Knox County Schools and TVA Near Deal: Andrew Johnson Building Hangs in the Balance

Andrew Johnson Building, 912 S. Gay St., Knoxville, September 2019

An agreement in principle has been reached between Knox County and TVA to have the school system offices moved to TVA’s east tower. The deal also involves Summer Place and was explained yesterday to a joint meeting of the school board and county commission. The commission must give final approval before the contract can be executed. The hope is to have that done within 45 days.

The effort to move the Knox County Schools administrative offices from the Andrew Johnson Building began with the previous administration. A Request for Proposals resulted in a contract with BNA Associates to purchase the building for $6,000,000. They agreed to spend $43 million to convert the building to a combination of hotel rooms, residences and commercial space.

The subsequent two years have seen the school system scouring the county, looking at properties they owned, properties to purchase or lease or properties where they might place new construction. They considered a dozen or so spots and found little that would suit their purposes. They considered vacant big box stores and spaces within Knoxville Center Mall.

Joint Meeting of the County Commission and School Board, City County Building, Knoxville, September 2019

Aerial View (Google Earth) of TVA Towers (left) and Summer Place (right), Summit Hill at Walnut, Knoxville

In the end, they decided that the vacant east tower of the TVA buildings would work best. In addition to leasing the entire tower for fifteen years, with the possibility of extensions for another twenty-five, they would also purchase Summer Place and its parking garage just across Walnut Street from the towers. The purchase price for Summer Place would be $1.6 million and the rate for leasing the tower would reportedly be less than the current downtown office rate of $15 to $18 per square foot.

County officials reported that the tower is in excellent condition and that TVA has spent $10 million to upgrade each of the buildings. According to their report, little would need to be done to get the building ready for occupancy. It would need paint and carpet. They also noted the favorable interest rates currently available for the expense involved in the project.

Moving all the component parts of entities occupying the Andrew Johnson Building would only fill Summer Place and about half the dozen stories of the east tower. The other six stories could be used to bring other groups inside the building from locations like Knox Central in the old Sears Building on Central Street. It was noted that developers have expressed interest in purchasing that building. Other buildings owned by Knox County might also be able to be sold.

Summer Place, Summit Hill, Knoxville, September 2019

The tower includes about 212,000 square feet and another option for the unused 106,000 square feet would be to sub-lease the space, that would, at least partially, offset Knox County School’s cost for leasing the building. Additionally, Summer Place has a tenant that would remain in a portion of the building, providing income to they system. It also has a large parking garage which would generate revenue. The deal also includes the small parking lot on Gay Street beside the Knoxville Visitor Center.

The total estimated cost of the work to be done to the tower and the move is $9,975,000. The estimated total for purchasing and renovating Summer Place is $3,590,000. The sale of the Andrew Johnson building would provide $6,000,000 to offset a portion of these costs, leaving the total estimated outlay at $7,565,000.

In terms of taxpayer money, the eventual return of the Andrew Johnson to the tax roles would be a cash-positive development. As federal property, the TVA towers are not on the tax roles, so there is no loss there. The potential ripple effect on other county-owned properties could also be beneficial as they return to taxable status.

TVA Towers (East Tower to the Right), Knoxville, September 2019

The contract is not a certainty. Some county commissioners seem to be skeptical of the idea and seemed to prefer keeping the offices where they are. Superintendent of Schools Bob Thomas was present and appeared to suggest displeasure with the process which has been driven by the County and not by the school system. Russ Oaks, Chief Operating Officer for Knox County Schools also expressed frustration at being excluded from conversations.

The plan, if approved would not be implemented immediately. It would likely be next summer before the first employees move into the towers and they would be moved in phases. Renovations on the Andrew Johnson Building would likely not start until sometime in 2021 at the earliest.

Comments

  1. Polly Doka says

    The School board doesn’t have a historically good record on property management. Look at Rule high school now and the condition of South and Lincoln Park before someone recused them. I think Rule high school would be an excellent location and give the school board a chance to fixed their own neglected mess for a change. It would also make them more accessible than a downtown location and give a boost to an area that could use some help. It appears Knox county school property management could use some better direction. Hopefully this physical visual isn’t a reflection of how education departments are conducted.

  2. Jeanne Clinton says

    As I understand the article, the Board of Education has not been involved in finding a suitable site. Correct? That makes no sense.

    • KnoxvilleUrbanGuy says

      The best I could understand it, the Board has been involved, but the superintendent seemed to suggest that he would have liked to be more involved. There was a lot that was unspoken, so it was a little hard to read.

  3. The Original Greg says

    Seems like a good idea. Office workers are important to keeping downtown lively during the day, and large corporations haven’t exactly been knocking down the doors at TVA to move into that tower. The Johnson building might become the best residential address in Knoxville.

  4. Wow. Seems like maybe you should consider a move to Chattanooga, Nashville, or Blount County then… I understand with expressing some criticism to the nuances of major decisions in downtown Knoxville – don’t get me wrong. But your indictment of Knoxville’s government seems to ignore the very major steps forward that downtown has made in the last 10 years; there are far more people living and working downtown then there were 10 years ago. The government may not deserve all of the credit, and I’ll be the first to tell you that I disagree with a handful of decisions made, but you can’t simply ignore the vibrancy of the neighborhood – AND, the appeal is clearly has to downtown residents whose turnover is pretty minimal (even with sky-rocketing prices and demand). Some of the credit has to go to the PILOT and TIF programs; perhaps it’s time for Knoxville to adapt some of the programs, as the nature of our downtown landscape has changed, but we LITERALLY have higher tax revenue in downtown than we did 10 years ago WITH NO TAX INCREASE throughout Rogero’s entire administration. Knoxville has always had a healthy balance in its economy allowing various industries to share the load; our tourism industry included – you may not like it (and, I don’t necessarily always love it either), but the argument that tourism is good for our downtown has plenty of solid premises. To be clear, I think Chattanooga is great – but, if you’d be happier living in Nashville or Blount County, then perhaps that deserves some self-reflection.

