Sun
Sep 24 2006
03:56 pm
By: R. Neal

Betty Bean has a great column on the history of the Brownlow School and a project to restore it.

(Hint: It involves condos. And TIFs. But no religious fanatics like South High.)

Number9's picture

I told you so...

Dewhirst says he tried his best to turn the Brownlow project around but was unable to make the numbers work without Tax Increment Financing, which he was unable to secure from the city.

How stupid are we now? That is not a rhetorical question. At what point do we take on this TIF giveaway? Have we passed the tipping point where every project must have a TIF. If projects are not viable without TIF's are they viable to begin with?

R. Neal's picture

Next time I build a house,

Next time I build a house, if I don't get a TIF I'm going to build it in Florida. At any rate, it's interesting how some people can get TIFs to make their projects viable while others can't.

Up Goose Creek's picture

School buildings

Welll, I can kinda see the public value of restoring that building for nostalgic/historic reasons if nothing else.

Kendrick didn't need a TIF when he redid Park Place. But then labor costs were a lot less in the 80's. Maybe they'll be cheap again as the bubble bursts.

Another school is on the market if someone wants to get on the bandwagon: Flenniken School on Maryville Pike for $260K.

edens's picture

>Kendrick didn't need a TIF

>Kendrick didn't need a TIF when he redid Park Place.

Just FYI, Kendrick sold the units as shells to be fitted out by the individual buyers. The last shell spaces weren't sold, btw, until the late 1990's, about 15 years after the project began. And they were sold to a third party developer who finished the units and flipped them.

The same model applied to many of the early condo projects downtown - Kendrick's and otherwise. It works, but it's a slow process.

Bill Lyons's picture

A bit more context

A few other clarifications and a bit more context might be helpful. First, the time period is crucial. No TIFs of this sort are possible anywhere unless the property is in a redevelopment area. That is why a redevelopment area is necessary for the South Knoxville Waterfront project.  When David Dewhirst spoke with us very early on in 2004 we quickly eliminated the TIF as a possibility because Brownlow School was not in a redevelopment area but in an historic neighborhood that was not a candidate for such an area. We were very concerned about the development of Brownlow and aware of the development challenges and did offer to pursue a PILOT tax abatement under the CityLife program.  This would have allowed him to also pursue historic tax credits while receiving tax abatements. The rules regarding historic tax credits mandate rental rather ownership for a number of years.

This was about the time that problems emerged with the South High property in south Knoxville.  We were approached by many people, including many in South Knoxville as well as Knox Heritage, about any role the city could play.  We did find some solutions that  would help the proposed development but tax abatement just did not seem to fit the situation and the project went on hold. At that time I began to explore the option embedding a solution to this problem in a larger policy – the redevelopment of historic schools that were no longer in use. In most cases the neighborhoods had a great interest in home ownership but the schools presented tremendous challenges to any potential developer.

The area around South High likewise did not seem to be good for a redevelopment area any more than did that around Brownlow. Our template for redevelopment areas was certainly broader than just one structure. At that time we became convinced that it was in the neighborhood’s interest, and certainly in the city’s interest, to see if we could pursue one-parcel redevelopment area under a program specifically tailored for helping abandoned historic schools.  We checked this with the appropriate lawyers and were told it was indeed acceptable under the applicable state laws and regulations. We envisioned a program geared to restoring historic school buildings – all producing no property taxes at all -  for home ownership.  While South High was our first concern we also recognized the applicability to Brownlow and perhaps to others. We discussed this concept with council members Frost and Hultquist and both thought it was a very good idea. I communicated this policy to council in early 2005. We received very favorable reaction.

Of course the first step in such a process is for council to request that a redevelopment area allowing TIFs be drawn up for a school property in question.  That only allows a TIF. It does not guarantee one at all. A separate application for a TIF must be made, with financials, development plans, etc. and the plan and TIF must be then recommended to council, who must vote to approve the specific TIF.  Our main impetus in doing this was to find a solution for South High School, but we were aware that it could be helpful to Brownlow.

We later became aware that the property had changed hands and of community meetings between Cardinal and the 4th and Gill neighborhood folks. We were told of the neighborhood’s interest in the development of the school into condominiums rather than rental units. At that time we suggested that it might be a good time to set the wheels in motion to prepare a one parcel redevelopment plan as we had envisioned under the new policy.

