Comment on this story What: A meeting open to anyone interested in living, working or playing downtown. When: September 16 at 5 - 7 p.m. Where: Radisson Hotel on Summit Hill in Knoxville Why: For Knoxville Mayor Bill Haslam to provide a progress report on projects and discuss his vision for the center city, and for public comment. More Info: 865-215-2029 The summit will provide information on the city’s approach to downtown and the status of special projects as well as to provide an opportunity for city officials to hear suggestions and answer questions on a wide variety of issues and concerns to those who live, work and play downtown. Following an address by Knoxville Mayor Bill Haslam, break-out sessions relating to Quality of Life, Downtown Development, Major Public Projects, and Special Events & Tourism will be held. City representatives and partner agencies will lead the discussions and answer questions. “The Downtown Summit provides an opportunity to share the city’s approach to downtown with a diverse group of Knoxvillians” said Mayor Haslam. “We hope to start discussions that we can continue in the coming weeks and months to help make downtown even better.”

A discussion with Bill Lyons, the city of Knoxville’s senior director of economic development

Last December, Mayor-elect Bill Haslam selected his former campaign manager, Bill Lyons, to be his administration’s senior director of economic development. Prior to assuming his position with the city, Lyons stepped down from his role as chairman of the KCDC board of commissioners, where he played a visible and sometimes controversial role in pushing the languishing efforts to forge a redevelopment process for Market Square. A lifelong academician, Lyons is currently on leave from his position as professor of political science at the University of Tennessee. Prior to his stint with the city, most Knoxvillians knew Lyons from his 25 years as WBIR-TV Channel 10’s chief political analyst.

On the eve of Knoxville’s first Downtown Summit, Lyons sat down with Metro Pulse publisher, Brian Conley, to discuss the Haslam administration’s efforts to revitalize downtown, to balance historic preservation concerns with economic development needs, and to outline the administration’s goals for its first term:

MP: Coming from an academic background, have you found government work to be different in practice than in theory?

BL: I’m a believer in theory. It helps us make sense of what we do, place it in context, and gives us the conceptual tools so that we see the big picture. In this case, I have found that most of the theories of bureaucracy, power, interest groups, and leadership are pretty much on target. That is not a surprise. These theories were informed by some deduction, but mostly by informed observation in a variety of settings. Still, that doesn’t mean that the occasional apple doesn’t fly off into space.

MP: Is that an allusion to Newton’s Law of Gravity?

BL: It is. Social science theories are not laws; they provide generalities. So an occasional apple does fly off into space, and that’s usually due to the idiosyncrasies of our local political structure, history and culture.

MP: Can you give us an example of such an idiosyncrasy?

BL: Certainly. For years, the city and county governments have suffered in varying degrees from a perceived, and often very real excessively confrontational relationship. This caused both city and county governments to under perform. Fortunately, under the leadership of mayors Haslam and Ragsdale, we’re making great progress in correcting this situation.

MP: You speak of perception, but how does that play out in reality?

BL: Some degree of city–county tension is understandable and unavoidable. In the past it would have been very difficult for the city and county to work out something as complex as the location of the transit center and finding the right location for the Beck Center, even if the end result was a win-win. However, we have to recognize the fact that some continuing tension comes from the fact that many who live outside the city view the city, especially downtown, with discomfort if not outright hostility. Our challenge is to work hard to change that perception. The best way to do that is to pursue policies that are successful and to make it in folks’ interest to see downtown in a positive way. Large events such as Boomsday, Sundown in the City and MetroFest have been great. We hope that as people realize that parking is free on nights and weekends that they will take advantage of other opportunities, such as First Fridays and Second Saturdays at Market Square.

MP: You have talked about downtown as a gathering place and as a cultural hub. How do you convince people that downtown is important to economic development?

BL: We’ve had to recognize that we are no longer able to grow our tax-base significantly through annexation and must place more of our energy on growing from within. The greatest opportunities are downtown. Buildings that are deteriorating and unoccupied are drains on resources. When a building is rehabilitated and fully occupied and assessed at the 40 percent rate for commercial property and generating sales taxes it reduces the burden from people in the neighborhoods.

MP: Is this a departure from the last administration’s approach?

