|City outlines theater process at public meeting
January 20, 2005 - City of Knoxville and Knox
Heritage leaders at a public meeting Thursday outlined the reasons
for a $3 million funding disparity between renovation and new construction
to locate a new downtown movie theater in the 500 block of Gay Street.
Based on the historic preservation community's indications that retention of simply the facades would not qualify the project for tax credits, but that keeping at least 60 feet of the buildings likely could qualify, the City's consultants drafted construction estimates in consultation with the National Trust for Historic Preservation.
Those estimates show rehabilitation would cost $3 million more than
Bill Haslam earlier this month asked Knox Heritage's leadership to
explore within 45 days whether other alternatives existed to close
that funding gap.
The budget for the movie theater project includes a $3 million contribution from the City's Industrial Development Board; $2.5 million from Regal Entertainment in furniture, fixture and equipment; with the balance of funding to come from third-party investors. The Industrial Development Board will lease the facility to Regal Entertainment. Those lease payments, in turn, will retire the debt financed by third-party investors.
Bill Lyons, the City's director of economic development, explained any alternatives proposed by Knox Heritage must generate revenue from other sources not previously identified to close any remaining funding gaps.
Mayor Haslam has noted that the movie theater is a strategic investment in downtown that will encourage retailers, including a regional store operator who has already shown strong interest, and restaurants to commit to downtown locations. That, in turn, will enable the City to recapture sales tax revenues generated downtown that would otherwise have gone to the state and apply that money to repaying the debt associated with the Knoxville Convention Center.
The Mayor has stated the project must be affordable for City taxpayers and generate a return on their investment.
Lyons detailed the history of the project, noting that developing a movie theater in the 500 block of Gay Street is a cornerstone of the Kinsey Probasco plan for Market Square, which was adopted by City Council in 2002 after an extensive public participation process.
Members of Mayor Bill Haslam's administration began working last spring with Regal Entertainment, Knox Heritage and design and construction experts in the public and private sector to create design scenarios for a financially viable theater.
It quickly became apparent, Lyons stated, that rehabilitating the buildings - which have been vacant at least 20 years - would make the entire project much more costly than pursuing new construction.
The cost of rehabilitating the first 60 feet of the buildings was estimated, and those numbers reviewed by the National Trust for Historic Preservation.
Mayor Haslam has allocated $10,000 in City funds to Knox Heritage to match $10,000 in private donations to explore ways to close the financial gap.
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