Preeminent Domain

Conflicts and opportunities arise as South Knox Waterfront development gears up

Property owner Gary Bayless is certainly one person whose fortunes are closely and personally tied to the massive redevelopment of Knoxville's South Waterfront, though he's not quite as voluble a cheerleader for it as some developers are. Bayless owns a small three-bedroom home on Sevier Avenue, right at the complicated and hazardous-looking intersection of Island Home and Lincoln Street. It's right on top of where the city is going to build a roundabout—part of a project announced in 2007 to extend Lincoln out to the river, where it will intersect the proposed riverwalk and boat launch. As of right now, it looks like Bayless is going to have to plan on relinquishing the house.

"I think it's ridiculous," Bayless says. He's owned the home since 1994, when he bought it for $68,000 for his daughters, who've since moved. He now rents the house out, and he'd like to continue to do that.

Bayless' tenants and nearby neighbors have begun a small grassroots campaign to stop the roundabout project. Recently, lawn signs have appeared in the neighborhood reading "STOP: No Roundabout or Boat Launch Needed in Our Neighborhood," and below that, "They're taking our homes."

The Sevier Avenue roundabout plan will only affect a few small tracts of privately owned land: Bayless' house in its entirety, plus small pieces of the Civil Air Patrol property on Sevier and a house on Island Home. Bayless believes that the streets can be re-aligned without it.

"I've talked to the city about it," he says. "I've asked if there's any way they could move it back about 60 feet. They told me they'd look into it. Really, I don't understand why they can't just put in a four-way stop."

Senior Director of South Waterfront Development David Hill says that the city looked into other plans for the intersection, but the roundabout appeared to be the best for traffic flow and the least intrusive into adjacent properties. Bayless has been aware of the plan since it was initially proposed, but it really hit him in September, when he received a letter from Knoxville's Community Development Corporation offering to purchase the house for $96,000, an amount he contests.

"That offer's not even close to the value of that house," Bayless says. "It's at least $180,000."

Being forced to sell will certainly be a hardship, even though it's not yet a certainty. Bayless has put in about $80,000 of improvements—he's replaced hardwood floors, installed central air, put in a custom-designed bathroom—since he purchased the house. Plus, since he rents it out, it's a source of income for him, not to mention the fact that, according to Bayless, his tenants are happy where they are.

"Those are all things KCDC will take into a consideration in the negotiations process," says Hill, adding that the city will also most likely help with the tenants' relocation.

The problem is that the home is in the way of a very important, long-term development priority for the city, one that also led to the creation of the non-profit umbrella neighborhood group South Knoxville Foundation.

Formed by City Councilman Joe Hultquist in 2005, right as the riverfront plans were beginning to take shape, the South Knoxville Foundation was conceived as an intermediary between residents, business owners, and government. Its vice-president is Kelly Conley, wife of parts distribution firm Regal Corp. owner Mike Conley, and sister-in-law of developer and former Metro Pulse owner Brian Conley. (All the aforementioned Conleys have major riverfront condo plans in the works.) It partnered with the city on the 2005 redevelopment feasibility study. And just before the city approved a comprehensive South Waterfront plan in April 2006, the foundation commissioned West Coast design firm Donald Newlands and Company to prepare an animated "flyover" of an idealized, bustling South Waterfront as it might look in 20 years.

The group held its first annual South Knoxville Summit on Nov. 1 at the Tennessee School for the Deaf. The Summit, an all-day workshopping and discussion panel, was supposed to be about more than just the South Knoxville Waterfront Development. It was also supposed to be about forging partnerships between South Knoxville business, residents, religious organizations, and political leaders, and about all the other stuff that's happening in South Knoxville: the proposed redevelopment of the Vestal business district, the newly formed Downtown South Business Association, and the ambitious plan to develop 1,000 acres of South Knoxville land—including three Civil War forts­—into a greenway and "historic corridor."

But even Hultquist wasn't surprised that the waterfront, and the progress it's made, were on the top of a lot of the attendees' minds.

"That is certainly a major emphasis," he says. "It's conservatively a billion-dollar project over the next 20 years. The south waterfront is key to the development of South Knoxville."

The success or failure of the waterfront will likely affect other development schemes and business plans south of the river, says Hultquist, notably the Chapman Highway commercial corridor, which the foundation's website re-imagines as an upscale, pedestrian-friendly chain of "Town Centers" (New Urbanism's answer to the strip mall) by 2034.

Eminent domain is a sticky political subject, but municipal projects of this scope have a tendency to run up against privately owned land, as homeowners like Bayless have found out. Still, Hultquist is quick to say that the city took steps to try assuage homeowners' fears about having their property pulled out from under them.

"We wanted to keep the use of eminent domain as limited as possible," as part of the South Waterfront project, says Hultquist.

Following a series of public meetings, the city placed a policy into the plan that would limit acquisitions to be used only to make room for city-owned infrastructure improvements rather than private interests.

"That was a very unusual addition," says Hill. "It's a policy that goes way beyond state law on eminent domain."

Limited, of course, is not synonymous with absent. The most visible potential buy is, of course, the 12-acre Marathon Petroleum facility on Sevier where the city would like to build a riverwalk. That plan's had some hiccups because Marathon needs both rail and river access. Because of its size and the potential relocation costs, it could be prohibitively costly.

"That is going to be a very expensive acquisition," says Hill.

In most cases, eminent domain offers payment on the "Fair Value" principle. That is, the government body is compelled to pay the largest reasonable amount that the house would sell for if it were put into the open market.

"Let me explain the process by which we go about this," says Hill. "First, we hire a third-party property assessor to do an evaluation. Then, we hire another one to confirm it. Now that that's been done, Mr. Bayless has the opportunity to get his own assessment, then we negotiate."

Bayless has not yet called for his own assessment but claims that other, comparable properties nearby have sold for close to $200,000. A South Knoxville real estate expert says that houses in that neighborhood, at that size, typically go for less than $100,000. He says that figuring a 3 percent yearly appreciation value (which he says is normal for South Knoxville), since Bayless purchased it 14 years ago at $68,000, the house should be worth about $96,500 now.

"The city's offer sounds just about right to me," says the expert, who preferred not to be named. "If I were him, I'd take that money and run."