BL: Mayor Ashe deserves a lot of credit for putting the focus on downtown, including the transformation of the waterfront area into a great community space. We are shifting our attention somewhat to projects with a more direct economic payoff. Mayor Haslam has made clear his commitment to facilitating quality development within the current city limits.

MP: What do you mean when you say quality development?

BL: Well, we are not talking about greenfield development, for the most part, but rather about infill, and the redevelopment of existing structures. It is essential that this development works for the community. The days of large-scale growth of the tax-base through annexation are behind us. Our challenge is to make it in the interest of those folks who put their dollars at risk to do so in our close-in neighborhoods and in downtown.

MP: There has been a lot of criticism of the city from developers who say that antiquated codes and a less-than-service oriented bureaucratic atmosphere keep them from building in the city?

BL: There has been. During the campaign we heard a lot of horror stories about how difficult it was to build in Knoxville and we are working diligently to try to make the process easier for developers to invest their dollars inside the city. But that is a two-way street. Developers must be prepared to advance the kinds of development that works in urban areas and that appeals to those who are concerned about their neighborhoods.

MP: How do incentives play into this?

BL: Well, we have to face the fact that, in order to attract the kinds of businesses and development we would like, government has to have a more entrepreneurial style. By that, I mean we have to think in terms of strategic investment, and in minimizing our outlay of capital. Simply put, that means a sizeable shift from borrowing money at the front end through bonded indebtedness to that of delaying some future property tax revenue for a set period as an incentive to private investors.

MP: Why do you feel that that approach is superior?

BL: Well, the reality is that the city must provide incentives for developers to invest in projects that otherwise would not make economic sense. It just costs more to rehabilitate an existing, possibly historic structure than it does to build something on green space at the edge of town. And the beauty of this approach is that the city is only “out” the increased taxes that come from the redeveloped structures after the builder has put money into the economy through local banks, employing local people in construction, and in purchasing local products. Moreover, we are only “out” what we almost certainly never would have gained without the incentive.

MP: And while property taxes are frozen at pre-development levels for a number of years, sales and other types of taxes are not?

BL: Precisely. Tax abatement is fast becoming the incentive of choice for more and more cities nationwide, including all the major cities in Tennessee. Most often these incentives take the form of “in lieu of” taxes or tax increment financing programs. Mayor Haslam is committed to the creative use of all the tools provided to us by the Tennessee General Assembly that will help us promote sound development.

MP: Earlier, you touched on historic preservation. How does the preservation of historic structures tie into economic development within the city?

BL: I’ve long been convinced that we have to change our mindset to recognize that quality development and preservation interests are not in opposition. We were very pleased to be able to work with City Council, the developer, neighbors, churches, and Knox Heritage to save the Temple House [on Hill Avenue] while improving a key city block. But it is not always that easy. Sometimes individual structures have been left to deteriorate for so long that there is no economically viable way to restore them.

MP: Do you think that the city’s “demolition by neglect” ordinance will help prevent this from happening in the future?

BL: I think it will help. Unfortunately, our first opportunity to apply it was in a very complex situation and, while we are getting a bit closer, we’re still not where we need to be in fostering a culture that sees the long-term economic benefits of preservation.

MP: Before accepting your current position with the city, you served as chairman of KCDC and played a pivotal role in that organization’s efforts to revitalize Market Square. Why did you feel that that project was so important to this community?

BL: Market Square seemed to be the center of a number of swirling forces, some positive and some negative. Downtown residential development was showing signs of life but, for a number of reasons, public confidence in our ability as a city to make decisions had been shattered. A lot of proposals had come and gone, all of which had been unable to survive public scrutiny. And right in the middle of all these failures was the heart of our city—Market Square. The potential was there for all to see, but, so too, were the string of failures. And time was running out. In order to pull Market Square out of the vortex, we had to act.

MP: What lessons did you learn from your involvement with the Market Square project?

BL: Well, it’s important to remember that the project is ongoing. In fact, we just started construction of Phase 2 of a three-phase project, which is the parking garage to the west of Market Square. But I’ve already learned a lot, particularly about the need for public participation and public buy-in for capital projects.

MP: Why are they so important?

