Fri
Sep 8 2006
12:56 pm

Recent outbreak of journalism in local print media has experts puzzled. No film at 11.

94
like
Justin's picture

Why the hell is that stupid

Why the hell is that stupid thing still standing? I would love to see it bulldozed and a new amphitheater put up in its place. Then again, maybe the good 'ole boys sitting on top of Mount Pilot like to stare at gigantic phallic symbols and think of how much money they can f%^& the taxpayer for....

Bbeanster's picture

Excellent story. This is the

Excellent story. This is the best look at Kinsey Probasco I've seen.

Oren Incandenza's picture

Surprise!

You can't get a Knoxville Voice at a Pilot.  Granted, maybe it's because the Voice didn't ask and/or would rather not be there...

(link...)

 

s'n'm's picture

Good piece, but, am I

Good piece, but, am I reading this wrong?

"...An 8,000 square foot space at 806 World’s Fair Park Drive appraised in the report rents for $7.50 per square foot. Applying the same rate to the Sunsphere’s 10,000 square feet puts the fair market rental value at $75,000 annually...

"...KPH will lease the Sunsphere from the city for about a third of the average rate, or about $5 per square foot (or $57,000/year)..."

I assume she meant 2/3s? Or am I mssing something?

Enough Already's picture

This is devastating. You

This is devastating. You will hear deafening silence from the usual city director of giveaways and bad policy on this one. This is a Good Ole Boy scandal for the city that will rival Harborgate.

Old Hickory's picture

Nice Piece, That's How You Do It, Ask Questions, Measure Answers

It's not against the law to ask questions and you don't have to have a license to be a journalist.

That's the problem with the ponies over at the News-Sentinel, they have a hard time figure out how to get to Broadway and keep forgetting that Black Oak Ridge is not a racially segregated portion of Oak Ridge at all, it really the boundary between Halls and Fountain City.

That is a well done look into what Kinsey Probasco is and how it is perceived in other places.

michael kaplan's picture

I assume she meant 2/3s?

i would also assume she meant 2/3. but aren't CBD retail/office leases above $7.50/s.f. by now?

edens's picture

aren't CBD retail/office

aren't CBD retail/office leases above $7.50/s.f. by now?

Damn that gentrification...

CBT's picture

Interesting story. I picked

Interesting story. I picked up a copy of the Knoxville Voice a couple of weeks ago. An obvious liberal slant. I did like the piece on Con Hunley. Con's a good guy.

I don't know who's running the show at KV, but unless they have a lot of cash to prop up the paper, you won't be seeing it for long. I counted two ads (or was it just one?) in the whole thing. I believe Rita's Bakery was one. Ad revenue is the lifeblood of free (and daily) papers, regardless of interesting stories and good writing.

redmondkr's picture

OMG, I guess now the county

OMG, I guess now the county will boycott Rita's Bakery as well.

Number9's picture

A very good story that has

A very good story that has up until now only been flushed out on area blogs and blabs. It is sad that KPA was able to rob the local treasury without any questions being asked by the local media. Or for that matter the local government.

I do appreciate the article but does it matter as long as the News Sentinel is controlled by the GOB? What is the paper and Internet circulation of the Knoxville Voice? I would bet more people have read the story because it was linked at KnoxViews than picked up a copy of the paper.

You have to start somewhere. I hope the Knoxville Voice can keep providing investigative reporting. Lord knows there is plenty of material around this town to be reported.

s'n'm's picture

You've gotten better lately,

You've gotten better lately, and this piece is a good summation of the avialable info, but it isn't like this hasn't been covered in other media.

(link...)

(link...)

(link...)

Bbeanster's picture

Of course, the Sunsphere has

Of course, the Sunsphere has been reported on. That's the easy part.

Now go find us some commentary on Kinsey Probasco Conley not living up to what was held out to the public (at the time) to be a legal obligation to invest $20 million as the "private" part of the illusionary public/private partnership that was Market Square redevelopment.

Bet you can't.

s'n'm's picture

Never said one could, Bean.

Never said one could, Bean. Just pointing out that the Sunsphere development has been covered by other media outlets, including those maligned.

I'm glad when anyone connects some of the other dots about development deals, which this piece did -- without resorting to hyperbole, generalization, conspiracy theories and/or insinuation. Which is what the digit, in the past 12 months or so it's been active, usually does.

Although it has gotten better in the last - what? two months, maybe? Coaching? Substitution? Revised strategy? Dunno, but it has performed better of late.

Number9's picture

Was that the original KPA Market Square deal?

Now go find us some commentary on Kinsey Probasco Conley not living up to what was held out to the public (at the time) to be a legal obligation to invest $20 million as the "private" part of the illusionary public/private partnership that was Market Square redevelopment.

