cover_story (2006-07)

Mark Saroff strikes a distinguished pose at a recent Take Back the Government rally on Clinton Highway.

Sandwiched between busy Broadway and the portion of Gay Street that marks the western border of the Old City, the 500 block of West Jackson Avenue seems grimmer, shabbier by the month—like a faded saloon, boarded and empty in the middle of a former ghost town grown suddenly populous and bright.

Around the corner, the 100 block of Gay Street offers new residential developments like the Sterchi Lofts and the Emporium Building. Nearby Market Square, a veritable phantom zone itself not so many years before, burbles with business and pedestrian traffic. Even the dormant corner properties of Jackson and Broadway look promising, having been recently purchased by established developers.

Yet the bulk of West Jackson is scarcely inhabited and scarcely habitable, and will continue to be so, so long as the cluster of buildings known collectively as the McClung Warehouses that loom like weary sentinels over the centermost portion of the block remain undeveloped. And many observers feel that will likely be the case so long as would-be developer Mark Saroff controls them. At press time for this week’s Metro Pulse , Saroff had reportedly signed an offer to sell the McClung buildings to a more experienced local developer, Kenn Davin. The parties have indicated that a closing should take place by the end of this week. But until that happens, it is Saroff’s capricious agency that holds sway over West Jackson.

For his part, Saroff continues to complain that he has been treated unfairly by the city. He recently reiterated his conviction that his properties are marked for condemnation under eminent domain to be redeveloped by an already selected entity whom he declined to name.

Gauging his inclinations at this juncture is all the more difficult given that he refused an interview request from Metro Pulse through his attorney Mark Siegel. “It is Mark’s belief that the Metro Pulse is out to get him,” said Siegel.

During a recent interview broadcast on local AM-1180 radio, Saroff spoke as if he would continue to be involved with the warehouses—he said he envisions creation of a public meeting space entitled “Knoxville Innovation Center” to complement planned retail and residential components. But when asked directly whether he would consider selling the building he was evasive. “I’m interested in the redevelopment of the property,” he said. “So I don’t know how to answer that question.”

Davin, meanwhile, is limited in what he can talk about due to an agreement with Saroff. But local officials and some of Saroff’s associates were willing to speak both on and off the record about his stewardship of the McClung properties, a long and singularly strange chapter in the history of downtown redevelopment.

“He (Saroff) is tremendously passionate about those properties,” says local developer LeRoy Thompson, who tried along with Saroff and developer Bob Talbott to broker a residential project for the buildings in 2004. “He’s also talented and bright. He’s been researching and studying on this for more than 10 years. I would put him up against anyone in the state when it comes to knowledge of historic preservation and rehabilitation.”

But Saroff’s zeal has also seemingly been marked by chronic and crippling uncertainty. Since the early 1990s, he has embraced and then abruptly parted ways with several development plans and would-be development partners.

In the meantime, the condition of the buildings—or the exteriors, at any rate—has continued to decline. And given that they are listed on the National Register of Historic Places, their reclamation is as important to local historic preservationists as it is to center-city boosters, none of whom are satisfied with Saroff’s desultory development efforts.

His inconstancy and lack of progress in rehabbing the McClung properties have been so troubling, in fact, that they were the reason Jackson and adjacent Depot Avenue blocks were designated a redevelopment zone by the city in 2002. The redevelopment designation gave Knoxville’s Community Development Corporation (KCDC) leave to request remediation and redevelopment plans from owners of blighted or underutilized properties that lay within the district, under the implied threat of reclamation by eminent domain. “I think it’s a fair inference,” says one city official, “that the McClung Warehouses were what (officials) had in mind when they established the Jackson redevelopment zone.”

But the result has merely been another series of delays involving Saroff’s properties—including missed deadlines by the developer, rejected proposals coming back from KCDC, and more abortive partnerships.

On Nov. 18, it appeared that at last the fate of the properties would come to a head, when Saroff presented KCDC with a proposal for the buildings at 501, 505, 519 and 523 West Jackson. The proposal was in truth an amendment of sorts to a plan rejected by the agency earlier in the summer, a plan which itself was essentially a reframing of one presented (and rejected) in June of 2003.

But the Nov. 18 submission differed in a few important respects from its predecessors in that it purportedly constituted a decisive effort to address those palpable, visual aspects of blight that were of immediate concern to KCDC officials. Its measures included:

•Replacing roofs on the buildings at 501, 505 and 519 West Jackson, at an estimated cost of $40,000 per building;

•Masonry repairs at 501, 505 and 519, at an estimated $25,000 per building;

•Placing Visqueen (plastic) covers over damaged windows at 501, 505 and 519, at an estimated cost of $10,000 per building;

•Razing entirely the smallest and most dilapidated building at 523, at an estimated cost of $100,000, including monies for paving and landscaping.

