Here We Go Again (Page 2 of 3)
September 6, 2006By:
“Tying anything up for 40 years is kind of scary,” Lyons said. “Any more than 20 years is hard for [KPH] to return up-front investment, so 20 [years] is the point of compromise.”
Yet the city’s “compromise” doesn’t sit well with some council members.
“We’re giving them such a sweet deal for such a long time,” said City Councilman Steve Hall. “To enter into a deal like that for 20 years is a very long time, we just want [the Sunsphere] back open.”
Although the proposal hasn’t yet to be voted on, members have indicated that the
developers should proceed with their planning and contract details. “I think we have every expectation [the] council will look favorably at it, but [the council members] still have the option to look at the details,” Lyons said.
While everyone involved would like to see the Sunsphere in use, some of the council members aren’t so eager to see a repeat of the questionable economics behind the Candy Factory/Victorian Houses sale. KPH’s proposal won out over bids submitted by local firms Terminus Real Estate, Dewhirst Properties, and Segundo Properties.
“I didn’t like the way [the Candy Factory deal] was handled,” Hall said. “I perceived it as a giveaway. The Victorian Houses, in the condition they were in, [the city] could have gotten $100,000 a piece. That was a sweetheart deal and the way the request for proposals (RFP) read, people had the impression they had to bid on the Candy Factory, the houses, the Sunsphere, and the Amphitheater.”
Retired UT architectural professor Gerald Anderson, who actively opposed the sale of the Candy Factory, agrees.
“The Candy Factory was a real loss, it was a great resource for all the arts. The classes, the Art Market, the outlets. It was a community resource that should have been built up rather than sold to the lowest bidder,” he said. “Losing the Candy Factory to [private enterprise] is unfortunate.”
“I didn’t think the price was adequate. The houses were way below value price. The RFP wanted people to respond to the Candy Factory and Victorian houses together. If the houses had been broken out separately it would have opened a whole new universe of people who would have responded,” Frost said.
“It’s easier for someone to redo a house than a multi-story building…What [KPH] offered didn’t work for me.”
Frost said he has a better feeling about the re-opening of the Sunsphere than what happened to its neighboring structures.
“The city’s not stepping out of the picture, unlike with other properties. With the city’s continued involvement there’s a comfort level there,” he said.
Even with the city’s involvement, nearly every aspect of the deal seems to favor the developers, including utility costs.
“Utilities will run around $60,000 annually when [the Sunsphere] is fully occupied,” said Sunsphere project manager Jeff Galyon. “That’s the worst case scenario, but we hope to reduce cost on overall utilities, we hope to do a lot of improvements to make it more energy efficient.” Galyon said that in the best-case scenario the utility bill could drop to $40,000 after improvements.
Yet under the agreement due before City Council, KPH will pay only $21,000 annually toward utilities, leaving the rest to be picked up by taxpayers.
The city, which will be using the fourth floor as a public observation deck, will “pay around $38,000 to $39,000 in [a] worst case scenario,” Galyon said.
The World’s Fair Site and Sunsphere are the most recent example of what seems to be an ongoing trend involving the relationship between local public officials and developers, resulting in eyebrow-raising deals that always seem to leave private interests on top when the dust has settled.
Kinsey Probasco principle Jon Kinsey is no stranger to the relationship between developers and city officials. Kinsey’s official bio notes that “the city [of Chattanooga] embarked on $150 million worth of new downtown projects” under his watch as mayor from 1997-2001. Three months after leaving office, Kinsey founded his development firm with partner Ben Probasco.