Bill has put forth that development by "team members" counts towards the KPA 20 million dollar figure. Bill says the figure approaches sixty million dollars in the CBID with most of that being the Candy Factory by KPA and many Dewhirst investments. BTW, hey Bill, good to see you back.

Is that kosher? Was that the "original" KPA deal? The CBID is a much larger radius than Market Square and is it really kosher to count the Dewhirst investments?

Not trying to short sell the progress in the CBID which is very good news and something that should be saluted, but was that the original KPA Market Square deal?

Bill Lyons's picture

Good question #9

Good question #9. Dewhirst was a major part of the development team along with with Conley and Kinsey. The proposal (not the contract negotiated, but lets not get into that again) referenced investment the team would make downtown. We used the CBID, which is the usual stand in for the downtown area, but we can just take specific buildings in the immediate area.  There was a change in building ownership so that Brian Conley took over the Burwell in exchange for the AmSouth across the street.  Taking just the Burwell and Holston gets you to 21 million. Add the New Union Lofts and you are to 27 million. Forget all the investment in MS and all the rest in the CBID and you still have investment  that one could very conservatively characterize as consistent with what was mentioned in the proposal. IMHO this is an amount seriously north of "negligable" such was reported in the Knoxville Voice article. The point is that KPH team promised to invest significant private funds in downtown to accompany the public funds invested and they have done so by any measure.

Bill Lyons

Anonymous's picture

Actually, the proposed $22

Actually, the proposed $22 million private investment contained in the MS proposal was the projected private investment that would be stimulated by the public improvements called for in the KPA plan. And it was not limited to Market Square. So, in fairness, you also should count all the investments made by Leigh Burch, Mast General Store, the Wests, Wayne Blasius, John Craig, Scott Schimmel., Andie Ray, etc., in addition to the investments made by Kinsey, Conley, Dewhirst, etc. since 2002. I'd say it's more like $70 or $80 million.

While some of this investment may have occurred without the city's commitment to renovate MS and build the garage and cinema, certainly the vast majority of it would not have. Mast General is on record saying that their move to downtown was contingent on the cinema, which, as you know, was central to the KPA plan.

Tiny Tim's picture

Study Scripps Code of Ethics, No Journalists here

This link is to the American Society of Newspaper Editors compilation of vaarious codes of ethics from various news organizations, including Scripps (which owns the daily rag here in Knoxville).

After you review these guidelines, you see why there is so little journalistic excellence at that tired old print shop, as they don't even follow their own ethical guidelines, putting dollars in front of the public trust, time and time again.

(link...)

Bbeanster's picture

never mind

never
mind

Anonymous's picture

It also seems rather

It also seems rather egregious that the article did not point out that KPA was paying (approximately $1 million) for their own build-out of the Sunsphere space, despite Lyons repeatedly stressing that to the reporter. According to the article, the Sunsphere space is worth $7.50 per square foot (based upon rental rates for comparable space), which would make the annual rental rate for the Sunsphere approximately $75,000.

When adding the $1 million buildout to the $57,000 per year lease commitment for 20 years comes to $2,400,000.

2.4 million divided by 20 years equals $120,000 per year or $12 per square foot ($4.50 per square foot more than what the article says the space is worth).

Anonymous's picture

Correction

The KPA commitment on the Sunsphere is approx. $2,140,000, not $2,400,000 as previously posted. Divided by 20 years, that equals $10.70 per square foot, $3.10 higher than the article says the space is worth.

Number9's picture

You've gotten better lately,

You've gotten better lately, and this piece is a good summation of the avialable info, but it isn't like this hasn't been covered in other media.

(link...)

(link...)

(link...)

Only one question was asked in those three examples of local reporting. Each was written to support the giveaway of the Sunsphere.

I do not see how those pieces compare to the investigative reporting in the Knoxville Voice.

Those pieces you listed are marketing literature for KPA. I object to that. Can you find anything from the News Sentinel that objectively looked at KPA and its relationship with the City of Knoxville or the performance of KPA with its contractual obligations?

I guess it depends on what you mean when you say it has "been covered". I see it differently.

Hayduke's picture

"Galyon said that in the

"Galyon said that in the best-case scenario the utility bill could drop to $40,000 after improvements.

Yet under the agreement due before City Council, KPH will pay only $21,000 annually toward utilities, leaving the rest to be picked up by taxpayers."

 This struck me as highly idiotic.  Regardless of how crappy the rest of the deal is for the city, the guy with his hand on the thermostat ought to pay the marginal utility dollar.  Doing it this way provides no incentive to get anywhere near a "best-case scenario."

 

Toad in the Hole's picture

Definition of Development in Knoxville is a little different

that the definition of development in Atlanta, Nashville, Louisville, and Charlotte.

Here, as a precondition for doing anything in the city, the Knoxville taxpayers have to pay a privilege fee, usally starting at $1 million, to "get the ball rolling" or "help the developer offset the initial project costs", which is a buzzword for nothing more than a local subsidy to get the deal done.

