by Joe Sullivan
The Kinsey Probasco redevelopment plan for Market Square is drawing kudos from all quarters including property owners on the Square who'd been wary of earlier proposals. An advisory board of Knoxville's Community Development Corp. charged with picking a Market Square coordinating developer has unanimously recommended selection of the Chattanooga-based firm and its local partners Brian Conley and David Dewhirst. KCDC's full board is expected to follow suit next week, and a fast-track process calls for a City Council workshop on March 14 followed by Council action on March 19.
According to the city's director of development, Leslie Henderson, Council will be asked to approve a "concept resolution." Does that mean an expression of intent to commit the $18.8 million in public funding that Kinsey Probasco is seeking to support its redevelopment plan? Answer: "Yes."
After four years of dithering that's left the Square languishing and its property owners in limbo, I'm all for a fast-track approval process. And most of Kinsey Probasco's public funding recommendations have been long-accepted preconditions for revitalization of the Square. To wit, $5.5 million for a parking garage to support commercial activity, $2.6 million for improvements to the Square's public space and $4 million for structural and façade improvements to dilapidated buildings subject to condemnation because their owners have failed to respond to KCDC requests to submit plans for their renovation.
However, the biggest component of the $18.8 million lies outside the ambit of the redevelopment area that KCDC is charged with overseeing. As a sine qua non of its proposal, Kinsey Probasco is looking to the city to build a $6 million, 10-screen cineplex on the Gay Street site that Knox County acquired for the court component of its abortive justice center. It's also the former site of the nostalgically remembered Riviera Theater, and the new cinema's entrance would be another Knoxville landmark: the restored façade of the S&W Cafeteria.
The cinema's drawing power is essential "in order to achieve the critical mass of people needed to sustain retail and restaurant establishments on Market Square and Gay Street," Kinsey Probasco asserts in a submission to KCDC. This assertion is based on the success of a Carmike cineplex in downtown Chattanooga that Jon Kinsey was instrumental in procuring prior to serving as that city's mayor from 1997 to 2001. Kinsey now has a letter of intent from Carmike stating that "we are very interested in finalizing an arrangement for the Gay Street location."
Before committing to $6 million in a cinema complex that also includes 200-plus parking spaces, however, City Council needs answers to a number of questions—questions that Kinsey is unwilling to address at this point. "I'm not comfortable making projections right now. We need to get the involvement and inclusion of all parties before I speak for publication," he says.
So in the Q & A that follows, the answers are purely my own.
Q: Is it permissible and appropriate for a city to fund and own a movie theater?
A: Uses of public funds are governed by a public purpose test, which is largely a matter for court determination since no statute could be all-encompassing. In Tennessee, there's never been a movie theater case. But the state's attorney general has opined that, "It is the opinion of this office that [the Industrial Development Corporation Act] may authorize the use of industrial development bonds to finance the construction of a movie theater under proper circumstances." Surely, building a theater that is integral to a downtown redevelopment effort represents such circumstances.
In both of the other metropolitan areas in which I've lived for more than a decade each, the center cities own commercially-oriented facilities that act as magnets. In Chicago, Navy Pier with its panoply of entertainment venues comes to mind. New York City's South Street Seaport is partly like a museum, but its Pier 17, which is also city-owned, bills itself as being very much like a mall.
Of course, one needs look only to Chattanooga to find a municipally owned cinema in Tennessee. Carmike leases there from the Chattanooga Area Regional Transportation Authority.
Q: Can the city expect to recover its investment or, said differently, what's the risk to taxpayers?
A: In its evaluation of last year's Renaissance Knoxville plan, Economic Research Associates projected that a downtown cinema would draw just about the national average of 50,000 annual attendees per screen. For a 10-screen cinema at which attendees pay an average of $9.25 for tickets and concessions, that represents annual revenues of $4,625,000. Given the city's ability to recapture state sales taxes in its central business district, sales tax proceeds to the city can be projected at $283,000 a year from the cinema alone. For every dollar spent inside the cinema, a guru in such matters (Harrison "Buzz" Price) insists that moviegoers will spend a minimum of another dollar outside. Doubling the sales tax take to $566,000 is more than enough to cover the financing costs of a $6 million facility. And that's before taking into account cinema lease revenues and parking fees that are assumed from the garage during weekday business hours.
Q: To the extent that Carmike gets favorable terms to operate on Gay Street, does that represent unfair competition for other cinema operators?
A: Essentially, there are only two cinema operators in Knoxville, Carmike and Regal. It might seem fairer to request that both of them make proposals. However, just about a year ago, Regal's CEO, Mike Campbell, wrote Mayor Victor Ashe an open letter urging him to drop the cineplex then planned for inclusion in Renaissance Knoxville. He asserted that the success of downtown cinemas has been poor except in large cities that have densely populated downtowns. According to Kinsey, that's also what Regal officials told Chattanooga when they spurned its overtures a few years back. Carmike stepped in, and its interest in proceeding here attests to its success there. Of the two, only Carmike has demonstrated the will to find a way to make it work while Regal has opted for the role of spoiler.
City Council members can be expected to have lots of questions about the cinema and other aspects of the Kinsey Probasco proposal. We trust that Kinsey and his colleagues will be well prepared to answer them.
February 28, 2002 * Vol. 12, No. 9
© 2002 Metro Pulse
| 
