Does Dean’s administration have the mettle to move PSC Metals?

Sunday, March 25, 2012 at 10:05pm

Head north on Interstate 24 toward downtown Nashville, and a blemished view of a modern, Southern city comes into focus. At the doorstep to tall skyscrapers, a downtown buoyed by billions in new investment, are mounds of metal — crushed automobiles, appliances and unidentifiable scraps — that rise high, dot dozens of acres and border the east bank of Nashville’s Cumberland River.

Piles of rubbish surround industrial warehouses and machinery. At night, lights shine brightly over the landscape. From just the right angle, a massive scrap yard joins the illuminated big city, and becomes part of the Nashville skyline.

“It’s sort of like somebody got a black eye in the middle of a pretty face,” said Tom Hardin, a 17-year resident of the nearby Edgefield neighborhood in East Nashville, who comes across the view daily. “You’re driving down the expressway, you come around the corner there, and there’s this pile of rubble, cranes and warehouses.”

That image is arguably Nashville’s biggest eyesore: PSC Metals Inc., a 55-acre scrap plant that accepts, processes and ships out metal to steel mills. PSC, an Ohio-based company, oversees 49 similar plants across nine states, with the Nashville location said to be among its most profitable. Its proximity on the east bank is the relic of a Nashville of the 1950s, when the waterfront was a dumping ground for industrial operations. Urban revitalization hadn’t entered the lexicon back then.

Today, Nashvillians don’t just see a blotted landscape when they look at PSC. They see unrealized potential, prime real estate next to LP Field and an evolving riverfront. So do mayors of Nashville, past and present, who for years have sought to relocate the PSC plant to a different point on the Cumberland to pave the way for private economic development. The decades-old relocation effort has never advanced, however, as those attempting it have found a project too complex to engineer, made doubly challenging because of an enormous price tag.

Like his predecessors, Mayor Karl Dean has said PSC is on his “radar,” though progress on its relocation hasn’t taken off. Yet in recent months, those in his inner circle have started to call the scrapyard’s relocation an actual second-term “priority.” Evidence of a PSC relocation perhaps taking larger precedence includes polling on the matter, along with communication with a PSC investor key in making the project a reality. Still, mayor’s office officials aren’t out to create false hope. After all, with three and half years left in office, the clock is ticking. The task is monumental.

“The mayor recognizes that parcel of land is probably not currently being put to its highest and best use,” Matt Wiltshire, the director of the mayor’s Office of Community and Development, told The City Paper. Wiltshire called the acreage “a major scenic bend in the river that has got a scrap-metal yard in it that has historically barged construction.”

“I don’t want to overstate things, and I don’t want to set unreasonable expectations, but it’s a priority,” Wiltshire said before providing one more caveat: “The mayor has lot of priorities. Chief among them is protecting the taxpayers of Davidson County.”

 

 

Despite that caution, signs are out there that solving the PSC challenge is occupying more discussion inside the mayor’s office than in the past.

Dean’s campaign committee in January undertook a phone survey that polled Nashvillians’ mood on a property tax increase, which would be Metro’s first since 2005. Among the first questions: “If it [a tax increase] turned out to be used to provide funding to support regional economic development initiatives such as relocating the metals scrapyard on the east bank of the river next to LP Field, would you be more likely to support it, less likely or would it not make a difference?”

A month before the poll, Dean’s office released a study that recommended three potential locations for a new Nashville Sounds ballpark, which included the east bank near PSC. Sounds management immediately rallied behind this site. Though Dean has said a new minor league ballpark isn’t a “necessity,” he called the east bank location a potential “game changer.” An east bank ballpark could perhaps fit on city-owned land surrounding LP Field, but it’s hard to imagine its construction realistic if the
adjacent metals scrap yard were to remain standing.  

The most significant break on a possible PSC relocation is communication: The mayor’s office in recent months made contact with an instrumental player on the PSC end — not company officials in Ohio but rather billionaire business magnate Carl Icahn, whose New York-based Icahn Enterprises owns PSC.

