Money Overriding Factor in Choosing Senior Housing Proposal for Knoxville High Building

Original steering committee report favored residential use over senior living

BEST POSSIBLE USE? Although a report issued by a county steering committee and the Community Design Center stated that “the market may be saturated” with nearby senior living options already, that’s the proposal that won a RFP for the old Knoxville High School building.

Photo by Jon Gustin Courtesy of Knox County

BEST POSSIBLE USE? Although a report issued by a county steering committee and the Community Design Center stated that “the market may be saturated” with nearby senior living options already, that’s the proposal that won a RFP for the old Knoxville High School building.

Ten Points.

That was the difference between the winning proposal to restore and redevelop the old Knoxville High School into an independent-living facility for seniors and David Dewhirst and Mark Heinz’s proposal to turn the school into a mixed-use development that would have included retail, offices, an event space, and affordable housing for teachers.

There’s no doubt that either development, both of which include a small amount of artists’ studios, would have a positive effect on the neighborhood—a massive property full of people has to be better than the partially abandoned building’s current state. But not everyone’s sure a good use for the building is the best use.

“It is a bit surprising for me,” says City Council member Mark Campen, who lives in North Knoxville and was on the steering committee that recommended suggested uses for the building. “I’ve got nothing against seniors, but I’d have liked to have seen a mix of uses come in there.”

That steering committee worked with the Community Design Center to issue a report assessing the viability of community-proposed uses for the historic facility, including returning to its roots as a school, a hotel, office space, and an artists’ co-op. Their top recommendation was to use the building for housing.

The report states, “Residential reuse in some form seems to be the consensus of local developers. … Many area assets … would also support a residential community including access to public transportation, nearby schools, and many attractions within walking distance.”

However, the report was not particularly supportive of an elderly residential community. It goes on to say, “Senior or assisted living is another option, but with the current development of Oakwood School and other existing nearby senior living options the market may be saturated. Knoxville High School may also be too large for an effective senior citizens housing environment. The senior living options already in place in the area include assisted and independent living in both public and private developments.”

Yet 100 units for low- and middle-income people 62 and older will be going in the school next year, barring any action taken by the Knox County Commission, which must vote to approve the project later this month. The $13.8 million development will be undertaken by the Loudon-based Family Pride Corporation, which is responsible for the Oakwood project and several senior living facilities in Loudon County, and the Southeastern Housing Foundation, the group behind Minvilla Manor and Flenniken Landing.

How did that come to happen, when three people on the five-person RFP evaluation committee were in favor of Dewhirst’s project? It comes down to one thing: money.

Knox County issued the RFP for the projects over the summer, and the evaluation committee met this fall to discuss the proposals. Representing the county on the panel were Jeff Clark from the finance department and Ben Sharbel from purchasing. Bob Whetsel, Knoxville’s director of redevelopment, was there on behalf of the city, as was Kim Trent of Knox Heritage and Harvey Sproul, the president of the Knoxville High School Alumni Association.

Each person ranked the three submitted proposals—the winning one from Family Pride and Southeastern, Dewhirst Properties’, and a third from Hatcher Hill, Segundo, and Family Pride for market-rate senior housing—on four different aspects. The quality of the rehabilitation was worth 30 points, the intended use was worth 30 points, the experience of the developers was worth 30 points, and the amount the developers planned to pay the county for the property was worth 10 points, for a possible total of 500 points.

The Family Pride/Southeastern Development scored 439 points. Dewhirst scored 429—despite three evaluators ranking his project 30 out of 30 in the first three categories. (The tabulations as provided to Metro Pulse are anonymous.) The Hatcher Hill project scored 358.

Dewhirst writes in an e-mail, “We of course are disappointed with the outcome of the county evaluation. We passionately believe we have the best development plan for an active-use restoration of the building and the best concept to link the north inner-city neighborhoods of 4th & Gill and Old North back to the core of downtown Knoxville. Primarily however, we believe that incentivizing young Knox County teachers to live on-site with significant rent discounts was the strongest compensation element of any proposal. It is most unfortunate that we scored zeros for this element, which was the only evaluation factor that we didn’t win outright.”

Dewhirst’s development would have set aside 40 of 75 units for teachers for five years at a 20 percent discount of the proposed $675 to $1,475 rental rates. But the county purchasing department awarded Dewhirst’s project zero points in the financial category, while Family Pride’s offer of $500,000 for the property received 10 points. This was the only category that evaluators didn’t score themselves; Clark says the purchasing department has a standard formula it uses for all RFPs.

Dewhirst says he’s frustrated that his offer wasn’t accounted for at all.

“We offered $650,000 in rent discounts to Knox County teachers but that didn’t score a single point. We thought they would provide us an opportunity to translate that into a cash payment in lieu of helping the teachers if they wished but it didn’t materialize in the tabulation,” Dewhirst says.

But Clark says the Dewhirst project wasn’t as profitable for the county and won’t have an immediate economic impact the way the Family Pride development will, with an estimated 18 new jobs and housing for seniors in need.

“At the end of the day, I felt like there was a greater need in Knox County for elderly housing,” Clark says. “Certain markets were potentially saturated, but not medium- to low-income housing.”

Sproul says he’s happy the school will be in use again, but he’s not entirely sold on the idea.

“I think it’s a good use for it. But I think it had greater potential for some other use,” Sproul says. “I thought the Dewhirst proposal would have been better suited for a bridge development between North Gay Street and the 4th and Gill and Emory Place neighborhoods.”

Trent wouldn’t comment as to which of the proposals she was in favor of, only to say that Knox Heritage is pleased that all the proposals planned to make use of the National Park Service Guidelines for Historic Preservation. Sharbel and Whetsel declined to comment at all.