Bill Lyons's picture

Thanks to Randy for the opportunity to respond.

 

Thanks to Randy for the opportunity to respond.  I will start with some general reactions more focused on the Sunsphere proposal and then address some of the assertions made about past projects. I was pleased that the Knoxville Voice was taking an interest in local stories. Ms. Trenda and I had two very nice conversations. I realize that constraints of space do limit what can be in the article.

 “The average price for downtown development is roughly $9 per square foot, according to a market appraisal prepared for the city last summer by Property Service Group Southeast. An 8,000 square foot space at 806 World’s Fair Park Drive appraised in the report rents for $7.50 per square foot. Applying the same rate to the Sunsphere’s 10,000 square feet puts the fair market rental value at $75,000 annually. Such a price tag, however, doesn’t account for the Sunsphere’s unique cultural identity, an asset that private owners would surely stress in marketing the structure.”

Comparing this lease amount to downtown space or even to the space occupied by the Butcher Shop, at ground level, with large amounts of free parking in the immediate vicinity is tenuous at best.  At this point we are talking apples to candy bars.  The comparison is more like apples to pencil sharpeners when you add the fact that the developer is required to spend $1,000,000 (apprx) to build out the entire interior of the structure including ductwork, wiring etc. including a large sum that they would expend in building out the entire fourth floor observation deck that they would have no use of. I took great pains to explain to Ms. Trenda that her article would be very misleading if she did not stress the tenant obligations.  

I also explained that renting the Sunsphere requires a very specialized tenant. There is no parking in the vicinity for customers and we are having a very difficult time identifying spaces for the tenants. There is very little pedestrian traffic. The layout of the floors is very difficult. But taking this at face value their spending $5 a square foot and leasing the finished space at $9 a square foot would yield a profit of $40,000 a year.  Twenty years would yield $800,000.  Adjusting their investment down and their possible rent upward would pump those numbers up a bit but it is hard for me to see that this proposal is some type of “giveaway” to developers. I don't think it is any kind of a slam dunk that they can recoup their original investment in twenty years yet alone make any money. The businesses would have to be wildly successful in drawing folks to the Sunsphere in order for them to have the ability to raise the rent they charge to the point at which they could make much money. But would not that be a "win" for the citizens of Knoxville?

In exchange the city receives a finished observation deck, two floors with public access, and at less expense than the city would otherwise pay for finishing the observation deck and paying the utility costs, which are such that only limited economies of scale are realized by heating and cooling one floor as opposed to the entire structure. Again, I carefully explained this in our interview and am surprised that there is scant, if any reference to the requirement that the developer build out space they would control as well as the requirement that they build out space which they would have no use of.  Suffice it to say that most tenants are not expected to finish space for others’ use. More typically it works in reverse in that the rent charged the tenant includes common space in the building that the tenant can use.

There is on other item which, in fairness, I don’ think I did mention to Ms. Trenda and was brought up by Mr. or Ms. Hayduke. The city will control the thermostat setting in the structure and keep them set at conservative levels to control any excess consumption. Also, and I don’t recall if I mentioned this or not, the city will have to approve any change in uses within the structure to make sure that no energy draining uses will be introduced without adjustments to the rate charged.

 Now that fact that there was more to the lease agreement than made it into the final version, I would like to address some specific items, hopefully with a minimum of editorializing.

 “Tying anything up for 40 years is kind of scary,” Lyons said. “Any more than 20 years is hard for [KPH] to return up-front investment, so 20 [years] is the point of compromise.”

Obviously there has to be a long term lease unless the city is going to do the entire build out and just turnkey the space.

“Yet the city’s “compromise” doesn’t sit well with some council members. “We’re giving them such a sweet deal for such a long time,” said City Councilman Steve Hall. “To enter into a deal like that for 20 years is a very long time, we just want [the Sunsphere] back open.”

One councilperson is usually not referred to as “some.” I did have a very long and pleasant discussion with Councilman Hall on this topic. I explained the reasons for the necessity of a lengthy lease when great investment on the front end was required. I want to be very fair to Mr. Hall. He did reference this discussion in his remarks at council.  I was not present for his interview with Ms. Trenda but I was not informed of his remarks so that I could respond.  In fact during this interview I was not given the opportunity to respond to any of the criticisms that appear in the article by Mr Hall, or any other “facts” gleaned from unnamed “reports.”

I didn’t like the way [the Candy Factory deal] was handled,” Hall said. “I perceived it as a giveaway. The Victorian Houses, in the condition they were in, [the city] could have gotten $100,000 a piece. That was a sweetheart deal and the way the request for proposals (RFP) read, people had the impression they had to bid on the Candy Factory, the houses, the Sunsphere, and the Amphitheater.”

