by Joe Sullivan
After two months of often contentious public comment, elements of community consensus appear to be emerging on which the Worsham Watkins downtown redevelopment plan can hopefully proceed.
Most criticism of the plan has centered on its perimeters: removal of the Victorian Houses and Fort Kid at 11th Street on the west and the wholesale condemnation of Market Square property on the east to clear the way for a monolithic, themed development. Preservation on 11th Street and protection of property rights on Market Square should go a long way toward focusing attention on core components of a downtown revitalization effort that most Knoxvillians can embrace.
Those include a Scripps/HGTV Center adjoining the city's new convention center in the World's Fair Park, a shop-lined overpass over Henley Street linking to a cineplex and IMAX Theater, a 417-room Marriott Hotel, a 33-story office tower, and more retail and residential development extending east to Market Square. True, the proposed glass-enclosed linkage has its own set of critics who fear diversion of pedestrians from the city's streets. Yet out of some 200 blocks of sidewalks in downtown Knoxville, only two of the least pedestrian friendly would be affected. Moreover, it seems clear that an enclosed connection is needed between the convention center and its headquarters hotel. (Whether it needs to be climate controlled—and at whose expense—is being addressed by the Public Building Authority).
The key question now is whether the commendable boldness of the Worsham Watkins vision comports with economic reality. Before the city can (or should) proceed with an envisioned $130 million investment in supporting public infrastructure, it's got to be satisfied that city revenues derived from the development are sufficient to pay off the debt incurred.
As matters stand, however, Worsham Watkins hasn't secured two of the pillars on which the entire deal rests: Scripps/HGTV and a cinema operator. "We can't proceed until we have HGTV, and I don't foresee that before year end," says the PBA's administrator, Dale Smith. At the same time, the financial plight of an overscreened cinema industry is hampering efforts to land a cineplex. The two largest chains, Regal and Carmike, are both closing screens instead of opening new ones. But the president of the Knoxville Area Chamber Partnership, Tom Ingram, insists that several smaller ones remain interested in a downtown location.
A preliminary report to the PBA by its consultant on the deal, Chicago-based Economic Research Associates, projects positive returns to the city under a variety of scenarios, including one in which the size of the office tower is cut in half. But all of them assume 95 percent occupancy of 170,000 square feet of retail and restaurant space between a Scripps/HGTV Center and cineplex. A projected $3.6 million in annual sales-tax revenues associated with all that space can't be counted until they've hatched.
The $240 million in private investment that Worsham Watkins intends to bring to the table tends to get taken for granted or, worse yet, spurned by critics concerned that the firm would gain too much control over the city. But Worsham Watkins' financial well-being is also vital in evaluating the soundness of the development. And on that account ERA's preliminary report is less encouraging. "The internal rate of return for the private development component is shown as 4.5 percent in the Worsham Watkins model—well below the expectations of most investors. We thus question the viability of the project, unless there are measures of economic return which are not reflected in the model," the ERA report states.
The time has come to start pulling for Worsham Watkins to succeed instead of being predisposed to believe the worst about them. That's not to say that the terms of their deal with the city shouldn't be subject to close scrutiny. However, when they propose, as they recently have, dispensing with lease payments on city-owned property in return for a larger city share of revenues above a threshold amount, it shouldn't be assumed that they are necessarily angling for a sweetheart deal.
An acid test of Worsham Watkins' entitlement to community good will is the posture it takes toward Market Square development. Hardly anyone can quarrel with sub-developer John Elkington's stated goal to make the square "become the gathering joint of the community." And many of the property owners in this landmark district believe that Elkington, or someone like him, has a role to play in achieving this goal. But it does not justify confiscatory ways and means of achievement via condemnation of all the property on the square in order to give Elkington total control over its use.
What's needed is a return to the approach taken in the redevelopment plan approved by the city in 1998, whereby all owners are afforded an opportunity by Knoxville's Community Development Corp. to restore and/or develop their property in accordance with a general plan. Only this time the plan should be, as Worsham Watkins has envisioned it, to "restore Market Square as an urban festival marketplace...[that] resonates with entertainment and activity. Retail shops, restaurants, entertainment, coffee shops and bakeries fill the first floors.... Specialty boutiques, galleries for artists and craftsmen, loft housing and office uses bring the upper floors to life."
Hopefully, the PBA's Smith will be heeded when he admonishes that "it would certainly be unethical not to use an approach similar to the KCDC redevelopment plan that's in place...Nobody gets very long to start to produce, but condemnation ought to be the absolute last resort. You've got to be willing to live with certain types of restrictions on incompatible uses, and you've got to be willing to make the requisite improvements. Under those circumstances I think Elkington could just as easily do leases with the owners as with the city, and the only difficulty comes when you have a resident or owner who just doesn't want to play."
Collaboration, not condemnation, should be the watchword as development plans proceed.
August 24, 2000 * Vol. 10, No. 34
© 2000 Metro Pulse
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