Saroff maintained in his submission that masonry work was to begin on Nov. 17; that black plastic window covers would be built by January and installed by March; that construction fencing and other staging implements would be in place by the end of 2005. (Most of that has failed to take place, until recent weeks, when repair of masonry in the rear of the building began in earnest, apparently under the auspices of Davin.)

But though it promised quick action, the plan wasn’t enough—perhaps too little, too late. At the December meeting of KCDC’s board of commissioners, board members rejected the proposal, basing their rejection on three considerations:

•That Saroff failed to provide any timeline for a long-term development plan. Said KCDC Chief Development Officer Dan Tiller in a memo to board members, “The developer has apparently misinterpreted what constitutes blight under the plan and under applicable law…. Blight (in addition to cosmetic elements) also includes deleterious land use and other factors.”

•That Saroff failed to provide adequate budgetary information so KCDC staff could evaluate the soundness of his cost estimates. “It’s hard for us, without more information, to tell whether $25,000 of façade work is sufficient to address the visual blight on one building,” says KCDC executive director Alvin Nance. “There’s no way for us to know whether his estimates are satisfactory.”

•That Saroff has failed to provide evidence that he can finance even the “relatively minor” cosmetic improvements outlined in the proposal. (In summer of 2005, Saroff was some $60,000 in arrears on his city/county property taxes, although he had reduced his debt to $18,000 by the end of the year.) “To date, that’s one of the biggest reasons we’ve rejected his proposals,” Nance says.

But with Saroff tasked yet again with updating his latest remediation proposal, developer Kenn Davin of Knoxville’s Design One Buildings Systems stepped forward as a potential partner in his long-thwarted dream of converting the warehouses into some kind of residential complex.

A Chicago native, Davin moved here seven years ago after 20 years in business in Illinois. He worked for one year with local developer Joe Hollingsworth’s Concept Developments before striking out on his own. Past and current projects include a mix of housing, historic preservation and government facilities, including the Social Security administration offices at Kingston Pike and Walker Springs, located in a former Winn-Dixie grocery store. (Hollingsworth vouches that Davin did a “good, cost-effective job” during his time at Concept Developments.)

Sources say Saroff has since agreed to sell the properties outright to Davin, though it wouldn’t be a first should the mercurial warehouse owner consider selling his interests, only to change his mind. When this story went to press, a spokesperson working with Davin and Saroff said that Davin has offered to buy all of the available Warehouse properties on the north side of Jackson at Saroff’s asking price.

“Kenn has the financing; he has the money in the bank,” said public relations consultant Claire Dewhirst on Feb. 14. “The contract is hammered out. They plan on closing this week.”

According to Dewhirst, Davin will likely develop the McClung properties as high-end condominiums—perhaps as many as 100 units—with the lower floors of the buildings potentially available as commercial space.

Dewhirst says the closing could be a fait accompli by the time this story appears on Feb. 16. Others are less optimistic. “(Saroff) has until Feb. 28 to present his amendments to KCDC, so I expect any deal that might happen to go down to the wire,” says an observer acquainted with Saroff.

Saroff had just acquired the first of the old C.M. McClung Warehouses on West Jackson, and told Dewhirst he wanted to redevelop the buildings as loft residences. (He bought the remaining buildings in 1993 and 1997.)

The two men formed a friendship out of their shared interest in redeveloping historic buildings, although Dewhirst says he preferred to concentrate on “smaller, more manageable buildings,” while Saroff directed his energies toward the larger McClung properties.

Nonetheless, Dewhirst would eventually consider either working with, or else buying from Saroff on several occasions. In one such instance, he and Alabama developer Adam Cohen discussed a three-way partnership with Saroff on the McClung buildings, though the discussions ultimately bore no fruit.

Around 2000, Dewhirst made an offer on several of the warehouses; Saroff accepted the deal, but abruptly departed (without signing off) the real estate closing in a state of nervous agitation, later announcing that he had changed his mind. In 2005, after Saroff listed two of the buildings on the east end of the property for sale through a realty company, Dewhirst made an offer of $1.5 million for those buildings and a parking area on the other side of Jackson. Saroff’s counter-offer was unacceptably high, says Dewhirst, and their discussions ended.

Dewhirst now believes that Saroff’s passion for the McClung properties will never allow him to relinquish ownership or managerial control. “They’re his babies,” he says.

Saroff’s other abortive partnerships would seem to bear out the truth of Dewhirst’s assessment. Over the years, Saroff has been associated variously with Dewhirst, Cohen, Florida developer Michael Thomas Bruce, Talbott and Thompson.

