by Joe Sullivan
Today's County Commission workshop on Universe Knoxville could go a long way toward deciding whether the proposed virtual reality space attraction will see the light of day.
The proposal's backers are due to present long-awaited plans for financing the facility that are expected to include a $30 million commitment on the county's part. To justify this commitment they've got to be prepared to answer a lot of hard questions about Universe Knoxville's design and management, its pulling power and staying power, as well as the full extent of the county's liability in the event it fails. While no votes are scheduled until Commission's regular monthly meeting on Nov. 26, the disposition of key commissioners is likely to be swayed by how well these questions get addressed.
At first blush, the timing couldn't appear worse for justifying a big new visitor attraction in relation to a faltering economy that's been further weakened by shock waves from September 11 and its aftermath. But given nearly three years of design and construction lead times, Universe Knoxville couldn't be up and running until 2004, when the relevance of current economic conditions would appear to be remote.
Any such relationship is minimized in a just completed feasibility study conducted for Knox County by Don Stewart of Economic Consulting Services, based in Newport Beach, Calif. The study projects that Universe Knoxville will draw 850,000 visitors a year to its space attraction accompanied by a new children's museum and exhibits derived from an affiliation with the Smithsonian Institution. That's down from a 1.1 million projection in a study last spring by Harrison Price Associates. But the higher figure was greeted with much skepticism by commissioners, and at their direction County Executive Tommy Schumpert commissioned a new one to be conducted at arm's length.
In the meantime UK boosters have continued to beat the drums with a public relations campaign orchestrated by the president of the Knoxville Area Chamber Partnership, Tom Ingram. Yet amid all the hype, there's been very little light shed on how the undertaking would be directed or financed.
Today, developers Earl Worsham and Ron Watkins, who originated the concept, are expected to attempt to put flesh on all the bones. While they haven't been talking publicly, Ingram is more enlightening.
The proposed facility, he says, has been scaled back in size and cost from what was originally proposed in relation to Stewart's lower visitation projections. Total cost has been cut from $128 million to under $100 million, primarily by reducing the size of a parking garage and the children's museum. The size and scope of the virtual reality planetarium that represents UK's core remain unchanged, he says.
The project's financial advisor, Joe Ayres of Morgan Keegan, is expected to opine that $60 million of the total can be financed via revenue bonds sold to private investors on which the county would have no obligation. The city of Knoxville (read Victor Ashe) is reportedly receptive to pitching in with a $5 million grant. That leaves Knox County on the hook for $30 million-plus in general obligation bonds to fund the garage and perhaps the children's museum.
As long as attendance measures up to the 850,000 projection, or anywhere close to it, these bonds would be serviced by UK revenues. But covering debt on the county's bonds would be subordinated to paying investors in the revenue bonds. Thus, in the event of a revenue shortfall, county taxpayers would be the first to feel the pinch. However, the county's finance director, Kathy Hamilton, has projected that even after setting aside a reserve for such a shortfall, no increase in county property taxes would be entailed until 2007.
While the UK concept appears to have a lot of potential, its realization obviously depends on how well the facility is designed, managed and marketed. But up to now, neither commissioners nor the public has had much to go on in making that assessment. Worsham Watkins is insistent on being named as the developer (for fees that also remain unclear). Yet the firm has no experience in running such an attraction.
According to Ingram, a not-for-profit entity will be formed with a "highly professional" board of directors. "That board, in turn will have responsibility for hiring the best management you can afford," he says. Where design is concerned, Worsham Watkins has been working with Jack Rouse Associates, whose credentials seem impressive. The Cincinnati-based firm's design credits include a Kennedy Space Center commemorative exhibit, the Grand Old Opry Museum and numerous other museums and halls of fame, primarily in the Midwest.
One often expressed concern is that UK may draw well in its early years of operation but will gradually exhaust its audience or be outstripped by new technology and competitors. To which Ingram responds with a question, "How long have aquariums in other places continued to draw crowds? How long have children's museums continued to draw?"
The answer, at least in the case of the Tennessee Aquarium in Chattanooga, is that projected attendance this year of about one million is down somewhat from a 1.1 million average during its first nine years of operation—but not badly, considering the weak economy and the opening of a competitive aquarium in Gatlinburg.
"One advantage of what we're proposing," Ingram adds, "is that you can readily change the programming. So there's no reason to be concerned about its getting stale."
The biggest advantage, though, is what UK can do for the rest of downtown Knoxville. From the commercial revitalization of Market Square to the viability of the city's new convention center, a major new visitor attraction can spell the difference between success and failure.
Knox County won't be called upon to invest its $30 million unless and until the $60 million in private financing has been obtained. Since bond investors are nobody's fools, their preparedness to take the risk should be an acid test for the county also.
As the big insurance company's TV commercial says, "The biggest risk is not to take any risk."
November 8, 2001 * Vol. 11, No. 45
© 2001 Metro Pulse
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