By pulling back from the city's plans to condemn the Holiday Inn Select, Mayor Victor Ashe may well have knocked the props out from under Worsham Watkins' bold plans for downtown redevelopment.
At the very least, Ashe's decision to allow the Holiday Inn Select to stay in operation undermines the feasibility for a new 415-room Marriott Hotel that would have served as a centerpiece of WW's grand design for drawing a critical mass of visitors into the downtown area. Instead of a critical mass to support the revitalization of Market Square and an adjoining block of Gay Street as a shopping and entertainment hub, these other elements of the WW plan are now on the critical list, in need of some new form of life support.
At the same time, the mayor's decision leaves the city without any tangible prospect of a new headquarters hotel and other amenities needed to make its new $162 million convention center viable. The $3 million that the Holiday Inn Select's wheeler-dealer owner, Franklin Haney, has committed to upgrade his slightly shabby hostelry amounts to little more than a facelift, whereas a much more costly makeover is needed for it to pass muster with convention site selectors.
Moreover, by jeopardizing what's left of WW's originally planned $240 million private investment, the mayor's decision has also jeopardized the city's ability to capture state sales tax revenues to help pay for the convention center. Under a 1998 state law, the city is entitled to keep otherwise Nashville-bound incremental sales tax collections in the city's central business district. But this entitlement is contingent on private investment of at least $25 million for convention center-related purposes. But in the absence of a WW plan no such investment is in prospect; nor, for that matter, are the prospects for incremental sales tax generation very bright.
There was never any overt linkage between demolishing the Holiday Inn Select on the World's Fair site and clearing the way for a much more convention-friendly Marriott two blocks to the east. Nor could there be, since getting rid of an existing business to facilitate a new one is not a valid public purpose for condemning property. But a study conducted for the Public Building Authority by hotel consultants PKF concluded that building a new convention center headquarters hotel could only be cost justified if the Holiday Inn was gone. And when the mayor moved precipitously last summer to condemn it on the flimsiest of pretexts, there was little doubt what he really had in mind.
His pullback, on the grounds that condemnation might prove too expensive, is just the latest example of a pattern of pussyfooting on the part of Ashe that has cost this city dearly. In 1997, Ashe pulled the plug on plans for a new downtown baseball stadium on similar grounds. Then, manifesting another of his worst traits—a propensity for impulsiveness—he announced at the same time that his vision for downtown had become a new convention center.
When faced with the reaction that a convention center built in isolation was destined to be a white elephant until Knoxville became a more attractive destination, a quest began in back-assward fashion for attractions that would draw visitors to the city. In the absence of any sort of master plan for the city as a whole, what emerged was the WW plan for restoring a swath extending from the 400 block of Gay Street through Market Square to the World's Fair Park. With its emphasis on an enclosed shopping, dining and entertainment complex that smacked of a suburban mall, the plan drew harsh criticism from the city's hardy band of urbanists. But even critics acknowledged that some of its elements held appeal, particularly a prospective Scripps Cable Network center, a cineplex and attempts at mixed-use inclusion of an office tower and apartments.
When the WW plan was unveiled last winter under the auspices of the PBA, Ashe hailed it as the greatest thing to come Knoxville's way since the advent of TVA. But even before he pulled the props out from under its centerpiece last week, other pieces were looking shaky. A long-anticipated commitment from Scripps has yet to materialize, the financial plight of an overscreened cinema industry makes a new cineplex unlikely anytime soon, and the PBA itself appears likely to nix plans for public funding of a glass-enclosed, climate-controlled mall over Henley Street as too costly.
In a news release announcing Ashe's decision to abandon plans to acquire the Holiday Inn Select, he is quoted as saying, "We simply did not have enough financial information to make an educated estimate of the value of the hotel. Without knowing the true value, we couldn't afford to roll the financial dice and move forward with condemnation of the property for acquisition."
What's to be said for the competence of a city administration that initiates a condemnation in such hapless fashion? The truth is that Ashe, in his helter-skelter way, and his law director Michael Kelley botched the handling of the condemnation from the get-go. By slipping $13 million for the acquisition (based on the property's appraised value for tax purposes) into the city's established convention center budget almost as an afterthought, the city gave the hotel's owner a leg up in condemnation proceedings. If condemnation had been contemplated in convention center planning from the outset, then the added value that adjacency to the center brings to the hotel would typically not count toward its valuation. But Haney's lawyer submitted an appraisal of $27 million based on that adjacency and the city never even went to court to obtain financial data that would have been needed to challenge it.
If there is another way to achieve critical mass downtown, it would seem to start with fostering residential developments in Gay Street's historic buildings. An Atlanta-based developer, Leigh Burch, has put a great deal of effort into plans for restoring the Sterchi Building, and a Birmingham-based firm is interested in several other Gay Street buildings. But subsidization in the form of tax abatements is needed to make these projects viable. In Memphis, a program known as PILOT is credited with facilitating downtown redevelopment through just such abatements. And the city of Knoxville's able and committed director of development, Doug Berry, has been trying to get such a program initiated here, but as yet to no avail.
If there is a silver lining amid all these clouds, it is that aborting the Marriott on the site proposed by WW may improve the chances of giving birth to a worthy headquarters hotel closer to the convention center in the not too distant future. While it may not make as much of a contribution to downtown critical mass, an adjacent headquarters hotel will strengthen the convention center's drawing power if the experience of numerous other cities is any guide. But it will take resolute leadership from the city to establish a site for such a hotel and to get it built—leadership that Victor Ashe has not exhibited to date.