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.
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.
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.
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.
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.