I don't see the attraction of Urban Outfitters, especially for $500,000. Mast only got around $275,000 and they are kind of an attraction for tourists besides locals. Anyone out there ever shopped at Urban Outfitters? Seems a Target would have worked as well or better, if Target could be had for a $500,000 incentive.

Looks to me like they're an interesting retailer with a broad category of goods, and unlike Target, there aren't three other stores in town already. Downtown retailers still need to be something different. Somebody might go past their neighborhood Target to get to this place, but they're not going to do that to get to another Target downtown.

I thought that was the store I visited in the gulch. I didn't understand the appeal but then I am Not their demographic. I got the impression it was an overhyped thrift store. But then hype sells, I suppose.

The question is: will they bring in enough tax revenue to justify the CBID investment?

I'm on the fence as to a $500k grant directly to the building developer.

Austin Texas has a 24-month Business Retention and Expansion pilot program to use low interest loans to the businesses locating. looks like they've done two $250k deals, and they may both be restaurants, but the program is directed toward retail, too. Loans go up to $750K with city approval. seems like a better deal, creating a revolving fund for the CBID with a payback clause, rather than using direct grants.

Its true that this is almost twice as large a grant as CBID awarded Mast General Store, and that Mast is a terrific draw for downtown. But there are several key differences in these two deals.

Perhaps the most important reason to make this happen in my eyes is that Urban Outfitters has been a catalyst in other cities, most notably the 3rd Street Promenade in Santa Monica. Several other national credit tenants have followed them into areas they might not otherwise consider. Downtown Knoxville doesn't have the typical demographics in 1, 3, and 5 mile radii that many retailers require, so we have to be able to prove it to attract retailers. Mast, Regal, and hopefully now Urban Outfitters will be the critical mass needed to attract others.

Urban Outfitters (the store brand) is part of Urban Outfitters, Inc., a global retail company that also features four other brands, including Anthopologie, Free People, Terrain, and Leiffsdottir. Based on their SEC filings, we think Urban Outfitters generates $4-5 million per year per store. Mast is a regional retailer with 7 locations, and Knoxville is their top-performing store. I don't know their total revenues, revenues per store, or sales per square foot, but I don't think they are in this range. This has strong implications for employment and sales tax revenues in particular, but broader economic impact in general.

Lastly, I think Urban Outfitters has the potential to draw people to downtown that might not otherwise come. This includes UT students, who have only been recently making downtown a key part of their Knoxville experience, and local students who may attend other colleges and universities. The latter group will bring their parents. And I think there is simply a group of people in the region who think that Turkey Creek is all that Knoxville has to offer, and rarely ventures further East than West Town Mall. The growing collection of dining, shopping and entertainment options--combined with our unique history and interesting architecture--are quickly becoming a destination in their own right.

CBID's board meetings are open, and we invite public discussion. Its notable that of four to speak today, all four were in favor of it (though one expressed concerns about ability to pay, timing of payments, etc., all valid points). One of those speaking in favor was Andie Ray, an existing retailer on Market Square. To paraphrase, she said "We need this. Its long overdue. Sure, we'll compete for customers and dollars, but the pie will be bigger. We all win."

I'll assume that the property tax on the Arnstein will increase with improvements. And that will likewise increase the special assessment which is tied to the property tax. But I fail to see how additional sales tax figures into the equation at all.
~m.

Just an FYI RE Urban Outfitters on Wikipedia.

Okay. So the recapture is still around. But as I said, it's apples and oranges.

I'm not giving a thumbs up or down to this project. That's not the point. But there seems to be a misunderstanding regarding where CBID gets it money. There's no doubt that, if successful, it will generate additional taxes. Substantial increases if we go by Patrick's numbers. But the CBID does not benefit from an increase in sales tax.
~m.

I haven't said anything about a downside. Just trying to clear up some confusion. Any time CBID does something and I hear about "taxpayer" money I cringe. The CBID doesn't get any tax money. It comes from commercial AND residential property owners downtown in an assessment that is above and beyond their taxes. Same goes for the idea that if sales taxes go up, it somehow benefits CBID's revenue stream. It doesn't.

As for the recapture thing, maybe Bill will chime in with the details. But as I recollect, it applies to how much taxes increase in the area around the Convention Center ABOVE the average increase in the city overall. It would be interesting to know how much, if any, benefit the city has seen from that program. And again, if I recall correctly, there's a time limit.
~m.

UO sounds exciting to me. Lots of downtown stores sale similar knick knackery stuff but during Christmas they all seem to be full, so wouldn't assume it would hurt anything. Just like at a mall folks seems to browse around in all of them.

Did a search and it seems there was a debate last summer whether UO would hurt indie stores in Asheville. I would not think it would hurt Knoxville, but we'll see. Folks will find reasons not to like regardless.

Not sure what you're so fired up about, Nine, seeing as downtown's subsidizing the county's tax base on their own dime...

Other aspects to consider:

This is a facade grant for a 7 story building that comprises 192 windows. Windows can account for as much as 40% of your construction budget. The Arnstein is a gorgeous historic structure that will once again contribute to the vitality of Market Square and downtown at large.

A destination/anchor tenant like Urban Outfitters will undoubtedly attract other retailers to locate downtown, so the money spent to attract will in fact have a ripple effect.

Take a look around, we are about down to only large former department store spaces for new businesses. New locally owned shops can't afford more than 1200-1500 sq. feet of space. The only realistic tenants for these large spaces are large, likely chain stores. There isn't an Urban Outfitters on every corner. In fact, I believe there are only 155 in the US and Great Britain combined They will truly attract new feet on the streets.

The City enjoying 2.25% of their retail sales is great anyway you look at it.

Now, if all of the moving pieces can come together for this project to actually happen and open by Spring of next year...

More from Flory.

I wasn't aware that the building had already received approval for a $1.1 millon TIF. The test for that is "but for" the TIF, the project wouldn't happen. I have to assume that in getting that approval, the city was presented with figures that would substantiate that with the TIF the project had enough money to succeed.

Now I'm wondering if, with the CBID providing nearly half that figure in a grant, and with the city agreeing to contribute an additional $200K, if the TIF is still in play.
~m.

I'd like to see what projections are like concerning these types of retailers.

I have a gut feeling a lot of these kinds of stores are going to lose steam in the near future.

People are saving more and spending less. And the stuff they're spending it on isn't necessarily this kind of trendy merchandise. At least, that's what the business and economic news seem to be reporting.

Recruiting these kinds of retailers may be a little behind the curve.

Does UO sell underwear?

I'm serious. I will be happy with downtown retail when I don't have to drive to west Knoxville to buy a pair of bloomers.

here's the UO story from sweden