City's Snafus Threaten Its Future

Last week's unceremonious resignation of the city's ever-so-able director of development, Doug Berry, accentuates doubts about the city's ability or will to achieve revitalization of its core.

The circumstances surrounding Berry's departure bespeak a state of disarray within the city administration over the largest redevelopment project undertaken to date: namely, relocation of the Knoxville News-Sentinel to a business park in West View. Berry had negotiated a deal to acquire the 27-acre News-Sentinel site as part of a land swap with the site's present owner, Ray Hand. In return, Hand's Eagle Distributing Co. (a beer wholesaler) would get a site at the Coster Shop property along I-275 on which the city had acquired an option last July.

When the time came to purchase the 56-acre Coster Shop tract for $3 million in December, however, the city's law director, Michael Kelley, succeeded in pulling the rug out from under Berry's deal. Kelley contended that the former Norfolk Southern Railway yard posed unacceptable environmental risk, whereupon the city moved to acquire Hand's property in West View by condemnation.

Berry stepped out (or was he ousted?) the day after he was deposed by Hand's attorney, Joe Conner, in a lawsuit contesting the condemnation. According to Conner, both Berry and an official of the city's redevelopment agency, Knoxville's Community Development Corp., testified that KCDC failed to adhere to several preconditions to condemnation. These included allowing Hand to submit his own development plan for the property and negotiating with him before resorting to condemnation. Again according to Conner, Berry testified that he had advised KCDC to forego these steps as inconsistent with the deal he'd struck with Hand. In any event, the city quickly dropped its botched condemnation action, having already forfeited the $100,000 it paid for the Coster Shop purchase option in the first place. Questions as to why environmental concerns were not resolved at that point, or in the five months leading up to the December debacle, were all referred to Kelley.

Kelley's secretary said he would not be available for comment until Feb. 5, and numerous phone calls to Berry's residence went unanswered. The city's newly appointed deputy to the mayor (and former News-Sentinel associate editor) Frank Cagle professed confidence that the Coster Shop acquisition can be resurrected. "We're back in discussion with Mr. Hand and the railroad, and I think a deal can be done quickly," Cagle says. Some form of insurance appears to be the most promising solution to any environmental problems.

Meanwhile, every passing day impinges on the News-Sentinel's timetable for construction of its new $45 million office and production building—and for delivery of the new presses that have been ordered to go in it. It hurts to think how the stretch-out may have affected the disposition of the News-Sentinel's parent, E.W. Scripps Co., toward committing to a Scripps Cable Center here that is an integral part of the city's downtown redevelopment plans.

Moreover, the Scripps screw-up is symptomatic of a lack of city planning and coordination on other developmental efforts that were under Berry's wing. (Imminently expected recommendations for a scaled-down, multi-stage version of Worsham Watkins' downtown redevelopment plan have been proceeding on a separate axis under the aegis of the Public Building Authority's able administrator, Dale Smith, but will soon be on the city's court as well.)

Berry's bent for making things happen had also been focused on renovation of Gay Street's historic Sterchi Building as a residential complex. An Atlanta-based developer, Leigh Burch, claims to have already sunk several hundred thousand dollars into his plans for 80 units of loft housing at a cost of $10 million. And he's also very convincing that some form of local tax incentive is needed in order to get financing for the project. Berry was championing a form of incentive known as PILOT, which has been used extensively in Memphis. But he was unsuccessful in his efforts last fall to get other top city officials on board for a trip to Memphis to see what it has accomplished there and how it works. Nor, as far as can be determined, has any serious attention been given to establishing criteria for making it work here.

For all his prowess as an economic development professional, Berry's penchant for sticking his neck out and perhaps even overstepping his authority at times contributed to his downfall. His bent to get deals done on his own reportedly included a disdain for lawyers. Yet legal evaluation and documentation of deal terms is inevitable in a bureaucracy. Similarly, his aggressiveness was almost bound to clash at times with the fiscal conservatism of the city's exemplary finance director, Randy Vineyard.

The real culprit in all of this is Mayor Victor Ashe. Instead of building a management team and stressing coordination, Ashe's combative style, by many reports, almost foments strife. It's further reported that the mayor's combativeness has swelled since Kelley succeeded Tom Varlan as law director in 1998. Where Varlan was oriented toward settlement of disputes, Kelley's forte is litigation. "There's been a night and day change in Victor's style since Kelley succeeded Varlan," says one long-time mayoral observer.

The city's move last summer to condemn the downtown Holiday Inn Select was just as precipitous as its condemnation of Ray Hand's property—and equally maladroit. Divisive annexation binges (for which Ashe has more appetite and a much longer attention span than for economic development issues) could also be ascribed to mayoral contentiousness.

The new voice in the city administration is Cagle's and he is preaching unity. While unity is no substitute for strategy, it would at least represent a step in the right direction. Unfortunately, it comes too late to retain the one city operative with the savvy and resolve to make a developmental difference—and there aren't even any plans to seek a successor of Berry's stature.

© 2001 MetroPulse. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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