In fact, the cinema is solely owned by Regal Entertainment Group, which leases its premises from the city of Knoxville’s Industrial Development Board. The main reason the IDB was vested with this ownership was to make use of its tax-exempt borrowing authority ..
Which is it? According to Hickman, "the city owns the 40,000-square-foot movie house in the 500 block of Gay Street, which it leases to Regal at a varying rate .."
Finding a way to fit the cinema on the site in a way suitable to Regal without demolishing the historic buildings was also a remarkable design feat, for which architect Faris Eid deserves great credit.
There was nothing remarkable about it. That's what architects do. What is interesting about the design is the modification of a one-level suburban theater layout to fit a downtown location, in fact occupying half a city block.
Cumberland Securities, which managed the financing, sought out other prospective purchasers of these bonds bearing a low 5 percent interest rate. But it soon became apparent that only “angel investors” were prepared to buy them, and the Haslams became the angels.
That's 5 percent tax-free, at a time MBNA was paying 4% on its 5-year CDs (subject to tax, of course). And according to Hickman, "The property itself, rather than city funds, serves as collateral for the bond investors, including Haslam, who stand to make a 5 percent tax-free annual return on the 40-year notes." Note, too, that there is a reference to investors, plural. Who has seen the list?
Beyond getting repaid on his high-risk bond investment, Bill Haslam has no financial interest in the cinema’s success. Nor would he benefit in any way from a subsequent sale of the property by the IDB once the bonds are paid off.
The investment could be considered a bet on the cinema's failure, because the property is collateral on the loan. If the project fails within the next 40 years, my understanding is that the investors get the property - a building (less its furnishings and equipment) and a half block of prime downtown real estate.
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