There are currently 10 users and 330 guests online.
The AJ Building---Servants' Quarters No More?
Submitted by Bill Pittman on Wed, 2007/06/06 - 6:23am.
County Mayor Mike Ragdale is right on the money in moving to sell the Andrew Johnson Building. My suggestion would be to move as many of the county employees currently in the AJ to TVA's East Tower.
I have never understood why we put our (public) servants' quarters on some of East Tennessee's most prime, waterfront real estate.
Actually, now is a great time to be having this conversation and earlier would have been premature. I say that because of the South Knoxville Waterfront Plan that now appears to have a chance of morphing into a reality that is recognizable from the plan. The AJ would be a fantastic connecting structure for condo/office of those with interests on both sides of the water. The value of the structure will however, likely continue to rise and will make its way out of the range of any of our homegrown developers or residents. Acquiring the property now and getting the renovation done as soon as possible would be good for us locals. In any case, now is a great time to have a short talk and some serious action on that end of Gay St.
Submitted by Sandra Clark on Wed, 2007/06/06 - 11:58am.
Moving Knox County Schools out of the AJ Building is a no-brainer, but it's not Mike Ragsdale's idea. Just ask Diane Jablonski who served on the school board awhile back.
D-Jab couldn't believe KCS pays rent to the PBA when they own empty buildings all over town. She was told (as I recall) that there's a long-term contract (long-term as in maybe forever) that requires the rent from KCS until some bonds are paid off and beyond -- the rent never ends.
KCS would be better off at the old South High School. They need to be on a bus line, but not downtown. -- s.
Submitted by Tamara Shepherd on Wed, 2007/06/06 - 3:05pm.
I recall having this conversation about the AJ Building with Jablonski, too, Sandra. It was just before or just after the board contracted for that "outside audit" with McConnell, Jones, Lanier & Murphy (MJLM), a Houston-based firm, in 2001.
Among the findings in the MJLM audit (pages 4-40 and 4-41, if you have it lying around) was that the central office was "inefficiently organized and costly to operate because of its location," that the AJ Building has "a limited amount of space per floor," and that the 17-story building "forces a vertical distribution of departments and offices."
An even more compelling reason for a move, though, is that MJLM found KCS to utilize only 75% of their available space. They determined, then, that KCS was "incurring more lease cost than necessary given the amount of space central office, support, and board functions occupy" in the building.
Also per the audit, although KCS has been paying 10% less than the average rental rate paid for downtown office space per MPC, their underutilization of the space causes them to pay for 30,500 square feet (122,000 square feet X 25%) they don't need, translating into superfluous rent cost of $350,140 that year, or $3.2 million over the term of the lease. MJLM estimated that the 10% discount in rent, coupled with the 25% underutilization rate, causes KCS to pay 19% more than the average rental rate paid for downtown office space.
And yes, the lease is tied to the bond issue used to renovate the building; it expires in 2010.
Submitted by Bill Pittman on Wed, 2007/06/06 - 7:54pm.
I would love to see more consolidation downtown but Sandra is right to suggest utilizing other available space already owned by the County unless said space is worth more on the open market than a lease would cost. The South Knox High building she suggests fits that bill.
Thank you Sandra,
Bill
I'm all for using the South High Building for something useful (you can thank Paul Pinkston for the fact that it's sitting there falling in), but it would take a significant amount of $$ to renovate.
I suppose that could be paid for with the funds from the sale of the AJ.
"Among the findings in the MJLM audit (pages 4-40 and 4-41, if you have it lying around) was that the central office was 'inefficiently organized and costly to operate because of its location'."
No doubt the central office is inefficiently organized, but I think location has little to do with that. With a new superintendent coming in, I hope that the roots of the problem can be dealt with instead of perpetuated.
Just for the record, I'm fine with moving the school system's central offices to a different location, as long as it's still somewhat centrally located. The Old South High School would be OK, assuming there's adequate square footage and money to fully renovate it. I wonder if the Old Sears building might work too.
The AJ Building has great potential for a mixed-use residential commercial development.
Submitted by Tamara Shepherd on Thu, 2007/06/07 - 5:06pm.
I said: "MJLM estimated that the 10% discount in rent, coupled with the 25% underutilization rate, causes KCS to pay 19% more than the average rental rate paid for downtown office space. And yes, the lease is tied to the bond issue used to renovate the building; it expires in 2010."
Oops. Information from that 2001 audit I cited has been superseded (and Indya, it may be that this is news to you, too).
I learned just today that PBA sold the AJ to Knox County sometime between the 2001 audit and 2004 (got a second call in to county finance to pin down that sale date). John Troyer in the county finance department confirms that the county refinanced the bond issue for renovations at the time of that sale. The result, he says, is that the school system saw a huge decrease in their lease payment.
Ron McPherson in the school system's finance department concurs, offering that the lease payment dropped from $1.4 million annually to just $826,000 for the upcoming budget year.
Lorna Norwood in the mayor's office is citing about the same revised lease payment in recent years, translating it into a cost per square foot (again, that's 122,000 square feet in question) of less than $7.00.
Finally, Gretchen Beal with MPC cites an average cost per square foot for office space in the Central Business District of $13.79 in 2006.
The question arises, then, of whether KCS can do better? And I guess the question already in existence was whether commissioners would cast their votes for Ragsdale's notion to give KCS the sale proceeds to try to do so?
It may be that there are more hurdles for KCS in this proposal than any of us here had originally realized. I'm wondering, now...