Councilman Hall and I have had a long and respectful disagreement on this matter. Councilman Frost and I have had a like disagreement.  I fully respect their decision not to support the sale of the Candy Factory and I am sure that both of them, along with Councilman Hultquist, the other person to vote no would agree that our relationships have remained unaffected by that disagreement. That should not be necessary to point out, but in this town that has not always been the case. I am sure that all would characterize our relationship to be a positive one based on a lot of communication. With that in mind I am going to repeat my perspective on the points referenced here by Mr. Hall and Mr. Frost. :”

I have never understood how a “deal” could be that was the product of a lengthy, well publicized “Request for Proposal” (RFP) process which drew in excess of 80 visitors to tour the site and nine proposals could be characterized as “sweetheart. The bid for the Candy Factory was one million dollars higher than that the second highest bidder (TIFs included) and nobody else bid any money at all for the Victorians.  Any notion that the price is “ridiculous” must confront the question… “Then why did the dozens of people who toured the structures during the pre bid time period not make a comparable, let alone higher offer.  Moreover even the “ex post facto, extralegal “bids” for the seven Victorians by various individuals who neglected to bid during the RFP period never exceeded much over $400,000.  These “bids” occurred after we decided to remove the arts restrictions regarding the development of the houses in exchange for KPH spending and extra $200,000. Thus they paid $415,000 for the houses to do with as they wish within the restrictions of H1 zoning but still under the approval of the city. Other strange extralegal bids appeared in my office and not one exceeded this amount.  Once again, to repeat much of the verbiage between #9 and me in the SKB days (hey there #9) , this was not a straight “sale” but a request for proposals under which the winning bidder would have to meet conditions set by the city in development the property. We did this because the community has a large interest in the restoration of these historic structures.

 “Retired UT architectural professor Gerald Anderson, who actively opposed the sale of the Candy Factory, agrees. “The Candy Factory was a real loss, it was a great resource for all the arts. The classes, the Art Market, the outlets. It was a community resource that should have been built up rather than sold to the lowest bidder,” he said. “Losing the Candy Factory to [private enterprise] is unfortunate.”

 Certainly this, like the rent percentages discussed earlier, is a mistake.  The retired professor who was a long time critic is Michael Kaplan.  Nobody identifying himself as Gerald Anderson ever appeared as far as I could tell so if there is such a man he was active under a bushel basket somewhere.

 Councilman Rob Frost voiced similar opinions about the value of the houses.  “I didn’t think the price was adequate. The houses were way below value price. The RFP wanted people to respond to the Candy Factory and Victorian houses together. If the houses had been broken out separately it would have opened a whole new universe of people who would have responded,” Frost said. “It’s easier for someone to redo a house than a multi-story building…What [KPH] offered didn’t work for me.”

 See above, Also, the RFP made it very clear that a bid would be accepted on any or all of the assets and that one could bid on either or both the Candy Factory and the Victorian Houses. Segundo properties bid only on the Victorians. Lee Burch bid only on the Candy Factory. In fairness to Mr. Frost I would willing to bet that his point was that higher bids might have been obtained if the houses could be bid on separately rather than as a group. I will concede that point but only to a minor degree. Of course then the city could be left with only the condemned house, not a particularly good outcome.

 “Utilities will run around $60,000 annually when [the Sunsphere] is fully occupied,” said Sunsphere project manager Jeff Galyon. “That’s the worst case scenario, but we hope to reduce cost on overall utilities, we hope to do a lot of improvements to make it more energy efficient.” Galyon said that in the best-case scenario the utility bill could drop to $40,000 after improvements. Yet under the agreement due before City Council, KPH will pay only $21,000 annually toward utilities, leaving the rest to be picked up by taxpayers.”

 Well, yes, and nobody in town would take on this development if they had the entire utility bill, or even one somehow pro-rated to remove the observation deck.  Perhaps that is why not a single other person or group advanced any proposal for the Sunsphere despite ample time for inspection and many, many tours by people who expressed interest at an early stage. At least four people volunteered to me that we would never get anyone to propose leasing that structure. See again above statements about “sweetheart deals.”

 “For his part, Mayor Haslam has remained positive about KPH. During his mayoral campaign, Bill Haslam singled out KPH proposals as examples for others to follow, which comes as no surprise, given that Haslam and senior director of policy development Bill Lyons served on the KCDC board that approved KPH’s 2002 downtown development proposal.”

 Yes, I did chair the KCDC board when they were chosen.  This entire history is preserved on the K2k board if anyone wants to go back that far. I posted over seventy single spaced pages of “stuff” during that time. But I digress. In fact I appointed an advisory group that included administration critics Carlene Malone and Lynn Redmon to consider the proposals. We all agreed that Kinsey’s, which included the public space for the square, a parking garage behind Market Square, and a cinema, was the best proposal. In fact (does this sound familiar) they were the only viable proposal.  Now I don’t want to mislead anyone. Carlene has had reservations regarding the implementation of the plan.  I have not heard from Lynn on this so he may or may not.  Many of the remaining points reference objections about KHP with which Ms. Malone may well concur.

