I'm getting $7 - $10/sf annually for ordinary apartments without the view.

Comparable office spaces seem to run $10-15 / sf. The Kresge building downtown is $10/sf and there's 4000 sf on Sevier for $8/sf.

I regret being a cheerleader for this giveaway. This is pathetic.

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I was expecting the city to negotiate a return of something closer to T-bonds which would mean rents starting at $2 /sf and rising from that.

Highly discounted rents going 30 yrs to the future? Not much confidence there.

Uh huh.

Private sector leaders don't confuse profit with public relations. Profit is money, so as long as our political leaders are willing to trade our public money for their PR, no private purchase necesary. .

But it is nice to pretend.

Shame on Mayor Rogero for turning a blind eye to corporate giveaway and putting form over substance all out of the pocketbook of the City of Knoxville taxpayers. This Regal will release earnings on October 27 of approximately $450 million for the quarter or about $5 million a day, there is no need to put the taxpayers on the hook to help this kind of well healed public company out, are the city taxpayers getting any discounts at the local Regal theatres? Hell no.

Mayor Rogero should be public record requested into the next century for any documentation that would indicate that Regal was moving their headquarters anywhere, they weren't moving, they weren't even contemplating a move, they hadn't even been solicited to move, this was all a ruse to bail out, in my opinion, a failing, faltering, poorly thought out (but perfectly pitched to the hicks in our local government) development on the South Knoxville waterfront that is going no where.

City is infusing $6 million into the purchase of this property, less that two years ago Riverwalk Investors bought the entire Baptist site for $6.25 million, did anybody bother to ferret out who some of the local investors are within Riverwalk Investors, it's not all the crowd from Georgia, there are some people from Knoxville, Tennessee who are minority members of the entity and this was nothing more than a bail out, in my opinion, of a failing and crumbling development. Where is the nice lady from Mercy Health Partners that shuttered the hospital and had the gall to say that a hospital would be rebuilt right there on Blount Avenue and nothing ever became of that ruse either. The site is not well suited to riverfront development. City of Knoxville taxpayers have a right to know who the local owners of Riverwalk Investors really are. Don't look for the News Sentinel to do any digging either, they got their taxpayer supported building several year ago from the Knoxville Industrial Development Board and they couldn't make it with a supported physical plant either.

Had Regal wanted to move down there, they could have purchased that tower in 2013, but they weren't interested, but a sweetheart deal and taxpayer supported building and lease to a company that will net more that a billion dollars this year is absolutely asinine. Regal wasn't interested in putting a theatre in downtown Knoxville until the overhead costs and real estate expenses were covered by taxpayers and bondholders.

Shame on Mayor Rogero, corporate welfare on the backs of the City of Knoxville taxpayers, we'd expect such shenanigans from Governor Haslam or a doofuss like Victor Ashe, but not from the Mayor of the People, bad, bad, bad and she's got no excuses for not supporting every other for profit business by opening up the city's checkbook. No backbone in the mayor's office and what have the taxpayers got to show for it?

Form over substance.

Ok, glad Rogero has something to look at out her window instead of a pile of rubble, but to stick the taxpayers with a $6 million buidling (the entire Baptist site only cost $6.25 million) and another $3 million for office improvements is downright disingenuous.

$6 million would cover lots of improvements to road officers, buy some Kevlar vests, improve fire department moral and enhance equipment, but the city doing things that cities do is just too boring, Rogero's in the real estate development business now, unfortunately somebody forgot to tell her that these millions will create no new jobs (Regal is already in Knoxville) and the efforts to truly recruit or relocate a new business to Knoxville will be gauged on what the city did for a business that was already here.

Looks like somebody put a bag over the head of Mayor Rogero and how this will turn out to be anything other than a nice building on the water (that was also already there) and pay off the bulk of the developers land costs is already well beyond me.

Glad I don't live in the City of Knoxville, taxpayers money is tossed around on buildings, jobs, and careers that are already here. Duh.

Three very positive outcomes, IMO, are: 1) a nexus of roughly 300 office workers in or near downtown that will put money in local businesses for lunches, happy hours, dinners and other events; 2) finally, one of our non-bank, hospital, or government local headquarters flying their banner in the center city; 3) an anchor for South Waterfront Development, which may fairly be viewed as a bailout as described above, but may also fairly be viewed as either insurance or "doubling down" given the momentum in many other ares of SoKno redevelopment. BUT despite what i see as tremendous benefits, the scale of the City's contributions are hard to fathom.