At present nothing has been done past the initial request to KCDC.  They have not yet prepared the redevelopment plan Hence there is not yet any legal basis for a TIF, has been no application for a TIF, no recommendation to council for a TIF, and certainly no council vote creating one.  We do not “offer TIF’s” to one party and not to another.  We can only explain the tools at the city’s disposal, the criteria for assistance, and suggest that folks apply if they think they qualify.  We would have loved to have been able to have worked toward a TIF in addition to exploring a PILOT for Brownlow with David Dewhirst but our discussions took place way before the chain of events started in regard to South High that led us to create the policy for historic schools. We would love to see Brownlow School rehabilitated. We also think it was the right thing to do to put a program in place to help rehabilitate old historic schools and to encourage home ownership in the affected neighborhoods.

smalc's picture

No TIFs of this sort are

No TIFs of this sort are possible anywhere unless the property is in a redevelopment area.

I have a very limited knowledge of TIFs, and you did say "of this sort", but is the Northshore Town Center a redevelopment area? You can't redevelop an area that wasn't developed in the first place.

Number9's picture

It was a TIF after the fact.

I have a very limited knowledge of TIFs, and you did say "of this sort", but is the Northshore Town Center a redevelopment area? You can't redevelop an area that wasn't developed in the first place.

Good observation.

Northshore Town Center received a TIF from both the City and County but it was not a redevelopment area. It also was done after the final plat was approved. It was a TIF after the fact. A horrible precedent.

So was it an illegal TIF according to State Law?

Bbeanster's picture

Couple or three

Couple or three clarifications/corrections.
I was sicker than three dogs when I worked on this story last week, so that'll be excuse for some stuff I don't much care for.

1. Sloppy wording to have said that the county chose a developer with considerable experience restoring old buildings -- over the objections of the neighbhorhood reps. What I should have said is that the neighborhood reps preferred another proposal over Dewhirst's. Nobody objected to his proposal because he is experienced in restoring old buildings.

2. Conley paid $325K, not $335K.

3. Although Dewhirst has mixed feelings about not being able to get the TIF, I don't think he's alleging that anything underhanded went down in Conley's deal. Could be the city was just free-er with that stuff over the course of three or four years. Bottom line is he says he doesn't know why he was turned down and Conley wasn't.

And the neighborhood's biggest beef (and there are many beefs where this property is concerned) is that Ragsdale apparently changed the terms of the sale of a valuable community asset without notice to or consultation with that community.

One more small factoid: Remember how all these pundits were trying to figure out why David Collins lost? Well, Collins sent out a direct mail piece listing his many accomplishments as a county commissioner. One of them was redevelopment of Brownlow. Every single person with whom I spoke was aware of that and not very happy. THis is one of the votingest wards in the city, and I think that mail piece, coupled with the general pissed-offedness at the condition of Brownlow, cost Collins a couple hundred votes, minimum -- and if those votes flipped to Harmon instead, you can double the impact on the election's bottom line.

Not to take anything away from Mark Harmon, who ran smart and hard, but Brownlow is a very significant issue in North Knoxville.

4&G's picture

to TIF or not to TIF

I should have read this at the time, but I'm surprised that no one noted this about when Conley's guys came to the Fourth & Gill board basically to announce that they had acquired Brownlow and present their initial plans:
When someone posed the question to them about whether not receiving a TIF would effect their intentions or ability to carry out the renovations, their answer quite specifically was, "No." I found this a curious answer to have given at the time, since just saying it ought to have meant that they wouldn't qualify for a TIF anyway -- i.e. how can you pass the "if not for" test of needing a TIF to make a go of the project when you say you'll do it anyway. Either they hadn't done their financial due diligence at the time, or they fudged their numbers later in order to justify the TIF.

edens's picture

>If projects are not viable

>If projects are not viable without TIF's are they viable to begin with?

Actually, the project probably was viable without the TIF, but the neighborhood would have been just as mad, if not madder:

As Dewhirst said in the article:

"We first proposed to do the project as apartments, with historic tax credits, but it was obvious that the neighborhood wanted an owner-occupied condominium building."

The question, with resale prices in 4th and Gill running around $100 a square foot, is whether what the neighborhood wanted was realistic?

Bbeanster's picture

Many of the neighbors

Many of the neighbors wouldn't have liked Brownlow as an apartment house, but I would bet a large sum of money they wouldn't have been anywhere near as mad as they are right now if that had been done, and done in a timely fashion. I think this is just one more thing on a short list of serious beefs (the Mission District, the porn store, WATE's rusty fence) with local government.