 “A 2005 report commissioned by the city found that a negligible amount of development dollars had been spent in the Market Square Phase I and II projects, despite KPH promises in its proposal that the $20 million in public funds would be matched with $22 million in private investments downtown. Curiously, specific language holding KPH—or anyone else—to this $22 million figure was absent from the actual signed contract. Jon Kinsey told the News Sentinel last year that his firm was only responsible for “some of it.” Meanwhile, public funds continue to be poured into the projects on schedule.””

The “report” cited here is one paid for under, well, somewhat questionable conditions. The author never came to Knoxville in his evaluation period and did not consult any building permit records or contact the parties. His methodology was, well, not textbook. Now an enterprising reporter might have asked me about this in the interview, or better yet, might have pursued this through local records. A conservative estimate of investment since the plan was approved in 2002 approaches sixty million dollars in the CBID, or close to triple the figures referenced in the proposal (but not contracted for)  This included the following  Fire Street Lofts - Dewhirst-$6,400,000, Burwell Building – Cardinal-$7,450,000, Holston  Dewhirst- $13,725,000, Candy Factory          Kinsey, Probasco, Hays $11,696,000, Victorian Houses-Kinsey, Probasco, Hays -$1,710,580, New Union Lofts -Kinsey, Probasco, Hays $6,000,000, Sunsphere (proposed) Kinsey, Probasco, Hays $1,000,000 I don’t have the figures for the Watsons building or the Emporium (Dewhirst) but that, along with the Watson’s build out easily are well in excess of $10,000.000.  Regardless, these investment amounts can easily be found locally.

 “Following the downtown deal, KPH successfully purchased the Candy Factory and Victorian houses last summer on the premise that it would spend $200,000 to finish the first floor of the Emporium Building for artist use, Councilman Hall said. “Originally they were going to finish that space out and make it available to art groups in the Candy Factory to have space to use. Someone came up with the idea to just give $200,000 to the Arts and Culture Alliance, and they’d just finish out a smaller space,” Hall said. “But one of the things motivating them was so much time had transpired and nothing had happened.” “It was kind of a nasty squabble,” Councilman Frost said. “The administration was approached by Lisa Zenni [executive director of the Arts and Culture Alliance] said that KPH hadn’t gotten around to the Emporium building…she was wanting to have a check so the Arts and Culture Alliance could take over the project.”

 “Both councilmen said that after the dispute, Brian Conley of Cardinal Enterprises—one of several prominent local coordinating partners including Dewhirst Properties—wanted KPH out of the Emporium Building deal. But the group’s $200,000 pledge to provide an alternate art space was part of the reason the houses weren’t split off from the Candy Factory. Both Hall and Frost, among other council members, voted to keep KPH committed. “We voted against letting them out [of the deal],” Frost said.”

I stated without equivocation on this blog and elsewhere that I approached Kinsey with this suggestion after talking with Ms. Zenni.  I also explained that I did this because KPH had agreed in the contract to replicate specific space and that Ms. Zenni thought that function could be served better if the space was built out differently from that which was contracted for.  Mr. Frost and Mr. Hall and I have different perspectives on this but I am the one who tried to broker this and I did so in an abortive attempt to find the best solution. Unfortunately, as we often do, people put the facts into the frame within which they feel comfortable. This was not one of my finer moments but this suggestion came at my request after talking with LIza. KPH was the last party to be aware of its existence.

 “Anderson isn’t a huge fan of the Sunsphere and points out the economic impact of Knoxville’s having to maintain it. “The Sunsphere has been a definite drain on the economy. No one can find a business to work there. It can be an albatross to keep maintained. The gold glass definitely has a life span and as [the 360 individual panes, which cost $1,000 apiece in 1981] start to fail it will be very difficult to maintain. It’s a drain on the city’s finances.”

Anderson? If it is Kaplan, then I guess he is just against the restoration of the Sunsphere with or without going through with the KPH proposal. That is certainly a reasonable position but council already voted 9-0 to proceed with the restoration of the Sunsphere so that at least the observation deck could be opened. Unless they rescind that vote quickly work will begin.

 “The Kinsey Probasco Hays deal guarantees that the Sunsphere will continue to drain public funds for the next two decades. As the development deal looms—apparently etched in stone before the public officials hold a vote, with little possibility of a public referendum—the glittering fixture in Knoxville’s downtown skyline may come to represent more than just a former World’s Fair site; it may ultimately serve as an uncomfortable reminder of the continued gifts bestowed upon private enterprise by elected officials.”