Less than $7 a square foot seems very difficult to beat. If this comes to pass, where KCS ends up and who gets AJ building could be interesting.
Although getting in/out, and parking, at South High, Old Sears building etc would be simpler than most any place downtown. I dont think the TVA east tower would be more efficient than AJ. Unless they can beat $7 a square foot.
Actually, now is a great time to be having this conversation and earlier would have been premature. I say that because of the South Knoxville Waterfront Plan that now appears to have a chance of morphing into a reality that is recognizable from the plan. The AJ would be a fantastic connecting structure for condo/office of those with interests on both sides of the water. The value of the structure will however, likely continue to rise and will make its way out of the range of any of our homegrown developers or residents. Acquiring the property now and getting the renovation done as soon as possible would be good for us locals. In any case, now is a great time to have a short talk and some serious action on that end of Gay St.
CAFKIA
-----------------------------------------------------------
It is impossible to defeat an ignorant man in argument.
- William G. McAdoo
Moving Knox County Schools out of the AJ Building is a no-brainer, but it's not Mike Ragsdale's idea. Just ask Diane Jablonski who served on the school board awhile back.
D-Jab couldn't believe KCS pays rent to the PBA when they own empty buildings all over town. She was told (as I recall) that there's a long-term contract (long-term as in maybe forever) that requires the rent from KCS until some bonds are paid off and beyond -- the rent never ends.
KCS would be better off at the old South High School. They need to be on a bus line, but not downtown. -- s.
I recall having this conversation about the AJ Building with Jablonski, too, Sandra. It was just before or just after the board contracted for that "outside audit" with McConnell, Jones, Lanier & Murphy (MJLM), a Houston-based firm, in 2001.
Among the findings in the MJLM audit (pages 4-40 and 4-41, if you have it lying around) was that the central office was "inefficiently organized and costly to operate because of its location," that the AJ Building has "a limited amount of space per floor," and that the 17-story building "forces a vertical distribution of departments and offices."
An even more compelling reason for a move, though, is that MJLM found KCS to utilize only 75% of their available space. They determined, then, that KCS was "incurring more lease cost than necessary given the amount of space central office, support, and board functions occupy" in the building.
Also per the audit, although KCS has been paying 10% less than the average rental rate paid for downtown office space per MPC, their underutilization of the space causes them to pay for 30,500 square feet (122,000 square feet X 25%) they don't need, translating into superfluous rent cost of $350,140 that year, or $3.2 million over the term of the lease. MJLM estimated that the 10% discount in rent, coupled with the 25% underutilization rate, causes KCS to pay 19% more than the average rental rate paid for downtown office space.
And yes, the lease is tied to the bond issue used to renovate the building; it expires in 2010.
I would love to see more consolidation downtown but Sandra is right to suggest utilizing other available space already owned by the County unless said space is worth more on the open market than a lease would cost. The South Knox High building she suggests fits that bill.
Thank you Sandra,
Bill
I'm all for using the South High Building for something useful (you can thank Paul Pinkston for the fact that it's sitting there falling in), but it would take a significant amount of $$ to renovate.
I suppose that could be paid for with the funds from the sale of the AJ.
"Among the findings in the MJLM audit (pages 4-40 and 4-41, if you have it lying around) was that the central office was 'inefficiently organized and costly to operate because of its location'."
No doubt the central office is inefficiently organized, but I think location has little to do with that. With a new superintendent coming in, I hope that the roots of the problem can be dealt with instead of perpetuated.
Just for the record, I'm fine with moving the school system's central offices to a different location, as long as it's still somewhat centrally located. The Old South High School would be OK, assuming there's adequate square footage and money to fully renovate it. I wonder if the Old Sears building might work too.
The AJ Building has great potential for a mixed-use residential commercial development.
Indya Kincannon
I said: "MJLM estimated that the 10% discount in rent, coupled with the 25% underutilization rate, causes KCS to pay 19% more than the average rental rate paid for downtown office space. And yes, the lease is tied to the bond issue used to renovate the building; it expires in 2010."
Oops. Information from that 2001 audit I cited has been superseded (and Indya, it may be that this is news to you, too).
I learned just today that PBA sold the AJ to Knox County sometime between the 2001 audit and 2004 (got a second call in to county finance to pin down that sale date). John Troyer in the county finance department confirms that the county refinanced the bond issue for renovations at the time of that sale. The result, he says, is that the school system saw a huge decrease in their lease payment.
Ron McPherson in the school system's finance department concurs, offering that the lease payment dropped from $1.4 million annually to just $826,000 for the upcoming budget year.
Lorna Norwood in the mayor's office is citing about the same revised lease payment in recent years, translating it into a cost per square foot (again, that's 122,000 square feet in question) of less than $7.00.
Finally, Gretchen Beal with MPC cites an average cost per square foot for office space in the Central Business District of $13.79 in 2006.
The question arises, then, of whether KCS can do better? And I guess the question already in existence was whether commissioners would cast their votes for Ragsdale's notion to give KCS the sale proceeds to try to do so?
It may be that there are more hurdles for KCS in this proposal than any of us here had originally realized. I'm wondering, now...
I'm curious what will happen to CTV that has it's station in the AJ.
Less than $7 a square foot seems very difficult to beat. If this comes to pass, where KCS ends up and who gets AJ building could be interesting.
Although getting in/out, and parking, at South High, Old Sears building etc would be simpler than most any place downtown. I dont think the TVA east tower would be more efficient than AJ. Unless they can beat $7 a square foot.
Post new comment