Metro Pulse/Insights/Universe Knoxville

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by Joe Sullivan

It's been six months since County Commission conditionally approved Universe Knoxville last December. Yet little progress appears to have been made of late toward satisfying several of the county's conditions for putting $36.5 million in public funding into the $106 million undertaking.

Since developers Worsham Watkins stand to collect several million dollars in fees for pulling off the planetarium and museum complex, and since they've stressed that time is of the essence, one might expect that all signals would be go by now. But County Executive Tommy Schumpert says he hasn't been getting any signals from the developers.

"I haven't heard a thing," says Schumpert, who will leave office Aug. 31. And his successor, Mike Ragsdale, is clear that, "We need additional details before this project goes forward."

One thing that's missing is a source or sources for $1.5 million a year in "other" revenues that are needed to supplement a projected $15 million in annual revenues from Universe Knoxville visitors. Without the other $1.5 million, financial models show a shortfall in covering debt service on the county's $36.5 million bond issue that would supplement $65 million in privately placed revenue bonds and a $5 million contribution from the city of Knoxville in paying for the facility.

When the city provisionally committed the $5 million, it also agreed—again provisionally—to dedicate the state sales tax revenues generated by Universe Knoxville to which the city is entitled under the state law that provides for recapture of increased sales taxes in the central business district to help finance the city's new convention center. This dedication on the city's part could cover as much as $800,000 of the $1.5 million, and the Tennessee Valley Authority is often mentioned as a prospective source of an additional six figure annual contribution. However, it's anything but clear where the rest of the $1.5 million would come from or how much effort has gone into seeking it.

The man who has become Universe Knoxville's biggest booster, Tom Ingram of the Knoxville Area Chamber Partnership, voices confidence that the rest of the money will be forthcoming. "We've got all kinds of opportunities for selling naming rights, getting corporate sponsorships and user fees," he says. He goes on to contend that the county should be prepared to sign off on its $36.5 million commitment based on what he terms "comparables," i.e., how much revenue comparable attractions around the country have been able to generate from such sources.

But comparables aren't enough to satisfy Schumpert. "That $1.5 million is what protects the county, and it's got to be pretty well tied down," the county executive states. His position is reinforced by the terms of the County Commission resolution bestowing conditional approval on the undertaking last December. The resolution stipulates that, "There must be either firm contractual commitments requiring the payment of other revenues or other income or pledges received, satisfactory to the County Executive, to produce income in an amount equal to at least $1.5 million per year for ten years."

Another prerequisite to going forward should be establishing the not-for-profit entity (NFP) that's due to operate Universe Knoxville. Until the NFP is formed with a board of directors empowered to select the management firm or team that will actually run the facility, big question marks remain as to how it will be operated. In the apparent absence of any formative work up to now, answers aren't likely to be forthcoming until Ragsdale takes office. While the county executive-elect says he is "excited about Universe Knoxville's prospects," he's also clear that, "We need to know the firm or people who are going to run the place before there's a final sign-off on the county's part."

An excuse for all the inaction is that Worsham Watkins hasn't yet been awarded a contract as Universe Knoxville's developer. How can they be expected to exert themselves much further on behalf of the project when they don't know if (or how much) they are going to be compensated for their efforts, the firm's apologists contend.

Two months of intensive contract negotiations with the Public Building Authority have involved a host of contract issues, including the $6.8 million in developer fees that Worsham Watkins is seeking. According to Ingram, who has attended a number of the negotiating sessions, "They are moving toward a contract. I'd expect a contract by the end of July."

In addition to a contract, Worsham Watkins also needs funding for design work that will give concreteness to the Universe Knoxville concept. Its centerpiece, a virtual reality space theater, purportedly will be patterned after the acclaimed Rose Center for Earth and Space in New York City. But until the design work has been done, there's no assurance how much of a replication can be achieved on a considerably smaller budget than the Rose Center had to work with.

As of now, however, the only identifiable source of funding for perhaps $1 million or more in design work is the proceeds of the $65 million revenue bond issue that's contingent on the county's categorical commitment of its $36.5 million stake. "We have a good six months of design work after the bonds are sold before we can get to the level of specificity that's needed," Ingram reckons. Yet some doubting Thomases would like to see that level achieved prior to the county's commitment. To which Ingram retorts, "If you know of someone who's willing to put up the million dollars, I'm sure we could accommodate them."

Perhaps County Commission should be that someone, which would seem to be in keeping with Ragsdale's stress on the need for more detail. But there's also a lot to be said for Schumpert's stance that no further commitments should be made until the $1.5 million a year in "other" funds is accounted for.

In the past, there have been Worsham Watkins complaints about getting strung out by the public decision-making process. Now the shoe is on the other foot.