Public referendum? I have not heard that anyone is starting a petition drive. Thanks to those of you who waded through this.

 Bill Lyons

metulj's picture

"See above, Also, the RFP

"See above, Also, the RFP made it very clear that a bid would be accepted on any or all of the assets and that one could bid on either or both the Candy Factory and the Victorian Houses. Segundo properties bid only on the Victorians. Lee Burch bid only on the Candy Factory. In fairness to Mr. Frost I would willing to bet that his point was that higher bids might have been obtained if the houses could be bid on separately rather than as a group. I will concede that point but only to a minor degree. Of course then the city could be left with only the condemned house, not a particularly good outcome."

Group, shmoup. They should have sold seperately to maximize their value. 

I do not know the exact breakout on what the Victorians that were bought is (price per...), but I can tell you that we just bought a Victorian home in similiar condition (long term mild neglect, used as a dwelling and business, on the "bow wave" of a hot real estate market). I will admit that ours is in the NYC metro area and 25 minutes from midtown, but those are merely multiplying effects that allow for comparison after weighting. The purchasers stole those houses. Each of them was worth between $65000 and $100000 a piece based on the architectural detail alone.

Victorian homes of that era in those conditions simply do not come on the market. Now casual observers would say: "Well, they are dumps." It doesn't matter because aficionadoes would rather have the problematic house rather than one that has had an amatuerish restoration or had been adjusted to fit more contemporariy looks and norms (vinyl siding!).

When I told my wife that those Victorians were bought for a 10th of what they should have sold for, she laughed. All the research we had done to find specific neighborhoods where you could still find such homes had stirred memories in us about those particular properties. Boom. Boom. Boom. Right down that hill to Cumberland sat a handful of what millions of Americans would do anything to get and they were had for a song. They should have been put on the open market. Knoxville taxpayers got ripped.

 

 

True happiness is knowing you are a hypocrite. -- Ivor Cutler

Up Goose Creek's picture

Victorian Houses

A lot of expensive work had been put in to the Victorian Houses. The new roofs are of very good quality (or at least expensive material). A lot of the siding had been replaced. The problems I noticed stemmed from little things like no caulking where the siding met the trim and downspouts that weren't connected to the flexible drain lines. If those houses had been in 4th and Gill or ONK they could have sold for $100K to $180K+ depending on the size. Of course that is withought the restriction that they be leased to starving artists which adds another wrinkle.

I believe that somewhere in the process someone made the assumption that they would be worth more assembled as a group and that assumption was wrong. By the time this was discovered the RFP process was too far along to make any changes.

As for the sunsphere, didn't someone do a poll that showed that saving the SS was the #1 concern of respondants? I don't mind my city spending a litlle money to save it's #1 icon.

metulj's picture

Amen with addenum. I am

Amen with addenum. I am framing in an old doorway today in my house. While pulling out the old trim, I knew what I would find to hang the door frame on: Quartersawn, full dimension lumber. With the base improvements that Mamaw mentions, which again mirror the general state of my house, I'd rather have, as someone who wants to work on my house, this state of affairs in a 100-year-old home, than a 10-year-old West Knoxville builder. There is no way that deal was good for anyone other than the purchaser. 

 

True happiness is knowing you are a hypocrite. -- Ivor Cutler

Bill Lyons's picture

RFP vs. Surplus Property Sale for Victorians

Metulj, OK, now we have moved far beyond the article to revisit the original RFP. I don’t mind going back there for a bit.  Let's keep one thing in mind though. The theme of the article was "giveaway" to developers and "ridiculous prices for the Victorian Houses."  Given the response to the RFP and the post RFP bids I hope that people holding such a perspective would at least reconsider.  Moreover, and I should bring this up again, this was not developer driven. Nobody came to us and asked to have a chance to develop these assets.  We basically asked for ideas and proposals within an umbrella of constraints. It is not surprising that it was (is) controversial and that there was much debate and discussion and that much of it got very emotional and even a bit nasty.  I am not surprised that the framing of this has always gravitated to the major template through which a great deal of local politics is filtered.  I think all of this discussion, including the snarkiness, reflects a healthy polity. I am glad that this forum exists to facilitate this discussion.

Your point is that we should have sold the Victorians separately on the open market because we would have gotten more for them. We considered that approach but rejected it.  The value guiding our decision was that keeping the city involved in the future of the properties outweighed pure fiscal concerns that would have led to price maximization as the only value. There are only two ways to market assets like the Victorian Houses - (a) surplus property sale and (b) through a Request for Proposals.  You suggest that we could have done much better (10x?) following (a). We considered and rejected that because once the bids are unsealed, the high bid must be taken and there is no way to control future use (other than through existing zoning). There is no way to mandate that the properties be improved. There is no way to mandate that they not be kept as is and broken up and run as cash cow rentals as have so many houses that are in the Fort. We chose the option (b) because we could write a contract binding the developer to improve the properties according to terms that would protect the structures and the area. For instance, our contract mandates that a bathroom in one of the buildings be kept open to the public. This is impossible in a property sale. Remember, there is a park right in the middle of this that is being kept open.  This was a balance, and I believe we made the right decision in avoiding a surplus property sale of individual units. The only other option would have been to ask for separate RFP's for each structure. That just did not make sense. There could have been no bids on at least one of the houses.  The resulting developments almost certainly would have made little sense from a holistic perspective.

