KNOXVILLE, Tenn. (WATE) — A major redevelopment project is closer to taking shape in Downtown Knoxville.
Thursday, we got a better idea of how it will look.
Wednesday night, the Knox County School Board adopted a MOU (Memorandum of Undertanding), essentially deciding to move their district offices from the Andrew Johnson Building to TVA’s East Tower, if all the parts of the deal are successfully completed.
Next, the County Commission will vote on a contract with BNA properties, the highest of seven bidders, who offered $6 million for the AJ Building. That vote is likely to happen Feb. 24.
The county is also waiting for confirmation from the state, either from the Attorney General or in the form of legislation, on whether school administration offices can be housed in a federal building.
The school board’s MOU is contingent on that confirmation from Nashville.
Once the paperwork phase is complete, build-out work at the TVA East Tower will begin.
Back to the AJ building. If you’re looking at the building from the outside, you might see beauty.
But when Knox County Mayor Glenn Jacobs looks at the interior, he sees a big bill. He cited issues like ADA compliance, synergy, a need to update, and estimated the costs of renovation to range between $20 to 30 million.
Jacobs’ team estimates the move from the AJ Building to the TVA East Tower will cost the county $10 million. That cost would be offset some by the sale of the AJ building.
The county would be able to sublease the top six floors of the TVA East Tower.
Currently, discussions continue about a sublease agreement between the University of Tennessee System and the county; however, nothing has been signed at this point. Summer Place Garage, which would be part of the TVA deal, would also generate revenue.
With that potential profit and a projected drop in general operating expenses, Jacobs’ team also estimates $300,000 in annual savings to taxpayers.
Jacobs didn’t say whether tax incentives, such as payment in lieu of taxes, would be a part of the deal with BNA. He did point out the building, currently, generates no tax revenue, and said “whatever tax revenue it produces is more than it’s producing right now.”
BNA plans to spend $37 million in renovations to the AJ Building. They include 94 boutique hotel rooms, 30 micro-apartments, 45 standard apartments, restoring the grand lobby, adding a bistro, coffee shop, workout facility, and rooftop bar.
With the building’s economic potential and potential cost to the county considered, Jacobs believes it would be best served in the hands of a private developer. “We think it would make a great hotel, but it doesn’t make such a great office building.”
Jacobs also sees the TVA deal as win for the taxpayer and school board employees because it’s virtually a blank canvas, and it allows the school system to design each floor, and create a more modern and efficient workspace.
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