To say the mayor’s office is in even preliminary negotiations with Icahn isn’t accurate. But they’ve at least told him about their relocation and development hopes. Of course, one of the challenges of moving PSC could be Icahn himself, an investor known as a corporate raider who is listed among the top of Forbes’ Magazine’s richest people in America. His $13 billion net worth ranks him 25th nationwide. The 1980s film Wall Street was based partially on his career.

In short, Icahn might not easily turn his attention to an appeal by a mayoral administration in Nashville.

Joe King, vice president, general counsel and secretary of PSC, declined an interview request for this story. Jason Avery, general manager of the Nashville PSC location, did not return a call.

 

 

Metro Finance Director Rich Riebeling said he has looked across at the “spectacular” downtown views from the PSC grounds, situated south of LP Field, catty-corner to Nashville’s central business district and a stone’s throw from the soon-to-open Cumberland Park, a $9 million “adventure play-park.” Set to open in April, the park is the first installment of Nashville’s bold long-term riverfront redevelopment plan. 

“You think about what could be there, and you could have a whole new major development — residential, commercial, mixed-use,” Riebeling said of the PSC site. “You could take an area and turn it into something that people would really find attractive and walkable near everything downtown. It has incredible upside.” 

Add it up, and some development experts say PSC sits on one of the most valuable, underutilized pieces of real estate in Nashville — and perhaps the entire state. But, as Riebeling puts its, the site has “a whole host of challenges that make it complicated.”

“It’s not something we can just arbitrarily decide to do,” he said. “It’s got to have willing parties, and I think that makes it difficult. That’s why we have to gauge everything, sort of in the perspective of, ‘What’s realistic?’

“We’ve got a business that’s been operating there for many, many years,” Riebeling said. “It’s got some requirements.”

Indeed, PSC has no reason to readily vacate its spot on the east bank outside of a major financial incentive, a factor that’s created one of the greatest impediments to relocation. Its current location provides the three components the company needs to function: access to the interstate, the railroad and barges along the river.

That combination has made it tricky to find another location in Nashville where PSC could thrive. Acquiring the land via eminent domain, many say, is simply not an option. First, the company, as a metals scrap plant, is a necessity for the city. In addition, the Metro Development and Housing Agency is in the midst of a public relations fiasco after a judge ruled Tower Investments, a development group, deserved more for its Music City Center land than the city paid through condemnation. Metro has appealed that decision.

Those involved in relocation talks over the years — The City Paper spoke to more than a dozen for this story — say a number of potential relocation sites have been identified in recent years. One of these is north of downtown, along the Cumberland at Cowan Street in East Nashville. Property owners there, however, have expressed interest in developing their land, not selling it to a metals processing plant.

While PSC officials are unwilling to speak publicly on a potential relocation in Nashville, even those most eager to move the company recognize that the company provides an important function. The company shreds unwanted metals before delivering it to partner steel mills. It’s a form of recycling. Moreover, the company employs hundreds in Nashville and pays property taxes. The challenge is identifying a place where the business could carry out the same function.

“It’s just a complicated transaction, but it’s worth an effort,” Riebeling said. “That’s why the mayor’s charged us to see if there’s a way to get it done.”

A huge obstacle is cost. Some observers say just relocating the metals plant could require between $40 million and $50 million. More dollars would be required for environmental remediation of the property. A private entity, likely a developer, would presumably need to step up and offer a vision for the land.  

With Dean’s administration currently weighing a tax hike, such a large-scale endeavor isn’t likely on the table immediately. Whether the city can afford a PSC relocation by the end of his term in 2015 is another question. Dominating Dean’s first term was the financing of a $585 million convention center. The Sounds would like help in constructing a new stadium. Dean has said he hopes to begin the process of building a new bus rapid transit line along a so-called east-west connector from East Nashville through downtown, all the way to West End Avenue. That project carries a projected $136 million price tag.