Bill Lyons 

R. Neal's picture

Bill, thanks for that very

Bill, thanks for that very thorough response to that article. A lot to digest there.

Re: "Also, the RFP made it very clear that a bid would be accepted on any or all of the assets and that one could bid on either or both the Candy Factory and the Victorian Houses."

At the City Council workshop when council members were talking about the Victorian houses and possibly getting new bids, didn't you say that separating them out would not be possible (or maybe practical) because you would have to start the RFP all over again?

And wasn't the winning bidder's agreement to build out the Emporium space contingent on them getting the Victorian houses and dropping the requirement for arts related use also part of the reason given why it would be troublesome.

I may be misremembering, but that's what I seem to recall.

At any rate, from what your are saying it sounds like the Sunsphere is a white elephant and that no matter what the City does other than demolishing it it's going to continue costing the City money, and the City thinks this is the best deal they could get to save it and get it opened back up to the public. Does that about sum it up?

Bill Lyons's picture

Sunsphere as White Elephant

Randy, you are basically on target here but I think the Sunsphere could work well without draining the city coffers. 

"At the City Council workshop when council members were talking about the Victorian houses and possibly getting new bids, didn't you say that separating them out would not be possible (or maybe practical) because you would have to start the RFP all over again?"  Yes, I did say that at our four hour marathon workshop.  We could have started over but most council did not want to follow that approach.

"And wasn't the winning bidder's agreement to build out the Emporium space contingent on them getting the Victorian houses and dropping the requirement for arts related use also part of the reason given why it would be troublesome."  Again that is correct. That was one change that was made in reaction to the very contentious (even a bit funny, in retrospect) meeting of those in the arts community. One of the reasons that the bids were low was that we mandated arts uses in the Victorians.  After hearing the reaction and talking further to the arts folks and the leaders of the Arts Alliance it became obvious that relieving the developer of the arts burden in exchange for having them pay for Emporium improvements made better sense all the way around. We approached the developers with that proposal and they agreed.

“At any rate, from what your are saying it sounds like the Sunsphere is a white elephant and that no matter what the City does other than demolishing it it's going to continue costing the City money, and the City thinks this is the best deal they could get to save it and get it opened back up to the public. Does that about sum it up?" Sort of, but I don't know if I would go quite that far. There was and is pretty broad consensus on and off council that the Sunsphere is a community asset, symbol, etc. worth saving and investing in. It is a very special structure. It just was not financially feasible to have the city try to run some commercial enterprise or to get stuck with the kind of operating expenses that did in the Candy Factory and Victorians and doomed them to suffer a gradual deterioration over decades. So we thought that the best plan was to spend the money to fix it and find a way to have it open at minimal burden to the city and with someone else responsible for much of the interior upkeep. Sure it is somewhat of a white elephant from a purely economic standpoint. What is before council now is a way to have a predictable, fairly minimal yearly operating burden that brings life to the whole structure. Right now we anticipate having it be open at no cost. Some on council have suggested that we charge a small fee that would likely make the structure pay for itself. That is definitely worth considering.  Such a decision can be made later, of course, and is somewhat independent of going with this proposal or not.

R. Neal's picture

Sort of, but I don't know if

Sort of, but I don't know if I would go quite that far. There was and is pretty broad consensus on and off council that the Sunsphere is a community asset, symbol, etc. worth saving and investing in. It is a very special structure.

Most people would agree with that except for a few who would just as soon see it demolished for whatever reasons.

I hope there is also something in the works to save the Amphitheater. To me, it's an equally valuable asset.

Getting back to the article, I think the other part of the discussion was not just about the financials but also who the city does business with and why. I personally don't want to debate that for reasons that should be obvious (besides the fact that it is a dead horse that ends up going in circles until somebody gets really pissed off), but it's probably a valid discussion for any public-private project regardless of who is involved.

Anonymous's picture

As Bill Lyons points out,

As Bill Lyons points out, the Market Square project was awarded to the only viable proposal (only two were made). The WFP project was awarded to (by far) the highest bidder. To my knowledge, those are the only two projects that have been awarded to Kinsey Probasco. Unless someone has evidence that there were shenanigans involved in the awarding of those projects, it seems more than a tad unfair to keep throwing around inuendos to that effect.

