Fire Museum Can't Repay City, County Loans, Seeks Waiver

The Fire Museum of Memphis is asking the city and county to forgive more than $3 million in loans to the four-year-old attraction.

In April 1997 the Shelby County Commission approved a $2.5 million loan for construction and renovation, to be repaid in annual installments over five years. The City of Memphis loaned the museum $540,000 to be repaid in 2001.

The nonprofit museum at 118 Adams downtown cannot repay the loans, president Jim Hamilton said Thursday, blaming the failure on unrealized attendance and fund-raising expectations.

The museum opened in October 1998 and has drawn an average of 24,588 visitors a year, many of them school kids.

"All of that money was going to go to pay back the loans. Unfortunately, we have not achieved all of those goals. We haven't come close," Hamilton said. "It's become clear to us that we're not going to be able to raise the money to pay back that loan."

Hamilton approached the County Commission this week with the request. However, commission chairman Walter Bailey said he's not inclined to forgive the loan.

"When they procured the loan, I read where they gave glowing projections on how they would repay it, and how much confidence they had. They just virtually assured us it wouldn't be a problem," Bailey said. "To make those kinds of assurances and not pay a dime back on it smacks of irresponsibility."

Bailey said the commission has mixed feelings on the issue.

"Some are sentimental to the extent that they are soft on it, because of the merit of the project," he said. "And then there are some who feel that the worthiness of the project shouldn't cause us to turn our backs on what is a legitimate debt."

The museum has also been negotiating with the city to forgive that loan, said Joseph Lee, city director of finance and administration.

"That loan has not been repaid. At this point, the city still has it on the books as due and payable," Lee said. "I can say that I do know that the Fire Museum has approached the City Council and are seeing if the council is willing to write off the loan."

Hamilton confirmed discussions with the council, but it's uncertain when it will hear the issue.

The museum also borrowed $540,000 from First Tennessee Bank. Hamilton says the museum has restructured that loan and has repaid about $140,000 so far.

Based on forms filed with the Internal Revenue Service, the museum has accumulated operating deficits totaling $1,850,971. That figure includes everything from general expenses and salaries to interest on loans and depreciation of assets.

According to Hamilton and the museum's fiscal year 2000 report to the IRS, a hefty portion of its income that year was in the form of a $250,000 grant from the city.

Hamilton says the museum is in no danger of closing if the loans are waived.

"No, I have no doubts and no fears about the continued operation of the museum if we can get these loans taken care of," he said. "We've got a good track record here. We're doing the things we said we'd do in our mission statement."

Copyright, The Commercial Appeal, Memphis, TN. Used with permission. .