Even if money weren’t an issue, there’s also the matter of PSC’s multiple property owners. PSC, which falls under Icahn Enterprises, owns one-third of the entire 90-acre footprint from LP Field to the interstate to the river. A combination of other investors owns another third. The remaining tracts belong to Nashville’s Liff and Steiner families, whose history there goes back 60 years. They’ve leased their land long term with PSC through 2024.

For a deal to materialize, the mayor’s office would presumably have to coordinate an agreement with all parties. For now, they appear to have the ear primarily of the Liffs. 

“Obviously, it’s a very valuable piece of property given its proximity to downtown,” said Adam Liff, managing partner of The Shelby Land Co. “It’s the gateway visually from many areas into downtown. And at some point, a higher and better use will come forth and liberate that property to be something greater than what it is today.

“With the right partners or at the right price — everything’s always for sale at the right price,” Liff said, adding that it’s still important that PSC find somewhere to continue to succeed and employ workers. He said he “roots” for the company. “If it’s going to happen, it’s going to take a public-private partnership of some kind.”

 

 

The PSC land has a long history as a place for refuse.

During the early 20th century the area was known as Hardison Lake, essentially a city dump. In 1954, the property became Steiner-Liff Iron and Metal. It remained so for four decades until the company was sold to Philip Service Corp. in 1997, which later became PSC in 2000.

The history of Metro officials trying to relocate the scrapyard is a shorter chronology. Phil Bredesen, mayor from 1991 to 1999, began the process of acquiring private east bank land via eminent domain in the mid-1990s for the construction of a new stadium to lure the then-Houston Oilers to Nashville. Acquisitions were limited, however, to the size of the stadium and adjacent parking, and never reached all the way south to PSC.

More recently, Bill Purcell’s administration, 1999-2007, had preliminary discussions on two separate occasions on relocating the property to the Cockrill Bend in West Nashville. But near the end of Purcell’s tenure, the investment group managed by Icahn — the famous billionaire magnate — purchased the company. Talks ceased.

Slowing the process to remove PSC from the east bank is that Nashville only recently started getting serious about cleaning up the riverfront. In 2002, a thermal plant on the west bank burned down, clearing 10 acres of open, still undeveloped city-owned real estate. The creation of the Nashville Riverfront Master Plan followed, which Dean’s administration has slowly started to fund.

“The riverfront is a great asset for Nashville,” said David Manning, finance director under Purcell. “But until the thermal plant was closed, and relocated off of it, there really wasn’t much of an opportunity there. Now that that has been closed, I think Nashville is catching up with what other cities have done with their riverfronts. Sooner or later, this piece of land has to be part of that.”

Newly elected Metro Councilman Peter Westerholm, whose District 6 includes the PSC site, said he heard PSC come up “fairly consistently” from voters while campaigning. 

Some thought an opportunity had arrived in May 2010, when the PSC plant experienced significant flooding along with the entire city. At the time, former Metro Councilman Mike Jameson, Westerholm’s predecessor, called the PSC situation a possible “silver lining” to an otherwise horrific flood. Because of PSC’s damage, his logic went, the company would have to apply for new building permits. New industrial uses are no longer permitted in the waterfront, and PSC would be unable to operate there. Jameson’s pipe dream never played out.

In the months prior to Nashville’s historic flood, state officials under Bredesen’s gubernatorial administration had engaged in discussions with Dean’s office about the PSC property.

And in the final days of the 2010 legislative session, the General Assembly approved a Bredesen-engineered amendment to the state tax code that would enable the state to get involved in a future PSC relocation. Without directly naming PSC, the change authorizes the Tennessee revenue commissioner to “allow a relocation expense credit to any scrap metal processing facility relocating from a central business district or an area adjacent to the central business district and separated only by a waterway.”

That “expense credit” is still Tennessee law, but nothing has resulted from it. And today, under Gov. Bill Haslam’s administration, PSC isn’t even on the radar.

Clint Brewer, assistant commissioner of communications and creative services at the Tennessee Department of Economic and Community Development, said PSC is “not something we’ve dealt with so far.”

