Andrew Johnson Building to be Redeveloped: A Look at LHP/Conversion Property’s Proposal

Andrew Johnson Building, 912 South Gay Street, Knoxville, July 2017

It may be a turning point of a more subtle sort. We’ve talked about the shift from converting derelict downtown buildings into modern uses – often residences. The supply of downtrodden buildings has dwindled and most activity in the center city has shifted to ground-up construction. This might appear to be more of the former, but it isn’t.

Instead, this marks one of the first shifts from a building which is largely utilized and cared, though perhaps underutilized, to, hopefully, a better use. Built as an elegant hotel and Knoxville’s tallest building in 1930, it served that purpose into the 1970s, but was converted to office space in the 1980s.

Andrew Johnson Building, 912 South Gay Street, Knoxville, July 2017

The history of the hotel, complete with a lengthy list of celebrity visits including Lyndon Johnson, Amelia Earhart, Sergei Rachmaninoff, and most famously, Hank Williams, parallels the 20th century rise and fall of our downtown. At its beginnings, the hotel benefited from a new national park and the rise of TVA. By its demise, it reflected the flight from the city to the suburbs.

Converted to office space, it is currently owned by Knox County – and thus off the tax rolls – and is largely home to the Knox County Schools’ central administration. It’s a use that preserved the building during a particularly dark period in the city and the county’s ownership might well have been its salvation. Times have changed, however, and the building could now very valuable to downtown, contributing to a greater degree with another use.

LHP/Conversion Renderings, Andrew Johnson Building, 912 South Gay Street, Knoxville, July 2017

LHP/Conversion Renderings, Andrew Johnson Building, 912 South Gay Street, Knoxville, July 2017

LHP/Conversion Renderings, Andrew Johnson Building, 912 South Gay Street, Knoxville, July 2017

This is the second time the county has offered the building for sale and requested proposals for re-development. The first time, several years ago, resulted in no acceptable proposal. Just a few short years later and the downtown environment has shifted substantially enough that no less than seven developers submitted proposals. The county will evaluate each proposal based on a 100 point scale with up to 30 points each awarded for intended use, quality of rehabilitation and the developer’s experience. The final ten points will be awarded for price.

I met with LHP chairman Phillip Lawson and CEO Carey Parker, along with Joe Petre of Conversion Properties, who have jointly submitted one of the seven proposals. Joe and Phillip worked for the same company years ago and decided, on Joe’s suggestion to team up for this project. LHP is responsible for a number of downtown buildings, including the City County Building and the Whittle Building which is currently the federal courthouse. Conversion Properties has also completed numerous projects and is currently underway with the high profile Regas Square Condominium project.

The two say they considered multiple uses including returning the property to a hotel, building condos and simply upgrading the building to continue its current use as office space. They felt current occupancy rates and the coming addition of hotels in and around downtown argued against that use. They also didn’t feel the other two uses were best for the building, feeling it could be more than an office building and being concerned that condos would be out of the reach of most downtown workers if they finished them at the level they would need in order to make the project profitable.

Their conclusion in looking at what they feel downtown needs is, “housing that is affordable for the average person who works downtown.” The decided to propose a 142 unit apartment building with an emphasis on keeping prices slightly below other downtown options. They’d like teachers, policemen and any host of downtown professionals to be able to afford the units. To further increase economic accessibility, they are devoting 42 units to people who are at or near the Area Median Income which is $44,800 for individuals.

Andrew Johnson Building, 912 South Gay Street, Knoxville, July 2017

Phillip said he came up with the idea for modest level prices because he looked at his own employees and realized many of them would struggle to pay current downtown rents. His company has extensive experience with low income housing, having completed about 85 projects, many of them offering subsidized housing. His vision for this was different, but the model was guided by that experience. Qualifying applicants can receive a $250 monthly credit from the company toward any apartment in the building. There will be no segregation by income, but rather an integration of medium and higher earning residents.

The proposed units range in size from small studio homes to one and two bedroom, with the basic plans spread throughout the building. There will be a couple of three bedroom units in the top penthouse section of the building. Prices should range from $900 to $1100 per month before any credit is issued. They hope individuals earning in the mid $30,000 range will be able to rent there, given the credits.