Knox County Mayor Tim Burchett is effusive about the project.

“I’m glad somebody’s going to save the structure,” he says.

Knoxville Mayor Madeline Rogero’s office offered a more muted comment. “We’re happy to see a redevelopment proposal for a historic property in the heart of the city,” spokesperson Jesse Mayshark writes in a e-mail.

When asked if a mixed-use development might have encouraged more future development in the area, Burchett’s only comment is, “This got the highest bid.”

Burchett’s former director of community development, Grant Rosenberg, also happens to be the vice-president of housing for Southeastern, but Knox County Communications Director Michael Grider says that wouldn’t have affected how either county employee would have appraised the proposal, even though Sharbel once worked under Rosenberg.

“I don’t think that’s an issue,” Grider says. “The RFP process is intended to avoid all that.”

The Commission doesn’t have the option to award the project to Dewhirst, only to vote in favor of the Family Pride proposal or against it. If they vote against it, they can then vote to issue another RFP or kill the project entirely.

Dewhirst, for one, hopes he can get another shot.

“We hope that county commissioners will review the evaluation, the proposals, and the scoring criteria of the compensation element in particular and vote according to their beliefs with all the information in front of them,” Dewhirst says.

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Comments » 8

Hayduke writes:

Short sighted decision by the bean counters. This project could do a lot for the redevelopment and tax base for the whole neighborhood, but it's not going to happen if the residents aren't physically and financially able to participate. Similar projects are already economic dead zones and Knox High deserves better.

knoxville_dt writes:

I am happy to see that at least one of Knoxville’s publications took the initiative to provide a more complete picture of this situation rather than just touting the fact that the building will be renovated and the Doughboy Monument will be saved, both feats that any of the proposed uses would accomplish. It is most discouraging to see that the quoted County employees and elected officials are not interested in the BEST use of a very large structure and an entire city block in the middle of an area undergoing revitalization.

I imagine that Mayor Burchett’s response must have been “I am glad somebody’s going to take the job” when selecting a Director of Finance (one that can do math but may not the BEST person to be doing it). I would like to see Mr. Clark’s calculations for determining the economic impact provided by low-income senior housing in an area that is already saturated with low-income uses. Sure the County will receive property tax money from this use, but it would receive that same amount of property tax money from the much better mixed-use proposal offered by Dewhirst. Mr. Clark mentions the creation of 18 jobs but fails to recognize that jobs will be created with either use. More importantly, Family Pride’s proposal shows a $480,000 annual payroll for these 18 employees. That equates to an average gross annual salary of less than $27,000 for each of these new employees. $27,000 is more than $4,000 below Knox County’s limits for the VERY LOW INCOME bracket. Family Pride’s low-income housing development will essentially help to perpetuate the need for low-income housing even for its own employees. The major component missing from Mr. Clark’s assessment, however, is the economic impact on the surrounding businesses affected by this short-sited decision. These businesses, many of them locally-owned, will miss out on a huge opportunity that an active, mixed-use development can provide. Instead of economic gains generated by an influx of employed professionals with income that may be spent at the surrounding businesses, Knox County is choosing the route of minimal economic return by allowing a segment of the population that has little to no expendable income to occupy this property. As evidenced in the Family Pride/Southeastern Housing proposal, practically all needs of the residents will be fulfilled on site. Residents will have no reason to explore the surrounding area and invest what money they may have in the goods and services provided. Even if we look past the low-income component, those residing in this facility will not bring positive economic impact to the businesses in the vicinity.

knoxville_dt writes:

Continued from above…
Speaking of businesses, it should be noted that the interests of neither the surrounding businesses nor the surrounding neighborhoods were represented in the selection committee. The interests of these businesses and individuals were, however, represented in the report prepared by the Community Design Center and attached to the County-issued RFP. From the Design Center’s report, it is clear that the surrounding community rejects the proposed use of low-income housing, senior or otherwise. The Family Pride/Southeastern Housing group is aware of this fact and has even acknowledged this within section 4.4.2 of their proposal where they have stated, “As referenced in the Community Design Center’s recommendations, many transitional, homeless or subsidized housing and support services were specifically excluded as “Do Not Allow” uses by both public input and area availability.” Aside from allowing the building to sit vacant or be demolished, the only other “Do Not Allow” use stated by the community can be summed up as NO LOW INCOME, SUBSIDIZED, TRANSITIONAL OR HOMELESS HOUSING. For Knox County to select a proposed use that clearly defies the requests of the community is disheartening to say the least, but I guess that is what we get when our leadership is willing to settle rather than to seek out what is BEST.

carig (staff) writes:

For the record, Clark is not the finance director, just an employee in the finance department. Chris Caldwell is the director. Also, although he represented the city, Whetsel actually lives in 4th & Gill. And Trent lives downtown.

murfvol writes:

This has to be stopped. That's a horrible use of the building, and detrimental to future neighborhood development.

knoxville_dt writes:

Cari – If possible, please clarify the following. You say that the County Purchasing Department awarded the winning proposal 10 points and the Dewhirst project 0 points in the financial category. Do you mean that the County actually awarded the winning proposal 50 points (10 points per each evaluator) and the Dewhirst proposal 0 points for each evaluator? If this is true then it shows the power that one anonymous county employee had in determining the outcome of this process and also shows that, when rated by 5 evaluators, the Dewhirst proposal was rated 40 points higher than the winning proposal. Is this correct?

carig (staff) writes:

Yes, that is correct.

carig (staff) writes:

FYI, I've posted the RFPs and the evaluation tabulation itself over on our blog: http://blogs.metropulse.com/the_daily...

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