“That’s not to say we wouldn’t,” he said. “Certainly, Metro’s a good partner, and we’d have a conversation with them. If there’s some way we could help, we’d certainly have that discussion.”

22 Comments on this post:

By: Ask01 on 3/26/12 at 4:20

I would rather the question be whether Mayor Dean's administration has sufficient friends in the business community willing to expend the funds to buy the land, move the current business, and build private business facilities, all without taxpayer welfare?

I have heard constantly businesses and business leaders deserve huge profits and salaries because they undertake enormous risks to build business and create jobs.

This seems an excellent opportunity for these "prophets of profits" to demonstrate a shining example, educating the masses on their role as self made successes by investing private money to build a private business and create jobs.

My vote on a property tax? A resounding NO!. Instead, cut the salary of Metro officials, all of them from Mayor Dean down to middle management, to finance this boondoggle of a project.

By: MetalMan on 3/26/12 at 4:45

Can't state it better than Ask01!

By: Loner on 3/26/12 at 5:33

Quote: "Clint Brewer, assistant commissioner of communications and creative services at the Tennessee Department of Economic and Community Development, said PSC is "not something we’ve dealt with so far"." (end quote)

You mean somebody actually hired that creep? Brewer nearly destroyed the NCP when he ran the paper...he oversaw the "Great Purge", in which yours truly and several of the regular posters were thrown out and our posts were purged from the archives...total wipe.
The ban lasted for over a year...the NCP finally threw the bum out and let us banned posters back into the community....but the posting community never fully recovered to its former stature....it was an excellent posting community, until Brewer screwed the pooch...isn't that right, Ben Dover?

Last I heard Brewer was working for a right-wing "think tank"...he must have wormed his way into a cushy government job since then....IMO, Clint Brewer is a complete and utter A-hole....he should be cleaning the toilets at Metro, not directing programs.

By: Loner on 3/26/12 at 5:34

Save taxes...fire Clint Brewer today!

By: treehugger7 on 3/26/12 at 6:35

Why don't you tell us how you really feel, Loner?! I agree with you--CP went to he** under him. Ask certainly has a good idea, but of course it will never play out that way. Basically we are stuck with it till we have another flood or disaster.

By: BigPapa on 3/26/12 at 8:45

You have to look at what other cities have done with their rivers and lakes and Nashville's is a dump. PSC Metals needs to move, this generally goes against my "hands off business" mind set, but given the direction is area is moving you have to think it's time to get that away from Nashville's front door.

After that's gone, move the housing projects..

By: Rocket99 on 3/26/12 at 10:12

PSC needs to move far and away and neither the State or Metro pay them a penny for it. Considering how profitable it is, they should be able to hire someone to find them a new location and then get the hell out of downtown. They can use the money they will make off the sale of the land to pay for all of this. I think a move west would be good for them.

By: 1kenthomas on 3/26/12 at 10:31

What other cities have done?

Flown over NYC lately? Boston? Charlotte? The Bay Area?

All cities have industrial areas near waterfront-- it's a consequence of actually doing something and producing money, instead of putting makeup on all the time.

If Dean wants this gone, let him pull the money out of his own pocket -- but a negative-revenue project such as this, isn't worth a dime of public funds.

By: BigPapa on 3/26/12 at 1:19

Obviously other cities have dense industrialization on the waterfront. The issue in Nashville is that ours smack in the front yard, of the city. In an area that we are now want to make more inviting to other industries the fuel downtown.

Look, you can work on your car but you don't lay all the parts and such out in your front yard... unless your white trash. Nashville doesnt want to be white trash.

By: NewYorker1 on 3/26/12 at 2:53

I hate driving by there and seeing that scrap yard. It messes up my day when I have to look at something that's less than perfect. Nashville really need to get it together and provide more of a glamorous appearance. I want it gone and now. I don't care how much more taxes we have to pay.

