessee.
Half a year after Mayor AC Wharton took office, the two sides settled.
To understand the terms of the Memphis versus Performa settlement, you must understand the lease agreement. Here's how it works:
Performa gets 15 percent of all Beale Street profits to manage the entertainment district, plus whatever it costs for operating expenses, like security and pest control. Whatever's left over is supposed to go to the taxpayers of Memphis.
Performa owner John Elkington says Beale Street has never made a profit since 1982. But this is a case of 'he said, she said.' A city of Memphis study argues Performa did profit, and that the company spent $6.4 million owed to the city on outside projects. Performa countered the city actually owes them $1.5 million.
Firstly, the settlement requires the mayor acknowledge Elkington turned Beale into the city's number one attraction. The settlement drops the multi-million dollar lawsuit against Performa, as well as $90,000 Memphis Police say Performa owes them.
Though Elkington will no longer manage Beale Street, he will get a five percent leasing commission, and half of the parking revenues, until November 2032.
Using calculations from the city study, that's about $100,000 a year for 22 years, for a total of $2.2 million.
The city also agreed to pay up to $11,000 towards a judgment, after an environmental engineering firm sued Performa.
If you add everything up, the city settled with Performa for roughly $8,701,000 to turn over control of Beale Street to the City of Memphis.
The agreement also involves Beale Street business owners.
Click here to download and read the settlement.
What the Settlement Doesn't Mention
The settlement signed by the mayor, the city attorney, Performa, and Beale Street merchants never mentions when Performa leaves.
It also leaves out a major component of the city's original lawsuit: wrist ban sales.
The city suit argued nearly $2.2 million from Beale Street wristband sales should have been calculated into the money Performa owed to city taxpayers.
But Performa always maintained since Beale business owners manage wrist bans, it doesn't count as Performa profit.
Beale Street Merchants
Under the settlement terms, Beale Street business owners agreed to pay $420,000 for the cost of the lawsuit. But they'll be reimbursed $360,000 of that money. Money that would have been calculated into Beale Street profit that's supposed to go to city taxpayers.
In addition, if Beale Street turns a profit, the businesses get an extra $60,000 in rent credits. Also money that would have gone to taxpayers.
CAMs (Common Area Maintenance Fees)
The lawsuit argued Performa billed city taxpayer for certain CAM expenses that should have been billed to Beale businesses.
The settlement drops that issue and calls for the release of $75,000 the courts held back from Performa.
If that doesn't work out, Beale Street business owners agree to cover the $75,000. In exchange, they'd get a $75,000 rent credit. Also money that may have gone to taxpayers.