When I think of large companies based in Knoxville, I think of Regal, Scripps Networks, Jewelry TV, Pilot Flying J, Clayton Homes, TeamHealth, and DeRoyal. HT Hackney is already HQ'd downtown, but are very low profile and have their nexus of activity off I-40 outside of the city. Only Regal and DeRoyal are likely candidates for downtown headquarters due to the investments the others have made in recent years in their current locations. I suppose TeamHealth could be a third, since they lease in Bearden, but they just inked a deal to keep them there for a number of years. Anyway, I think downtown headquarters are an important part of a city's identity and long-term prospects. And Regal is a good corporate citizen... they sponsor many community events (like Christmas in the City), do some significant movie events at Turkey Creek, and I could imagine they'd upgrade their downtown theater and start to do more events there given proximity to its new HQ.

BUT investing $9MM (city only) seems like an awful lot to get these benefits. Regal will make payment equal to what they would pay if they owned the building. Assuming the market value of the building after all the renovations is about $20MM (purchase price, value of improvements greater than cost of improvements, long-term lease... yes, I'm being generous), the assessed value would be about $8MM (40% of appraised value, using Riverview Tower as a comp). Regal would thus pay the City about $243,656 per year for 10 years, assuming no increase in assessed value. That's $2.44MM per 10 year period, or just over $7MM if it runs the full 30 years. So the City would have invested $2MM net, and would still own the asset, which should in turn be worth at least that, unless the area remains a pile of rubble. Unless I missed it, the deal doesn't have teeth in SEDA and their development timeline, but it should.

The other thing I wonder about is utilization. At 175,000 square feet and 275 employees, there would be 636 square feet per employee, which is significantly higher than even C-level exec averages of 200-400 and average per employee closer to 100-200 (and trending down). So if Regal only hits the minimum required number of employees, does the City retain the ability to lease space in the building that Regal isn't using and do so at market rates, thereby generating a material amount of revenue to the equation? I assume not, since it wasn't mentioned.

If Regal's PILOT is reasonable, the city made SEDA commit to development timelines on their remaining project, and the City can lease space not used by Regal to other tenants at market rates, this investment amount starts to make sense. Otherwise, the investment seems outsized to the return. BTW: I realize this is a simplistic evaluation and doesn't take into account the time-value-of-money, inflation, etc. And I also realize I'm making some generous assumptions. And I'm certain there are other very good uses for $9MM. For my own edification, I just wanted to evaluate the deal a little deeper to understand it better. It's clearly not just $9MM in giveaways by the City, but it's not clearly a slam dunk either.

I'm glad Regal will be in the downtown area, but the timing of this is curious. Nothing has happened on the former hospital site for months, despite the fact that under the original timeline for development the project should be nearing completion already. You can see why there is widespread speculation that the developer got into financial trouble.

Now the city is coming to the rescue with $$millions.

I REALLY hope the city's purchase is contingent on the developer finishing the rest of the project! If it isn't, and the hospital site remains a pile of rubble, then heads have to roll in the city administration.

Wow - Kimberly-Clark let their building go for $3,550,000 to avoid reporting building-related assets and liabilities on their balance sheet (they now lease the old Goody's building). This works out to $16/SF for the 12-story building. This is compared to $50/SF taxpayers are on the hook for the smaller, unrenovated wreck of a hospital.

Ya think the city would have jumped at that bargain basement cost to keep 300+ K-C employees downtown.

If Regal workers moved to that area, are they zoned for South Knoxville Elementary or Sequoyah? Somewhere else?

Most of them live in Halls and they'll stay there.

From all indications, nothing was going on with the redevelopment of the site and the city steps in and pays $6 million for a portion of the entire property that Tennova/Baptist sold for $6.25 million. That is a major cash infusion to a project that has nothing on it but the abandoned building and a huge pile of ruble.

Regal was not being actively recruited by any other city other than perhaps Maryville, maybe Nashville, as their employees, their executives, and their rank and file know how liveable Knoxville is and things that are taken for granted (1) driving to work (2) not paying to park at work (3) a short 20 - 25 minute commmute to work go off at a premium and are not always available in the major American cities.