By: 1kenthomas on 3/26/12 at 6:39

Nashville doesn't want to be white trash? Wow. It's been a long day and I needed that kind of laugh.

Nashville *is* white trash.

As far as cities-- well, what's at the northwest of Brooklyn, in what would otherwise be great space? Oakland/Richmond/Alameda? And so on?

Those areas are the equivalent of where PSC is.

Manhattan (and to some extent, the San Fran peninsula) can affort to move such industries away and be "boutique cities" because they have the economic heat for it. And they're prissy girls.

I don't particularly like prissy girls, and if my car breaks, I'm more likely to do the work where-ever the problem occurs, than call for a tow without giving it a shot myself.

In this case, it boils down to economics and whether Nashville can afford to be a prissy girl. And while I think Nashville is an ugly, dumpy city on the way up, I'd much rather see money spent on eliminating infill blight, which is everywhere, than eliminating an eyesore for commuters on 24.

By: 1kenthomas on 3/26/12 at 6:42

^^ Witness New Yorker: "I don't care how many taxes we have to pay." Sheesh, how'd you get here, marry one of those high-voiced sorority girls from Vandy ;) ?

Why don't y'all take up a collection to pay PSC's moving costs (which will be significant-- have you thought about environmental cleanup?) and leave my wallet and taxes out of it?

By: cgrout on 3/26/12 at 7:29

Kind of a big omission that the vast majority of this property is significantly in the floodplain, which means that from a demand standpoint you're lined up next to baseball stadiums and parks. Maybe an amusement park? Certainly not corporate relocations, not that anyone is noticing them all bleeding south to WilCo.

By: BigPapa on 3/27/12 at 7:26

Having a dump right next to your NFL football stadium and across from the big tourist area just isn't good business. That is one of the two biggest barriers to even more economic development on the east side (the other being the dense public house ghettos dumped on us in the 60's and 70's).

By: Kosh III on 3/27/12 at 8:25

"Having a dump right next to your NFL football stadium and across from the big tourist area just isn't good business."

Then let businesses fix it. If the NFL doesn't like it, if the bar/restaurants don't like it, if the Sounds want a new playpen, then let THEM pay for it; that's capitalism and free enterprise--right?

By: NewYorker1 on 3/27/12 at 8:33

Atlantic Station in Atlanta was developed on a similar site. They elevated the buildings and put parking underneath. This is what Nashville should do since it's has the potential to flood. There, problem solved. Increase taxes and get it done.

1kenthomas, I got here by way of owning my own business in the music industry. Nashville is my second location outside of New York city. Once my business can operate by itself without my being here, I will be returning to New York.

By: BigPapa on 3/27/12 at 8:36

The reason you have a city or local government is to plan and push the area in certain directions. Zero planning ends up with poor consequences and failures.

Why not try to make things better? Why maintain something bad just as a matter of principle?

By: govskeptic on 3/27/12 at 8:44

Odd that we have both NewYorker1, a lady paying no taxes, and Loner who lives
in upstate NY yelling for an immediate clean up at any cost on this project.
They along with college students have all the answers with none of the
cost. We seem to have a lot of posters screaming for the same on many
many things that come along, without any of the pain of cost!

By: NewYorker1 on 3/27/12 at 9:10

govskeptic, I pay taxes here. I own a home in Green Hills. I pay business taxes, etc.

By: Ask01 on 3/27/12 at 7:26

Kosh III, you are correct. If the NFL, the Titans, and local tourist oriented businesses have a problem with PSC, they should put up the money to fix the problem.

On a similar note, those who object to the offending display can voluntarily donate money to facilitate the move.

I for one am tired of public money being spent to further private enterprise.

It's time for businesses to pay their own way.

By: Kosh III on 3/28/12 at 8:18

"It's time for businesses to pay their own way."

You mean-gasp! Act like capitalists?

By: cannoneer2 on 3/28/12 at 8:43

If PSC were the little guy, eminent domain would have taken care of the problem long ago. Must play nice with Big Business, however....