“He’s never been specific on who his partners are, or how exactly he’s going to accomplish what he plans,” says Kim Trent, executive director of Knox Heritage, from which Saroff requested a façade grant in 1999. “We could never get enough information to convince us his project was going to proceed.”

Of all Saroff’s associations, the Talbott/Thompson/Saroff partnership was certainly the most harmonious, and potentially the most fruitful; the trio worked for all of 2004 and the first of 2005 trying to put together the right package of financing plus incentives to convert McClung into residential units. Thompson says he threw in the towel in February of ’05 when it became evident they were about $1 million short of the funds they needed (the city had rejected their request for an $850,000 façade grant), with no new options in sight.

But Thompson says he was, and continues to be, impressed with his one-time partner’s passionate vision. “I met Mark Saroff over a cocktail,” Thompson says. “And the more he talked, the more fascinated I became. Normally, I would run the other way if you suggested historic rehabilitation, but Saroff had done more research than anyone I’ve ever met in my life. He was very knowledgeable. We wasted six months trying to verify his information, only to find out he was right on point.”

Ultimately, says Thompson, “We had everything lined up except a gap of $1 million. I decided it was better for me to go on to other projects than spend another two years trying to get there.”

Some say circumstance has played a role in Saroff’s foundering. Dewhirst believes Saroff’s inability to broker a deal for the warehouses in the ’90s can be attributed in large part to the times, as well as the project’s overarching ambitions. “I don’t think Mark had any chance at that time,” he says. “It was too expensive, and the market wasn’t there until about 2000. It hadn’t been proven that ‘big box’ residential was viable downtown.”

That didn’t happen, Dewhirst says, until he and fellow developer Leigh Burch masterminded the Emporium Building and Sterchi Lofts, respectively. With tax abatements and other assistance from the city, Dewhirst and Burch were able to secure financing from private lenders; the success of their developments would then create interest among local lenders for other, similar downtown reclamation projects.

“When we worked together, I didn’t see the momentum from the city to make the West Jackson area a top priority,” Thompson says. “You had a new administration wrestling with a difficult budget. And for a project like that, for a historic renovation, you need the city, county, and private interests all working together.”

Saroff himself believes city officials have been predisposed to treat him unfairly: In his most recent submission to KCDC (Nov. 18), he notes that “we continue to believe that this project is proceeding without being given the same assistance provided to competing projects in the market (thus placing) this project at a severe competitive disadvantage.”

By several accounts, a sore point for Saroff was the $500,000 façade grant provided to Sam Furrow under Victor Ashe’s mayoral administration for the restoration of the old downtown post office building. With Bill Haslam now in the mayor’s seat, city policy director Bill Lyons has made it clear that incentives such as TIFs (Tax Increment Financing) are the current administration’s preferred means of encouraging development, and Saroff’s own request for a façade grant in 2004 was denied.

“I think in the previous (Ashe) administration, there were some ruffled feathers,” Thompson says. “And Mark is still trying to get over the hostility from those days.”

Another observer puts it that, “To some extent, Saroff got a cold shoulder from the city under Victor’s administration.”

But not everyone buys into the notion that Saroff was snubbed by a hostile administration. “I don’t see why he thinks there’s a drumbeat against him,” says Trent. “I’ve talked to several different city development directors over the years, and their attitudes have all been that, ‘We can work this out.’ But then his plans never materialize, and the buildings continue to deteriorate. I think he’s just looking for someone to write him a check.”

And there’s a pervading instinct among many that Saroff simply lacks the development experience—never mind the financial wherewithal—to achieve his goals. KCDC executive director Alvin Nance is pessimistic that Saroff will ever complete the McClung rehab without the participation of a savvy development interest. “He can’t do it without a partner,” Nance says, “and he’ll have to give the partner control.”

And still more of his failings may be attributable to personality conflicts with potential partners—conflicts due in no small part to Saroff’s own quirks and single-mindedness. “You have some folks who just don’t want to work with Mark,” says one associate. “Mark wants to be the quarterback, and he hasn’t gotten it done. Then someone else comes in, and they want to be quarterback, and they want him to step out of the way. But he is not going to let that happen.”

“I’ve never met anyone this paranoid,” says another local businessman. “He thinks everyone is out to get him.”

Thompson, however, is more diplomatic about Saroff’s eccentricity. “Mark is very knowledgeable. But is he the most politically savvy person? No. Is he the most patient? No. And that impatience has sometimes superceded his reputation for being smart. His passion sometimes comes out the wrong way.”

In his Feb. 10 radio interview, Saroff admitted “I’ve not done a good job of communicating my vision…. Everything I’ve done is generally misunderstood.”