BL: At KCDC, we decided to take some risks. Mayor Haslam, in his former role as a KCDC commissioner, was very much involved with this. First, we knew there was a lot of energy, as well as frustration, in the community. We decided that we would focus on the positive and attempt to harness that energy. Many people who were intent on shooting down what they thought was a bad idea were more than willing to be supportive of a good one. It is worth taking the time to get on the ground with people and to hear their concerns first hand. Involving a broad base of people in a decision-making process is not only good politics; it is good policy. On the negative side, I learned the difficulty of dividing authority for a project among a developer, a development agency, and many city departments.

MP: You’re referring to critics of Phase I of the project, which included controversy over the ultimate design of the floor of the Square and criticisms of long delays in construction. Do you believe that the Market Square project will ultimately be viewed as a success by most Knoxvillians?

BL: I do. Again, we are still early in the project, but there is already a whole lot more activity there than there had been in a very long time. There is tremendous demand for residences. New businesses are doing well and older businesses are doing better. Sales taxes are now being generated and the value of the buildings on the Square is increasing. The design has worked well. I know some disagree, but the vision for a connected, open urban space that came from the very well-attended design charrette seems to work as advertised. People now think of Market Square in a positive way rather than as a civic embarrassment.

MP: What is the current status of the Gay Street cinema?

BL: The cinema project is key to downtown Knoxville. It represents the third leg of the Kinsey Probasco plan for Market Square, and it is appropriate that we are talking about this as work begins on phase 2, the Market Square garage. We do not have final designs or cost estimates at this time because we will be taking the project through an extensive public process prior to presentation to council. Our goal is to begin construction next spring. We’re working with Regal Cinemas as our partner in the project. The numbers are impossible to pin down exactly until preliminary engineering work is complete. The plan has Regal investing in fitting and finishing, providing equipment for the theater, and serving as the operator. Pending council approval, the city portion will be made possible largely from savings realized through value engineering and reworking the garage. Private investors in bonds will make up the difference. This is a great example of a public-private partnership.

MP: Do you envision free parking for the cinema?

BL: If a theater is going to work downtown, it’s going to have to have free parking on weekends and in the evenings when the vast majority of people go to the movies. One of the keys to the 500 block site is its proximity to the State Street garage, where the city has recently instituted free weekend and evening parking.

MP: Do you see the cinema as the silver bullet that will save downtown?

BL: No. It’s not a silver bullet. But I do believe that it is a catalyst that compliments and builds on the more natural economic growth that is occurring. We have every expectation that the theater will bring more retail to Gay Street, including a mix of national and regional retailers unique to the city. We know that Knoxville residents will have a choice in where they can eat, shop, and see a movie. Most of the existing choices are fine, but they are not unlike experiences that one can have anywhere. Downtown can provide a one-of-a-kind dining and entertainment option.

MP: Some people have been critical that the city is working exclusively with Regal on this project. Would it not have been better to work with more than one cinema operator?

BL: Currently, there are only two major cinema operators operating in the Knoxville area and both have been consulted on this project. Ultimately, the mayor and Kinsey Probasco, who made the final selection, felt it best to negotiate directly with Regal, the world’s largest cinema operator with headquarters in Knoxville.

MP: We’ve spoken a lot about issues pertaining to development within the city, but what about job recruitment. Isn’t that a key component of Knoxville’s economic development?

BL: Absolutely. But, in many ways, they go hand in hand. We have a clear priority to attract companies that bring with them good jobs. And we also need to make sure we keep the companies and jobs we already have. Our arrangements with the Chamber and the Development Corporation have been quite helpful. The Chamber’s existing industries program has identified hundreds of thousands of dollars in savings for existing businesses in the empowerment zone, and the Development Corporation’s ability to market the I-275 Business Park gives us real possibilities in that area to enhance our tax base and to provide jobs. But the reality is that it is difficult and extremely competitive to bring in the kinds of new industry we—and everyone else—wants; i.e. non-polluting, high paying jobs. We fully support the approach of the Jobs Now! program and, if they locate in the city, that is great. However, it still benefits Knoxville if a company moves to Knox or its surrounding counties but locates outside our city limits. And a vibrant, lively city with a successful downtown helps attract the best types of industries and jobs to our region.

MP: Can you give us a concrete example of how the need to revitalize downtown, to balance historic preservation interests with economic development needs, and the desire to create new and better jobs are intertwined?

