Thu
Jul 6 2006
08:22 am
World's Fair site redevelopment update
By: R. Neal

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.

Read more...

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.

Topics:
Number9's picture

There was never any

Submitted by Number9 on Thu, 2006/07/06 - 12:16pm.

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.

Brings back memories of the Market Square contract where KPA was allowed to escape from the obligation of securing National Tenants for Market Square.

Brings backs memories from three weeks ago when KPA tried to get out of contractual commitments for the Emporium build-out. City Council wouldn't allow KPA to renege.

Whatever happened to the condos that were supposed to be built next to the Market Square garage?

No outrage, no shame, just business as usual.

Bill Lyons's picture

A couple of points

Submitted by Bill Lyons on Thu, 2006/07/06 - 3:59pm.

I would respectfully like to offer a couple of points and a bit of clarification to an admittedly confusing set of circumstances.

Kinsey never requested to “get out of contractual obligations to build out the Emporium.” At my request and with the agreement of Liza Zenni they agreed to pay $200,000 so that Ms. Zenni could oversee the build-out directly. I made that request because KPH had a very specific contractual obligation to replicate space exactly as it was in the Candy Factory and Ms. Zenni was looking at the build-out as it would best serve the folks in the arts community. I initiated this because my judgment was that there was a bit of conflict between the two sets of interests and that ultimately it seemed that Ms. Zenni would be the best judge of how the money could be spent to serve the interests of the folks she works with. To me the important thing was to best serve the interests of those would use the space rather than to insist on adhering to an exact replication of space previously used. Council decided to stick with the contract and that is fine with me, KPH, and with Ms. Zenni. Some people may find my choice to pursue this to have been unwise and there is ample evidence that it may have been. But the blame for the request belongs clearly at my feet, not at Ms. Zenni’s or KPH's.

There has not been any shirking or backing out of anything on the Sunsphere. KPH made a viable proposal in response to the RFP. They have followed with a viable specific set of proposals in an effort to reach agreement. The city has responded with some counterproposals. Discussions are continuing. This is the negotiation process. The issues revolve around a restaurant use and the responsibility for the utility costs, which have increased greatly in a structure that is very inefficient and make the inclusion of a restaurant and attendant expenses highly problematic. The city did not specify anything about utilities in its “Request for Proposals” and KPH did not propose to pay them in its proposal. Making the proposal in no way binds the proposer to pay for all the utilities than does having offering the RFP bind the city to pay the entire amount. Nor do the RFP or the proposal obligate either party to embark on what may become a financially reckless course.

Finally, the condos will be built and will begin fairly soon. They were delayed because of the fact that the Market Square Garage was constructed slightly onto KPH's property. This had to be corrected through property line adjustments that had to go to MPC and council and then through law. While this is unfortunate these sorts of things sometimes happen and there are delays which take a long time to fix when government entities are involved. In the long run a few month delay is irritating to many (me included) but looking at the big picture....

Thanks for your interest in such matters. I am always willing to answer questions (at least those not involving alleged continued spouse beatings)and understand the concerns folks have about projects such as this.
Rachel's picture

Hi Bill, Thanks as always

Submitted by Rachel on Thu, 2006/07/06 - 6:53pm.

Hi Bill,

 Thanks as always for sharing all the information.

 I have a quick question about the Emporium.  When the deal went to Council, I couldn't get too worked up about it one way or the other.  It did seem to me that the contract language was too "loosey goosey" since it only specified a build out that would replicate the CF facilities and didn't have any $$ figure, but I figured that was KPH's problem.

However, later I read in MP that Ms. Zenni planned to spend only $50k of the proposed $200k buyout on improving the Emporium, and to put the rest in the Art Council's operating account.

This bothered me, especially since I didn't hear it mentioned at the Council meeting.  It would seem that Council (and the public) thought they were getting approximately $200k worth of capital when they ok'd this deal, not sending $150k to the Arts Council's operating budget.

I asked one Council member if he knew about this before the vote and he said "no."

So I'm wondering - was this really Ms. Zenni's plan?  Or is MP all wet?

Bill Lyons's picture

Gemini, This, like so many things...

Submitted by Bill Lyons on Thu, 2006/07/06 - 8:39pm.

Gemini, This, like so many things, reflects understandable confusion that is exacerbated by nuances of language and timing. Here is what I can say. Ms. Zenni's letter to the administration committed to using the money for construction purposes. No time frame was mentioned in the request. My understanding is that her immediate plans were to build out some of the space for approx. 50k, and to later build out other space with the funds, possibly supplementing with other money raised so that the quality of the space could be enhanced. Her remarks at council were more oriented to the short term and only mentioned the immediate buildout. As I understand it in the interim she would use some of the interest to pay for some operating expenses so that she would not have to charge the $2.50 an hour, etc. for use in the evenings. None of this was that clear in the Q&A in the council setting a lot of different conclusions could be drawn. I know I have not articulated things particularly well in the council setting and have later realized that I could have added a few sentences that would have made a world of difference. There may have been other conversations among all parties about which I am not aware. However my take is that everyone has been operating in good faith throughout and subsequent to the council meeting and different interests, roles, and perceptions, and manner of presentation led to a lot of collective head scratching. The good news is that the outcome is fine. The bad news is that it did not help public confidence in the way we do things and the responsibiity rests with me. Thanks.
Michael's picture

It did seem to me that the

Submitted by Michael on Fri, 2006/07/07 - 10:24am.

It did seem to me that the contract language was too "loosey goosey" since it only specified a build out that would replicate the CF facilities...

*****

I always thought that was sort of poor phrasing.  I wondered how anyone could build out the buried basement of the Emporium to replicate a 4th floor space full of windows.

~m. 

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.

TN Progressive

TN Politics

Knox TN Today

Local TV News

News Sentinel

    State News

    Wire Reports

    Lost Medicaid Funding

    To date, the failure to expand Medicaid/TennCare has cost the State of Tennessee ? in lost federal funding. (Source)

    Search and Archives