The entire Regal thing is nothing but a city of knoxville, taxpayer funded bail out of the south knoxville riverfront development all on the backs of the city tax base.

Somebody needs to remind the city fathers that economic developement, business recruitment and relocation of good jobs requires that you look to recruit and relocate businesses that are not already in your community.

It's one thing to be unable to compete with Chattanooga, Nashville and other southern cities for new businesses relocating, but to shoot your wad on a business that is already in your community is downright backwards.

(link...)

When the project was announced, 300 class A apartments, 225 student suites, 150 room waterfront hotel, 40,000 square feet of retail and commercial, none of which was contingent upon the city buying up any aspect of "their" development.

All of this construction was purportedly to be completed mid 2015, but there are no announced financing/sites/commitments for any of this stuff, it's just a rockpile with no development, no lenders, nothing on track per their initial announcement, in my opinion the project is essentially stalled, stagnated, and really much ado about nothing.

City is basically reimbursing the purchase price, less $250,000, all on the backs of the shrinking tax base of the city of Knoxville and for what, Regal announces revenue of $725 million for the third quarter, you want the city taxpayers to subsidize that? No rents for 10 years? Seriously, is the company in that bad a shape, how is this a good return on the taxpayers money with a company that is already located in Knoxville, Knox County, make no sense unless you look at how bad off that riverfront development really is and the need for the city to bail out this development.

(link...)

What's happening on Central means far more to the future of the city than this

Knoxville has always shone as a place where the best development happens from the grass roots. Consider how wonderful Market Square has become compared to a string of chain stores overseen by a master developer.

Is there a need for more business incubator space? How is the business incubator in Market square doing? If we are going to be giving out free or greatly reduced rent why not cater to start-ups. Rents could increase as the business became successful. In years rather than decades. Yes it is more labor intensive but the build - out could be done slowly as demand increased.

Nobody has talked about the first floor. The atrium is crying out for a nice restaurant. It would be a waste for it to be a mere lobby.

... which is kinda my thing.

178,000 SF would normally rent out at around $2.2M per year, but your landlord would be normally responsible for buildout, improvements, etc before you move in.

PILOT in lieu of property taxes- that would seem to be a 'net zero' thing, as most commercial leases are "triple net", which means the occupant would pay property taxes anyway.

So, for $3M in renovations, they get free rent for 10 years, and almost free rent for 20 more years ($360K rent over 30 years), vs. the $66M they would have paid in rent to a commercial provider.

So, the question is, with 275 employees working and (possibly) living Downtown, what's the net gain for Knoxville over those 30 years?

Let's say half the employees live Downtown and spend $15k of sales taxable income, and pay another $1200 each in property taxes (occupying a loft that would otherwise be untaxed? Of course unoccupied, the developer would still pay, but never mind that...). The other half live out of downtown and spend $7K of income in sales taxable stuff.

140 x ($15K x 2.25% + 1200) = $215,250
135 X ($7k X 2.25%) = $21,262 = $236,500. We'll round that up to $250K.

$250K x 30 years = $7.5M, hardly enough to make up for $66M in lost rent, or even to make up the City's investment.

BUT it comes close to recouping the City's investment, and one could argue that the 'anchor tenant' is good for ensuring the survival of the rest of the development.

So, unless I'm missing some other obvious City revenue source, it does appear to be a bit of a bailout, but not a huge one.

STILL, I would much rather see the rents go up more after 10 years escalating more steadily towards commercial rates. Otherwise, the 'shock' of regular rates after 30 years. Something like:
Year 11-15: $2/sf/year
Year 16-20: $4/sf/year
Year 21-25: $6/sf/year
Year 25-30: $8/sf/year

Otherwise, guess what? At year 30, they're going to say "we can't suddenly jump from $2/year to $12!! You'll have to keep making it cheap (forever)."

THAT's the part that pisses me off, being a small business that pays $12/sf. I'd love to have some nice digs downtown with nearly free rent. Where's my bailout?

Which reminds me- who is paying for repairs and maint? I hope not the City.

"The outside of the building, a worn beige-and-pink stucco, will receive an all-new facade"

Did not know this.