    • Calvin Cassady says

      There was a tax increase. And one full year of the increased revenue went to Regal

      https://www.wbir.com/article/news/local/downtown-ut/city-budget-including-tax-increase-approved-6-3/51-95184653

      • KnoxvilleUrbanGuy says

        Calvin, that’s a half-truth. There was a tax increase one time in the last eight years. Five years ago. Regal did not get city money.

        • Regal did receive a sizable incentive package as part of that deal. The city committed $9 million-plus to buy the building and part of the garage and do some of prep work. And Regal gets very favorable lease terms, with an option to buy. (As long as they abide by certain employment levels.) So while there wasn’t a literal check written to Regal, the project got substantial public funding. By all accounts, it is the only reason Regal is still here. The lease is only friendly to them if they abide by it. If they break it, there are substantial penalties. And Regal spent a lot of its own money to build out the interiors, so they had some sunk costs. So once the new owners realized they’d just spent a lot of money on this building, and it would cost even more to pull out of it, that made Knoxville a more attractive prospect.

          Whether all of that makes it a good or bad deal I guess depends on your point of view.

  5. The TVA towers should be used for vertical farming and supply fresh produce to the businesses and residents of downtown and the rest of Knoxville.

    https://www.usda.gov/media/blog/2018/08/14/vertical-farming-future

    The school staff should occupy a part of Knoxville Center Mall.

    The Andrew Johnson building should be a mix commercial/residential building.

    Just my 2 cents.

  6. If the developers believe the Andrew Johnson is worth doing, it means there is still a need for hotel rooms downtown. There are a lot of them now. That’s not likely filled with “tourists.” Maybe tourism is a side of that, but I’d bet a majority are here on business. In terms of jobs and quality jobs, maybe that’s not great, but when people from other places come here and leave their money behind in hotels, restaurants and shops, that’s great for us. The markets are setting the goals.

    The other side of all this is things we do not know. Those in those voting seats have a better idea of what corporations are exploring our city for space and of what kind. Hopefully they make these decisions based on the real knowledge, and not pure guessing.

  7. Other than just the overall hatred for change, and Knox County Schools being poorly managed anyway (former student here) I can’t understand why anyone would be against moving the headquarters out of the Andrew Johnson building. Sure, it’s beautiful from the outside, and I’ve never been inside, but I would say that due to the time the hotel closed and KCS moved in, it’s probably full of dirty beige carpet and linoleum over what I’m sure were beautiful original hardwood floors.

    The Andrew Johnson Building and the Bacon and Co. building (bless their hearts) are really the two largest structures in Knoxville that are still in desperate need of attention.

  8. The most exciting part of this article was reading that if it goes through the county might also vacate and sell off the Knox Central building on Central Avenue for development. I think that site has a ton of potential to be some nice apartments and mixed-use. If something is designed well and built with the desire to make Central a stronger pedestrian corridor then it could be a major step towards defining the Happy Holler district as a major node outside of downtown. This could also be a really interesting way to see how the Recode can be applied in this area since the Central Avenue corridor was a major area of focus.

  9. Here I was hoping a prime piece of real estate like the east TVA tower could be used to recruit a great new business into downtown and bring more well-paying jobs, not the school district. Maybe it’s just me. 🤷🏻‍♂️

    • I guess we want to keep letting Blount County, Chattanooga and Nashville attract all of the good jobs. Knoxville local government seems satisfied with surviving off of hospitality and tourism. Doesn’t make for a great place to live and work. I wouldn’t count on that tax money quite yet, every developer in Knoxville seems to plan on a PILOT and infrastructure to be paid by city/county.

      • While I agree with you both that it would be nice to ultimately woo a larger corporation or company to Knoxville and set them up in the East TVA Tower, I also think this move has the potential to move Knoxville another step towards having brand new office space built downtown. If Andrew Johnson Tower, which is currently being used as office space, is converted to residential and hospitality then it will reduce the available percentage of office space downtown while also filling up most of the TVA towers. Between the school system moving and the old Conley Building being converted to the Embassy Suites Knoxville has reduced a large amount of available downtown office space, which sounds bad on its face, but also means that there are fewer spaces competing for the same tenants so there is more incentive to actually renovate existing office buildings or even build a new office building or two downtown. I have heard for years that Knoxville has plenty of office space, but it’s the level of quality (class A, B, C) for the offices that matter more in attracting people to downtown. TBH Knoxville needs some legitimate mixed-use buildings (not some mixed-use light with like 5% retail just to fill a shallow storefront) so we can pepper in high-end office space with residential and ground floor retail so the costs aren’t heavily reliant on keeping a singular large tenant. Most young and up-and-coming companies want location and experience over other items when choosing a new HQ, so creating a nice space in a walkable and fun community with access to amenities is more desirable than having a big flashy sign on a giant glass tower.

      • That is laughably wrong. Look a little west and you’re seeing manufacturing jobs coming into Knox County in the advanced composites and materials industry. You’re seeing suppliers of those industries come here. You’re seeing a pipeline of work flowing from VW in Chattanooga and Ford in Detroit to Knoxville and Knox County.

    • At least the top six floors can be used for that purpose still. Better than nothing.

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