BL: I can. In many ways our most successful economic development strategy is to draw on our strengths as a city to attract young entrepreneurs who will hopefully create and grow businesses. We are a university city in a beautiful area with terrific recreational amenities. We have to make sure that our downtown and close-in, historic neighborhoods provide ample residential, social, and cultural choices and opportunities for this group of people. This is one reason that Mayor Haslam placed historic preservation in our department. The package we helped broker to enable the improved design for the Hampton Inn led to the stabilization of the Mary Boyce Temple House, a major concern for Knox Heritage. And we feel that it was a classic example of the positive intersection among historic preservation, good urban design, and economic development.

MP: Today the city is holding what it is calling a Downtown Summit. What is the Downtown Summit and what do you hope to accomplish with it?

BL: The downtown summit is an opportunity for Mayor Haslam to share his vision of downtown and to bring the public up to date on projects and programs affecting downtown. The city will also be accepting responsibility of the Crandall Arambula Plan from the Nine Counties One Vision Downtown Task Force. There will be interactive sessions dealing with major projects, special events, tourism, and quality of life issues. The city hopes to continue ongoing discussions and to start new ones about how we can help downtown better serve its residents, workers, and visitors.

MP: Since the Crandall Arambula recommendations were widely perceived to be too costly, what is the point of the city taking possession of and responsibility for the entire plan?

BL: While the entire Crandall Arambula downtown vision would be very costly to implement, it was always clearly put forward as a “menu” from which some items could be chosen, but all of it will almost certainly not be. This community has invested a lot, both in time and in citizen effort. It is appropriate that the city revisit and update the plan through a final public process with an idea toward making some hard choices and developing an implementation strategy prior to presentation to council.

MP: Recently, downtown has come under some criticism for not having more African-American-owned retailers, restaurants and businesses. Also, there has been some criticism that the general atmosphere downtown is not very welcoming to certain ethnic groups. Do you feel these criticisms are valid?

BL: Downtown is for all people. No group of people should feel unwelcome. We have to make sure that is our clear message. I tend to think of downtown as the area of Knoxville most hospitable to diversity. As for business location, we would love to have more minority-owned businesses anywhere in the city. Programs such as “Economic Ventures” can help with loans and the creation of business plans. It gets complicated when one thinks in terms of using the public sector to try to steer businesses to one area or the other. Low-income neighborhoods are in need of more businesses to provide economic opportunity and convenience to those who live there. The Five Points project is a great example of public sector involvement to that end. Would it make sense to try to draw minority owned businesses from neighborhoods to the center city? That gets complicated. The city will do all in its power to make sure that downtown is racially and economically diverse and welcoming to all.

MP: If you could sum up the City’s economic development goals for the remainder of Mayor Haslam’s first term, how would you do it?

BL: I’d say that it’s absolutely critical that the city make it easier for developers and contractors to build and restore within our city limits. Inspectors are in the front line of protecting public safety as they enforce building codes, but Mayor Haslam is going out of his way to meet with contractors, architects, and others to find out how to make this process work better. People want consistency, predictability and rapid turnover. Some of the issues are as simple as improving customer service and communication. Others involve making clearer what is expected at each stage of the plans review process. Also, we are working hard to streamline our approach to addressing problems that cut across departmental lines. We recognize that we can do much better here. This has been and continues to be one of the administration’s top priorities.

With regard to the bigger picture, I’ll reiterate that Mayor Haslam has made it clear that our focus is quality development within the present city limits. The mayor’s philosophy here is the same as it is in other arenas. The city is committed to working with property owners, neighborhood interests and developers to pursue a policy of incentives that we hope leads to a win-win for everyone involved. In the long run we are convinced that this approach is in the best interest of our citizens and will provide for long-term economic stability and more orderly growth.

Note: Metro Pulse publisher, Brian Conley, is also the owner of Cardinal Enterprises, Inc., a partner with Kinsey Probasco and Associates in the redevelopment of Market Square. Conley is also the owner of the Burwell Building in downtown Knoxville and his brother, Mike Conley, owns several office buildings in the CBID.

September 16, 2004 • Vol. 14, No. 38 © 2004 Metro Pulse