Metro Pulse/Insights/Universe Knoxville

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by Joe Sullivan

When County Commission conditionally approved Universe Knoxville last December, it provided for creation of a not-for-profit (NFP) entity "to manage and operate the Project." The project was defined to encompass "an approximately 114,000 square foot educational facility consisting of an earth and space exploration center, a children's discovery center, a TVA exhibition hall, a Smithsonian-affiliated exhibit and a gallery for temporary and touring exhibits."

Since then, developers Worsham Watkins, in tandem with architects Barber & McMurry and Denark Construction have been shaping plans for the facility (although no design firms have been retained as yet). The Cumberland Securities division of Morgan Keegan appears to be making headway in lining up investors for revenue bonds that would cover $65 million of its $106 million cost, with the balance coming from $36 million in subordinated debt backed by Knox County and a $5 million contribution from the city.

Yet nary a step has been taken to form the NFP to run the show or select its board of directors, whose composition could be crucial to Universe Knoxville's success. This is particularly surprising since having a board in place, and probably a management team or firm of its selection, seems like a prerequisite to getting bond investors to commit their funds. Joe Ayres of Cumberland Securities stresses that time is of the essence in cementing these commitments while interest rates remain favorable.

So what accounts for the delay in forming the NFP and its board?

One reason is that Worsham Watkins, which hatched the Universe Knoxville concept, has yet to be selected as its developer. The Public Building Authority, acting on behalf of the county, is presently in the process of evaluating a WW contract proposal that includes $6.8 million in developer fees that would be paid out of bond sale proceeds. Until a deal is struck with the PBA, the project has gone into a state of suspended animation that tends to put everything else on hold.

Moreover, there appears to be uncertainty about who is supposed to take the lead in forming the NFP and selecting its board. Earl Worsham says, "It's not our responsibility." And rightly so. For Worsham Watkins to hand-pick the board would have a fox-guarding-the-henhouse aura, since the board needs to be providing arms-length expertise on crucial design and functional decisions that could impact Worsham Watkins' profits. The same holds true for the project's spearhead, the Knoxville Area Chamber Partnership. Its chairman, Raja Jubran is the head of Denark Construction, which has its own set of vested interests. The chamber's president, Tom Ingram, has become such a fervent champion of the undertaking that he hasn't bothered to draw much of a line between advocacy on behalf of Universe Knoxville and advocacy on behalf of its developer's interests.

That leaves it to County Commission, or possibly the PBA, to take the initiative in getting the ball rolling. But commission has been in a wait-and-see mode—awaiting word on whether the $65 million can be obtained that would trigger the county's $36 million commitment. Moreover, any initiative on commission's part begs sticky questions about how the board should be constituted. A year ago, a panel appointed by commission recommended that 10 of the 13 seats on the initial board go to the county executive, county commissioners and their appointees. The other three would go to business and civic leaders.

Commissioner Wanda Moody, who has been pivotal in all Universe Knoxville decision making, managed to get that recommendation tabled because she felt (a) it was premature at that time and (b) the proposed composition of the board was too political.

"We need a broad spectrum of expertise on that board, and the process that was recommended wouldn't have assured that," Moody says. Mike Ragsdale, who will take office as county executive on Sept. 1 because he's running unopposed, amplifies on that by observing that, "the board needs to be a group of nationally respected individuals with expertise in running destination attractions, education, science and financial management that will give the bond holders great comfort. And there also needs to be local expertise that's representative of the entire community." Yet for all of the diversity he envisions Ragsdale also believes the board needs to be kept small in order to remain functional. "I'd feel more comfortable with a nine-member board," he says.

Before even getting to nationally respected individuals, however, the number of local claimants for seats on the board keeps growing. In addition to county representation, City Council made its $5 million contribution conditional on board seats for the mayor, a Council member and a minority representative. Representatives of the East Tennessee Discovery Center and TVA have been collaborating on what seem like an exemplary set of plans for what they term "the Museum and Science Center Component of Universe Knoxville." But each of those organizations also wants two seats on the board.

It's time for someone to take the lead in formulating all of this, and my candidate is the sage Ms. Moody. Her model could be the way the Development Corp. of Knox County was established by County Commission as an NFP. Its original nine-member board included four elected officials and a majority of five development-oriented business leaders. When the terms of the majority of five expire, they nominate their own successors, subject to approval by Commission. If a nominee is rejected (which has never happened), then the board members pick another one.

That leaves the question of how the initial board members get selected and to what extent they should be categorized. My own sense is that Commission should form a broadly representative nominating committee to make the initial selections. Its mandate should include the types of expertise and institutional representation that are sought—but not too restrictively.

Perhaps the consummation of this process should await the outcome of negotiations between PBA and Worsham Watkins on a developer agreement. But there have already been too may chicken-and-egg hang-ups associated with Universe Knoxville for it to be delayed much longer.