The City of Knoxville has released financial projections for the South Waterfront project. The report is here (PDF format). It contains some fairly detailed, and interesting, information about projected costs and sources of funding...

The city estimates the overall cost of publicly funded improvements at $139 million over twenty years. The city anticipates private investment of $814 million over the life of the project, which means a $5.86 return on every $1 of public fuding. The report has a comparison chart showing the investment and return for several other waterfront projects. Knoxville's is far more optimistic than any other project, but is also a longer term project.

(The one thing that appears to be missing is relocation costs for Holston Gas and the asphalt tank farm. All the land acquisition costs are listed as "excluding relocation." But maybe this is somewhere else and I missed it, so please feel free to correct me.)

So far, the city has identified $50.2 million in public fuding sources. This includes $43.6 million in TIF financing (where the city will loan itself money against future increased property tax revenues) and a $6.6 million federal transportation grant. This leaves a funding gap of $88.8 million.

The city and their consultants have identified up to $165 million in other potential funding sources to cover the gap, including private donations, foundation fundraising, state economic development funds, federal transportation grants, state "transient boating" grants, state "fishing pier" grants, federal and state stream/wetland mitigation grants, federal water resources appropriations, water and sewer rate fees, and parking garage revenues.

It certainly appears they have turned over every rock looking for money for the project. The first order of business is to establish a TIF for the project area. According to the Knoxville News Sentinel, this would be the first time the city has loaned itself TIF money. In the past, TIF financing was used to pay off developer's loans.

According to the KNS, Knoxville senior finance director Chris Kinney said "We need to be prepared to use some portion of our debt capacity." It's not exactly clear what this means, because one of the reasons cited for unloading the World's Fair Park site was that the city was tapped and could no longer afford the improvements or upkeep.

It's also generally believed that the city has no more "debt capacity" in terms of the usual municipal bonds form of financing because of the massive Convention Center debt burden left for the taxpayers by the previous administration. Which is a shame, because there are projects with great potential for the city, including the Worlds Fair Park site and the South Waterfront, and this makes it tougher to fund them.

TIFs are just about all that's left, which is why, as the newspaper notes, they are Mayor Haslam's preferred financing tool. The only concern, it would seem, is that the city has in effect gotten itself a second, high-limit credit card because the first one is maxed out. It makes you wonder why this is such a great idea if your first source of financing, i.e. the municipal bond markets, aren't willing to in effect raise the city's credit limit.

At any rate, it looks like the city and their consultants have been thorough and creative in putting together the financial projections. In addition to the financial details, the report also lists which projects will be included in each phase, an overall summary of the project, and a map of the redevelopment area. The next step in the process is the "Action Plan", which is supposed to be completed next month.