The group will apply for a PILOT and intend to use historic tax credits. In order to use historic tax credits, a developer must commit to owning the building for at least five years which, in turn, dictates that any residential development must be rental. They feel strongly that, particularly given the affordability and the appeal of living downtown, the project could be very successful.

Andrew Johnson Building, 912 South Gay Street, Knoxville, July 2017

Plans also call for restoring the lobby to a similar grand feel to that which it previously expressed. Phillip remembers what it was like and would particularly enjoy seeing something resembling its better days. Ideas for potential use of the ground floor include a coffee shop/lounge on the one corner where that would be viable and a large, open co-working space on the mezzanine level.

As a summary, Phillip said, “There’s only one A.J. and we want to get it right.”

As previously stated, this is one of seven proposals. I hope to provide similar detail in this space for any other developers who are willing to discuss their proposals, so look for that in coming days or weeks. While the timeline for making a decision is a bit vague, it appears that something should be determined by late this fall.

Comments

  1. Bob Richards says

    Since it is already owned by Knox County, the default position is to provide affordable housing for people making much less that the $44,800 annual limit. These type of opportunities happen very rarely, and Nashville, TN is an example where the city sold out to the developers. While property and sales tax, along with hotel and motel taxes are great, what would the best common good solution be for this property.

  2. I am so glad the city is committed to letting this building go to a better use than office space. Overtime, I’ve walked up and down the area close to the river and I daydream about the AJ building and the City County Building and think to myself…how and why is it possible that the two BEST river front locations are government buildings? It’s such a shame and a waste! Government buildings could be anywhere in Knox County. They bring no tax benefits to the city by taking up the most valuable real estate and they add even less culture. This is a great start and I hope one day they give up the City County Building as well.

    To the proposal, I love the idea of offering affordable housing. I question it being in this particular building, however. With the views that building is going to have, they would be able to get a really special price in comparison to other buildings downtown. I’m not in real estate, though, so I don’t know for sure.

    I love having this building filled because Main Street and that part of Gay is underutilized and this is the step towards a more complete downtown.

    Now if we can just build a community OVER James White Parkway and turn Henley Street into a smaller road with business on each side, we’ll be there. 🙂

  3. Anonymous says

    While I do think more affordable housing is needed downtown, I honestly think they should turn this into a luxury hotel with four floors of penthouse condos on the top. Someone else proposed that but I don’t remember who. Tourism is growing rapidly in Knoxville and by the time they finish it it would be justified. That and since certai. smaller neighboring cities with an unjustified superiority complex are suddenly getting a Westin I feel like we deserve something of that caliber here.

    • I dunno. Downtown already has, what, 7, 8 hotels either now or on the way? Does our downtown really have enough consistent out of town visitors to sustain more than that?

    • If Knoxville wanted to keep pace with that certain smaller city, it should focus not on high end hotels but on spurring New Economy job growth. Downtown North or maybe Sevier Ave. would be excellent locations for Knoxville’s own innovation district.
      https://mobile.nytimes.com/2016/08/17/realestate/commercial/chattanoogas-innovation-district-beckons-to-young-entrepreneurs.html

    • I think that would be a very short-sighted approach considering your idea would mean that there will be 11 hotels in a 1 square mile area. We have luxury accommodations in the Tennessean and the Oliver. Right now, downtown hotel prices range from $110 a night to $3,000 a night. I don’t think we need a Westin to claim we have a luxury hotel. I’m weary about Knoxville becoming too reliant on tourism dollars and ignoring the local economic ecosystem. I’m not saying that tourism isn’t great and we shouldn’t welcome (and encourage) it, but I am saying that it would be great if the people who work downtown on a daily basis could live closer.

      • I couldn’t agree more. While my wife and I live downtown, there are two major hotel developments going on nearby right now, with the Farragut (Hyatt Place) and the double Marriott property on State/Church. If we want to get some of those missing “city amenities”, like a serious grocery that we can walk to, we need more folks living down here. Developing the AJ is another step in that direction.

    • spinetingler says

      Take a lesson from Charleston, SC, and don’t over-hotel and over-luxury-condo.

      No one who works downtown can now afford to live downtown, save for the high-priced attorneys.

      • Dana Self says

        I have a antique bench past down from my great aunt that lived in Knoxville that is from the lobby of the Andrew Johnson Hotel. It is beautiful!

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