School's been out 10 years now, and folks have run out of patience. Ripping out the window sashes and plugging them up with Styrofoam seems an odd -- and extremely visible -- restoration technique, for example. You sit across the street and look at that for about 400 straight days and see if you're not tired of it, too. Especially if you disagreed with the decision to close the neighborhood school down in the first place.

The proposal favored by the neighborhood offered less upfront money (something like $50K as compared to the $200K Dewhirst offered), and that was the most heavily weighted element of the proposals. Turned out, however, that the rejected proposal took into account the cost of asbestos removal, which Dewhirst's proposal low-balled. I understand that ended up being one of the deal breakers.

This is going to be a very costly project to get done.

Tess's picture

How about a new park?

If the Brownlow school is too expensive to renovate, why not just tear it down and build an urban oasis? 

Up Goose Creek's picture

Urban Oasis

There's an urban oasis nearby at 1st creek park. Apparently that presents problems best reserved for a whole 'nother thread.

The building is worth saving for its unique character.

I'm wondering if the business model of marketing shells will still work or if it only worked in the '80s & '90s because that was almost the only option if one wanted a loft space. I know the community will want something quicker for Brownlow but I'm wondering about Flenniken.

zoomfactor's picture

"Interior demolition"

Wonder where those windows went. I know people in Boston pay big money for large, old-wood double-hungs like that.

dmcd's picture

windows

Kent Kendrick got the windows. I'm not sure how that happened, seeing as they are exterior and subject to review by the Historic Zoning Commission.

bizgrrl's picture

Not to be down on you, Bill.

Not to be down on you, Bill. But, how does that work?

Bill Lyons: No TIFs of this sort are possible anywhere unless the property is in a redevelopment area.

SMALC: I have a very limited knowledge of TIFs, and you did say "of this sort", but is the Northshore Town Center a redevelopment area? You can't redevelop an area that wasn't developed in the first place.

All of us South Knoxvillians are waiting with bated breath. Not that a TIF is the issue, but the word of the City/County as to other issues, e.g. eminent domain.

Bill Lyons's picture

Be as down on me as you want: No offense taken

Be as down on me as you want and no offense is taken. The City's TIF for Northshore Town Center was entirely different from that of dealing with the development gap for an historic school building that is in need of rehab and reuse. Northshore Town Center is indeed not in a redevelopment area. The TIF is for infrastructure improvement (Northshore Drive widening, intersection improvements, traffic lights, etc.) through the Industrial Development Board under a program established for industrial parks and other qualifying projects. This TIF puts the developer and not the city at risk. The developer pays for all the infrastructure improvements and will be repaid from the increased taxes that will occur if the center works as predicted. If the project does not work well and the taxes do not come in and they do not get repaid.

 As for the "word of the city" regarding eminent domain the only use of ED in the South Waterfront redevelopment plan is as authorized in the plan. The plan is posted on the city’s web site so I suggest that all concerned folks read it.  KCDC has no authority to act beyond this assuming for some reason that they have an interest in doing so. Eminent domain in the South Waterfront can only be used for pure infrastructure improvements (roads, parks, etc that the city has the power to do anyway) and for dealing with dilapidation (not blight) with strict definitions and due process for any structure so designated. No property assembly for economic development is possible under the South Waterfront plan.

I have followed this for many years and I am unaware of any time when the city has violated its "word" on eminent domain issues through the creation of redevelopment areas or in any other way.  See the Market Square and Jackson Depot redevelopment area plans for the conditions under which eminent domain can come into play and then compare the implementation.

deeryst's picture

Re: Proposals

If you look at the old proposals (public record) the one preferred by the neighborhood actually scored better. Hugh Holt is the one responsible for the bad decision because he didn't understand basic finance. Other than the lack of adequate asbestos budgeting, the awarded proposal also severely under-estimated the future property tax payments, whereas the preferred proposal did not. The purchase price plus the value of the projected property taxes actually made the offers almost same - and the preferred proposal a win with the higher scoring in other categories. But $200k just sounded better than $50k - and Hugh couldn't see the point. The other thing is the awarded proposals didn't meet all the strict submission guidelines set out by the RFP.

The Purchasing Dept should be responsible for taking back the building and using the additional $150k they received to put the project back in the other proposer's hands.

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