R. Neal's picture

it seems more than a tad

it seems more than a tad unfair to keep throwing around inuendos to that effect.

I was referring to the newspaper article. What are you talking about?

Real Reporter's picture

Journalism? Real Journalism?

Journalism? Real Journalism? Take it to any class and have them rate it on sourcing, accuracy, including of relevent information. Critics nobody heard of, leaving out most of the information on the lease to give a total wrong impression, quoting an unnamed apparently inaccurate report when data are clearly available and numbers that do not add up makes for real journalism? Thanks for pointing out such a high standard for reporters. You are right. You will not find reporting like this at any other outlet now that the Knoxville Journal has decided to get halfway serious.

Michael's picture

What is before council now

What is before council now is a way to have a predictable, fairly minimal yearly operating burden that brings life to the whole structure. Right now we anticipate having it be open at no cost.

I've been proffering the very unpopular argument for a couple of weeks now that there was no way that we were going to be able to keep the Sunsphere without subsidization.  My question has been, and still is, can we not forge a better deal?  Would getting an extra fifty cents or a dollar on the square foot utility agreement be a deal breaker?  I'd like to better understand how it is anticipated to open it at no cost.  I must be missing something.

I begun to wonder just how well the city is in bargaining.  The Market Square project was severely compromised between proposal and the execution (and somehow twisted to include development outside of the original development area of the project, and leaving out areas that were).  It's often been explained to me that what was proposed vs. what was eventually contracted for was significantly different.  And from my perspective, the changes always resulted in less obligation to the developer, and diminished results for the city.  I hope this project will not suffer the same evisceration under the reasoning that we were just lucky anyone was willing to bid on it, and that we must always compromise in favor of the default developer.

If I were building a house and contracted with a builder who didn't meet my goals, I'd fire them based on that fact and hire someone else to finish the job. It seems to me the city is always the party that compromises in these deals.
~m. 

bob stepno's picture

The more the merrier

Thanks for providing so much material for class discussion whenever I get to my "online dialogue, bloggers and print media can be a pro/am collaboration" theme... It's at least encouraging that some "pros" are reading this site and each other. I haven't followed everything the TV stations and KNS have said about the WFPk project, but will be interested to see whether this prompts them to start feeling "competitive" about the story. (I started reporting in a town where the circulation areas of four dailies, two student newspapers, and a feisty local radio station overlapped... very healthy for journalism.) Speaking of KNS, did Hilary Trenda just switch to KnoxVoice or was she only freelancing for KNS on the suffrage memorial story?

PS This was in Connecticut, not Tennessee, but the feisty radio station news director moonlighted as a songwriter and co-wrote Elvis's "Blue Christmas."

Number9's picture

Thanks for providing so much

Thanks for providing so much material for class discussion whenever I get to my "online dialogue, bloggers and print media can be a pro/am collaboration" theme... It's at least encouraging that some "pros" are reading this site and each other.

Interesting analysis from Bob Stepno:

(link...)

michael kaplan's picture

bill lyons wrote: "Anderson?

bill lyons wrote:

"Anderson? If it is Kaplan, then I guess he is just against the restoration of the Sunsphere with or without going through with the KPH proposal."

dr. lyons, why have you attached my name to the discussion of this issue?

you know my position, as i handed a typed copy of it to you at the public meeting in 2004: that the sphere be restored and used as the KMA's pavilion of 80s american art and a coffee shop. that probably wouldn't make the city a great deal of money, but it would put the museum and the sphere on some kind of map and likely generate additional traffic to knoxville. and it would be a perfect place to screen the simpson's episode ..

rikki's picture

dr. lyons, why have you

dr. lyons, why have you attached my name to the discussion of this issue?

He brought your name into it because the article quotes a retired architecture professor named Gerald Anderson. You are the retired architecture professor who has been vocal on the issues in the article. Do you know this Gerald Anderson person? Was there a retired architecture professor other than yourself who has been involved in public forums? 

Bill Lyons's picture

Retired Architecture Professor

I am sorry Michael, I have no knowledge of a Mr. Anderson was "active" in opposing anything about the sale of the Candy Factory or has had anything to say about the Sunsphere. He did not come to our council workshop last week and did not speak at the workshop or any other public meeting regarding the Candy Factory.  He did not post on the Internet (I don't think he is #9). He did not write any emails to our office. He has not written a letter to the editor of which I am aware. I was trying to make sense of the quote(s).  I was giving Ms. Trenda the benefit of the doubt in her sourcing of this piece. You certainly have been active in a manner consistent with my understanding of the word. I know you handed me some material at the meeting in 2004 but I just do not recall any Sunsphere statement. My memory is not as good as it once was. I am glad you do support renovation of the Sunsphere and again apologize in drawing an incorrect inference.  Thanks.

Bill Lyons

 

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