Development projects plod on despite downturn
Knoxville, like any major city, suffers from its fair share of social ills, inner city violence, a concerning crime rate, dilapidated areas of the city that breed nefarious anti-social behavior like drug abuse and drug dealing and a lack of funds to properly stamp out these problems.
However, it was announced in June 2010 by Knoxville news media that the city’s Chamber of Commerce was meeting with up to 29 major national companies in order to tempt them to relocate to, or expand in, Knoxville.
If all 29 companies take the Chamber of Commerce up on its offer, there could be around 8000 new jobs in the city, such an expectation is, of course, over-optimistic, but this is an example of the power that investment in the city by businesses can have. A new business needs to buy or rent property, hire developers, hire local staff, consume local supplies and generate revenue in the local economy.
If even ten of these companies find Knoxville attractive it will mean thousands of badly needed new jobs and half a billion dollars of investment.
Knoxville is becoming a tempting proposition for many due to efforts by city leadership. A set of policy initiatives, such as Tax Incremental Financing (TIF) and Payment In Lieu Of Taxes (PILOT) are powerful investment-generating tools that have attracted business in the past, helping to redevelop some of the city’s most rundown areas and buildings.
TIFs basically allow a developer to offset the cost of developing a property against their taxes, in essence it acts as a kind of tax-break for redeveloping an area or building. PILOT initiatives work in a similar way, but are more comparative to a Free Zone, as they grant developers or businesses the right to pay reduced or limited taxes for an individually agreed period.
Such programs have been employed in the highly successful renovation of the Brownlow School building. Brownlow School closed its doors in 1996 and until 2007 was a vacant two acres property with a 94-year old, three-storey building on it, its 46,000 square feet of space empty and decaying.
The site became a location for vandals and drug users, litter filled the grounds and obscene graffiti covered the walls.
“It’s a blighted piece of property,” Melynda Whetsel, president of the Fourth and Gill Neighborhood Association, told Knoxville news provider Knoxville News Sentinel in 2007.
This is not the case anymore, though. By 2008, through TIF initiatives, a developer had renovated the building at a cost of $6 million and, while staying true to the original architecture of the Colonial Revival building, installed 35 luxury condos.
The TIF given to the developer did cause controversy, as the neighborhood in which the building was located is not one badly in need of rejuvenation, unlike other areas of the city. For some, the TIF provided to the developer seemed like a nod to the middle class.
This is not the case with the extensive South Waterfront Redevelopment Plan, which seeks to completely rejuvenate the city’s South Waterfront over the next 20 years. The area which will be effected by the massive project is roughly 750-acres in size and stretches three miles along the Tennessee River.
That’s an area roughly three times the size of the Principality of Monaco and represents an investment that will cost hundreds of millions of dollars. The 20-year timeline for completion of the entire project may seem long, but the financial crash in 2008 derailed many of the city’s plans for the area.
TIFs and PILOTs were to be used to attract the interest of developers who would build new luxury housing complexes that would be worth over $50 million, the Waterfront Park was to be created and take up 5 acres of space, a bicycle/pedestrian walkway was to be built along the bank of the river, the city was going to build new roads, improve existing roads in the area and build a bridge connecting the South Waterfront to the University of Tennessee-Knoxville campus.
These efforts were aimed at providing a basis for private investment that would outstrip public spending, thereby initiating a knock-on effect that would benefit the rest of the city according to the ‘trickle down’ laws of economics.
The 20-year plan is still in place as the downturn will not last forever, but the progress has been slower than what was expected in 2006 when the project was first reported by Knoxville news media.
TIFs and PILOTs will therefore be essential to the successful implementation of the project in the years and even decades ahead.
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Knox Focus
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Development projects plod on despite downturn
Knoxville has been hit hard by the recession like every other major city across the country and the world, but innovative planning and adaptation by city leaders seem to be helping the local economy recovery, while laying the ground work for a strong economic future as well.
Knoxville, like any major city, suffers from its fair share of social ills, inner city violence, a concerning crime rate, dilapidated areas of the city that breed nefarious anti-social behavior like drug abuse and drug dealing and a lack of funds to properly stamp out these problems. Read more
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