I recently asked City of Knoxville officials about progress on the World's Fair site project. Bill Lyons, Senior Director - Department of Policy Development, was kind enough to answer our questions and provide the following updates.

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Q (R. Neal, KnoxViews.com): I understand construction is underway at the Candy Factory. Is there a projected completion date?

A: (Bill Lyons, City of Knoxville) The Candy Factory and Victorian houses have been sold to KPH [developer Kinsey Probasco Hayes of Chattanooga]. Construction is underway on the Candy Factory. I don’t know the completion date but it is in the interest of the developer, obviously, to get it done and open as soon as possible. They have already paid the $1.82 million to the city and on various loans, etc.

Q: Has there been a final determination on allocation of retail/restaurant and condo space at the Candy Factory, and if so, what is the breakdown, and are there retail/restaurant tenants lined up or in negotiation?

A: The contract specifies that there has to be retail space in the building. That will probably be the Chocolate Factory. My understanding is that they are very close to an agreement with KPH to purchase that space. You might want to check with them for any further developments.

Q: Is the South's Finest Chocolate Factory still operating during construction? Will they be there after construction is completed?

A: The Chocolate Factory is operating now. I am not sure if they will stay open through all construction or be down for a while.

(UPDATE: We contacted the South's Finest Chocolate Factory, and Bill Douglass said they are open now, will remain open during the renovations, and will be a permanent tenant.)

Q: It is my understanding that all other Candy Factory tenants were relocated in May, is this correct? Did the city help with finding them new space, or has the city followed up to determine where these tenants ended up? Did any of them decided to cease operations instead of relocating?

A: Other private Candy Factory tenants included the Mountain Laurel Gallery and Gary Heatherly photography. There was also a small office for the Tenn. Stage Company, which has secured other space. They are no longer in the building. Gary is still in business. I am not sure what the owner of the Mountain Laurel Gallery is doing. Both she and Gary were grateful to have had space for their businesses at very low, subsidized, rentals for a long as they did.

(UPDATE: We contacted Gary Heatherley Photography, and Gary Heatherley says his studio is now located at the L&N Station. He says he likes the new space better, even though he is paying substantially more rent. He said that he received notification from KP, not the city, when it was time to vacate. We tried the contact Mountain Laurel Gallery, but their phone number is no longer in service.)

Q: What is the status of the Victorian Houses? Have tenants been relocated? Has any construction begun? What was the final planned use for these properties?

A: The Victorian Houses are still operating with the same tenants under KPH ownership, at least for now, with the exception of one gallery, which apparently decided to leave of their own accord. Neither the city or KPH ever agreed to pay relocation costs for these businesses. My understanding is that KPH is making space in one house available to the Peter Taylor Prize folks at no cost. The eventual use of these properties is up to the new owners. Original restrictions that a portion be “arts related” were removed when KPH agreed to build out the equivalent of the arts-related space used for dance rehearsals, etc. that had been on the fifth floor of the CF on the first floor of the Emporium. They are proceeding on that build out.

Q: What is the status of the Amphitheater? It was my understanding from the KP proposal that they would work with the city to develop a plan to restore it. Have there been any meetings on this or any plans developed to date?

A: The city never pursued any proposal from KPH or anyone else on the amphitheater. Various alternatives are still being looked at.

Q: The KNS had an article recently about some possible issues with the Sunsphere lease. It was my understanding that the city had agreed to be responsible for upgrades to bring it up to code before leasing it, is that correct? The article also indicated the city may go ahead with the upgrades whether or not there is a lease agreement, is this correct?

A: The city has budgeted up to 1 million dollars to deal with major structural and code issues regarding the Sunsphere. It is very possible that the city may go ahead with upgrades that need to be made so that at least the observation deck can be open to the public. Much of these expenses are fixed regardless of finalizing a lease arrangement and tenant build-out with a developer.

Q: Part of the financial projections for benefit to the city involved income from the Sunsphere lease. If the lease does not go through, how does this affect the financial projections for the project? Are there any provisions (or penalties) in the contract with KP regarding severability of the Sunsphere or Victorian House portions of the project?

A: Your statement that “part of the financial projections for the benefit of the city involved income from the Sunsphere lease” is not really correct. The finances relating to the sale of the CF and the Victorian Houses were self contained and did not ever reflect the Sunsphere financial arrangement. There was never any agreement with KPH on the Sunsphere. Reaching an agreement has become much more problematic for all parties following construction cost and energy cost increases of the past couple of years. What we had was a proposal, which we have hoped could lead to a successful contractual arrangement. Many specifics have had to be worked out to the mutual satisfaction of both parties. KPH did not commit to paying the utilities for the structure in their proposal and the city did not commit to paying them in our RFP. Specific lease terms likewise have to be agreed to.

While the city saw some advantage to working with one developer on the three assets, the RFP clearly stated that proposals would be considered on any or all of the assets. No viable proposals were received for the amphitheater. KPH was the only entity to propose on the Sunsphere. Others proposed on the CF and Victorians, either separately or, in one other case, together.