Metro Pulse/Insights/Market Square

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by Joe Sullivan

The city's left hand and its right hand appear to be on a collision course when it comes to residential development in Market Square.

Knoxville's Community Development Corp., acting on behalf of the city under the Market Square Redevelopment Plan that City Council approved in 1998, has been facilitating new residences on the square. Within the past few months, KCDC has approved plans for renovating two more of the square's quaint Victorian buildings for residential use. This brings the total number of six-figure residential renovations on the square up to seven since the redevelopment plan was adopted. And while that leaves many of its 63 parcels of property still begging, the square is beginning to take on the trappings of a mixed-use neighborhood with commercial space on the ground floor and gentrified lofts above.

At the same time, the Public Building Authority, acting on behalf of the city to foster downtown revitalization under the same redevelopment plan, seems to be holding up a "Residents Not Welcome" sign where Market Square is concerned. At a meeting last week with a Market Square property owners association, PBA officials told the assemblage that commercial development is preferred, even on their buildings' upper floors.

The owner of the building in which the meeting took place, Emily Dewhirst, noted that her residence sits atop space that has just been leased to Earth Media, which describes itself as a multimedia company. Attracting exactly this type of enterprise was explicitly the objective of the redevelopment plan; and, Dewhirst said, "I've done everything the city has asked me to do. Now surely they're not going to come along and throw me out."

To which the PBA's administrator/CEO, Dale Smith, responded, "I would never use the word surely." PBA's counsel, Tom McAdams, added that, "I'll be very surprised if either of those is the type of use that Worsham Watkins [the PBA's appointed downtown developer] is going to propose. I don't think that's what they think it takes to make Market Square active and vibrant. That business that's downstairs would probably make sense upstairs from their perspective with a coffee shop downstairs, for example—something that's open to the public." McAdams went on to venture that, "Having property that somebody lives in is not going to contribute to the overall economic success of the project as much as having multiple businesses in a row...On the other hand, does that mean an end to residences on Market Square? The answer is not necessarily."

Saying it ain't necessarily so was small comfort to the residents at the meeting, even when McAdams paid tribute to the need for more downtown dwellers to support amenities like a grocery store. One explanation for his seeming inconsistency may be that Worsham Watkins is understood to be looking to another firm to spearhead Market Square development. The leading candidate for this role is Performa Entertainment, a Memphis-based firm that controls Beale Street there along with urban entertainment districts in other cities. And control is the operative word where Performa Entertainment developments are concerned. Its president, John Elkington, is insistent on being able to call the shots on selection of the types of tenants and their hours of operation, as if his urban districts were a mall. And the only established way of accomplishing this is by gaining control over all the property involved rather than leaving it dispersed in the hands of a bunch of small parcel owners like Emily Dewhirst.

Another part of the explanation would appear to be that the entire PBA downtown redevelopment effort is being driven by a quest for maximization of sales tax dollars generated. Under the state's Tourism Development Act of 1998, the city gets to retain sales tax revenues that would have otherwise gone to the state on sales growth in the Central Business District over a base set in the year prior to the opening of the city's new convention center. These revenues, which could only be applied to servicing convention center and related debt, are crucial to financing the entire undertaking. So the almighty sales tax dollar could be allowed to dictate the future character of the city's most historic communal space.

The Market Square Association has resolved to "Act as a united, pro-active, development organization of property owners, business operators and developers" in order to, among other things, "promote diversity as an alternative to mandated uniformity in and near Market Square by actively encouraging and supporting property development by individual independent property owners." But the square's property owners are anything but united behind this approach. Indeed, the two largest among them now have a different view.

Mahasti Vafaie, owner of the successful Tomato Head and Lula restaurants, says she "likes what she sees" in Worsham Watkins' plans. Except for a proposed enclosure over the square (an idea which is now moribund), Vafaie says, "All of the other things they want to do are great. You can't put them at bay waiting for somebody else to do something."

David Dewhirst, son of Emily and owner of most of the property that once housed Watson's Department Store, says, "I'm among a number of people who could be very reasonable and supportive of this. I think taking a confrontational tack would be unfortunate."

So they, among others, are basically in a wait-and-see mode, pending the scheduled June 28 unveiling of Worsham Watkins' grand design.

It will then be up to PBA's board and ultimately City Council to resolve the clash between KCDC-encouraged residential development and the forces that are impinging on it. The orientation of the PBA board may have changed in this regard since Jim Haslam II departed as its chairman last month. His successor, Arlene Garrison, professes no awareness of any anti-residential sentiment on PBA's part. And Smith assured last week's gathering that, "It's very much a preference on the part of my board to give people who own property every opportunity to develop it. They are more of a property rights group than a government-is-always-good type group."

Prompt resolution is needed so that any damages to owners who are investing hundreds of thousands of dollars in new residences aren't compounded. And how could they have been allowed to be caught in such a cross-current in the first place?

"Government is fickle and will do whatever is expedient at the time," concludes Arnold Cohen, a sage attorney who attended last week's meeting as an observer.