He also contended that the attention given to the state of his buildings has been unfair. “All of downtown looked like that just a few years ago…. There’s absolutely no justification for the seizure of my property,” he said. “I am fully committed to redevelopment.”

The Depot Avenue/railyard side—the one visible to incoming motorists from the interstate—looks worse yet, resembling nothing so much as some blackened squatter’s tenement in New York or Detroit.

As if to underscore the apparent neglect of Saroff’s buildings, Ernie Gross’s handmade furniture shop at 515 West Jackson—the only one of the McClung buildings not owned by Saroff—sits clean and well-tended in the center of the others. Gross’s storefront is a neat presentation of multi-paneled new glass windows behind which can be seen potted plants grown thick and reaching in the radiance of the sun in the southern sky.

A furniture maker for 31 years, Gross relocated his shop to 515 West Jackson about 20 years ago, well before Saroff purchased the surrounding properties. He says he’s put considerable cash as well as sweat equity into his own building, rewiring the electric and plumbing (the warehouse buildings formerly shared wiring and plumbing systems), replacing all the windows, and doing mortar work on the portion of the building around his office. “Every once in a while, someone breaks windows, and I have them replaced immediately,” he says. The rest of the McClung properties, on the other hand, have suffered considerable decline over the time the two have shared the complex. “They’ve deteriorated tremendously,” he claims. “Twenty years ago, they were very solid-looking buildings, with good windows.

“I’m looking forward to seeing those buildings fixed and developed. It hurts my property value to have them looking this way, and I also worry someone will get in one of those and start a fire. From the road, this looks like a dilapidated area, not a good vision for what the city should look like.”

Gross says he hasn’t spoken to Saroff in over a year, though, not since the two quarreled over fallen bricks and gutter run-off allegedly coming from Saroff’s taller buildings onto Gross’s roof.

But looks are at least partly deceiving; Saroff hasn’t wholly neglected the upkeep of his West Jackson properties, only the most visible parts—the portions which, quite naturally, neighbors and city officials are most likely to worry about. People who have been inside Saroff’s Warehouses (which are home to offices for both himself and for architect Ben Garlington) say most of the interiors are well-kept, and the buildings structurally sound.

“From the outside, you wouldn’t think they were worth much,” Thompson says. “They’re much more beautiful from the inside—maple hardwood floors, polished, 12-foot ceilings and exposed brick masonry.”

Unfortunately, that means little to motorists headed into Knoxville on I-275 South or I-40, who are greeted by the unsightly limestone walls at the rear of the buildings, nor to area property owners like Gross, who believe the unkempt exteriors of the McClung Warehouses send an unwelcoming message to potential patrons and residents.

But even though his Nov. 18 blight remediation proposal was rejected, KCDC commissioners gave Saroff one more—perhaps a final—chance to come through with a feasible plan, a 60-day “cure period” during which the developer has been asked to present an amended proposal addressing the board’s primary concerns. Due at the end of February, the proposal would go for another vote at the commission’s meeting in late March.

At this point, the easiest route—for Saroff, at any rate—would appear to be the sale of the properties to Kenn Davin, which has reportedly been set in motion. But Saroff doesn’t have a reputation for making things easy. “I’ve never seen anyone as emotionally attached to a piece of property as he is,” says one observer. “I believe that if there wasn’t a threat of eminent domain, we wouldn’t even be having this discussion.”

Should the sale somehow fail to transpire, and should Saroff then fall short yet again in his proposal to KCDC, his stewardship of the McClung properties may come to an involuntary end. “From a staff standpoint, if his information isn’t satisfactory, we are going to recommend to the board that we should move forward and seek a new developer,” says Nance.

That would mean acquiring the property from Saroff via eminent domain; the board of commissioners could conceivably vote to solicit a new developer at its March meeting, and issue a Request For Proposals within the week. The condemnation itself is another issue, however; one former would-be partner notes that Saroff would probably “fight to the death in court” should KCDC seek to separate him from his property.

In any case, it seems that Knoxville is on the verge of a definitive answer about the future of the buildings on West Jackson Ave. Saroff’s pattern of propose-and-recede has continued for nearly 15 years with no apparent consequence. But the mood in the center city seems different now; with the spate of recently completed downtown residential complexes, ongoing projects like the revitalization of Market Square, and planned ventures like a new Gay Street cinema, there seems to be a renewed sense of urgency regarding both historic preservation and redevelopment. And there’s a feeling among many observers that Saroff has reached the end of his rope.

“During the time I’ve been here, we haven’t seen a single proposal allowing us to confirm the financial ability of Mr. Saroff,” Nance says. “If that evidence existed I don’t see why he wouldn’t have submitted it…. I don’t believe the property owner has the ability to obtain the financing to get it done.”