Regal campus possible for Knox County Schools

Sandra ClarkGossip and Lies, Halls

Regal Entertainment will leave Halls before year’s end, packing up and relocating its corporate headquarters to a renovated physicians’ building on the east end of the old Baptist Hospital site downtown. Now we’re learning that the current Regal campus might become home to the central office of Knox County Schools.

Knox County has issued an “intent to award” to Nashville-based BNA Associates for the sale and redevelopment of the historic Andrew Johnson Hotel, a priority of Mayor Tim Burchett. The deal is contingent on finding a suitable headquarters for KCS – approximately 95,000 square feet of office space.

BNA suggested two sites, a warehouse on Outlet Drive in deep West Knox County and the Regal campus in Halls. Here’s the language from BNA’s proposal:

BNA has explored a building owned by First Commercial Real Estate on Outlet Drive. The facility offers the school system space to locate on one level in an open-office environment. It also offers, in the same facility, space for training and continuing education. The property offers plenty of parking and space for the construction of a warehouse for the system.

 McCarty Holsaple McCarty has prepared conceptual floor plans that show how this might work for the school system’s program. BNA would trade this property to Knox County in exchange for the Andrew Johnson plus $6 million in cash.

BNA has also explored another facility-specific option for the Knox County school system. Regal Cinema Corporation is moving their corporate headquarters to downtown Knoxville. MHM, using their information regarding the school system’s needs and their desired adjacencies, has prepared a test fit at Regal’s former headquarters. As opposed to the Outlet Drive building, the Regal option offers a campus approach to the school administration. BNA would trade this property plus $2 million in cash for the Andrew Johnson Building.

Mayor Tim Burchett said as much as he wants to redevelop the AJ Building and return it to the tax rolls, the decision to relocate its administrative offices is the school board’s. “This (intent to award) is just one piece of the process.”

The Andrew Johnson Building was originally home to the Andrew Johnson Hotel, which opened in 1929. Knox County purchased the 18-story building in 1991.

Rebuilding the AJ

Seven firms submitted proposals for the Andrew Johnson Building, and the team of evaluators from the county’s procurement office selected the most expensive, elaborate choice – and the one that generates the most income for the county.

The five evaluators were: Ben Sharbel, Knox County Procurement; Kristin Grove, Public Building Authority; Jon Rysewyk, Knox County Schools; Bill Lyons, city of Knoxville; and Blaise Burch, J.A. Fielden Co. Their consensus was clear. Although the points were close in a couple of areas, four of five evaluators selected BNA as No. 1.

BNA (90 points of 90 possible) Nashville-based developer Philip Welker proposes a 94-room boutique hotel with 75 residences and a rooftop bar, as well as various other retail and restaurant offerings. He estimates the redevelopment will generate 100 permanent jobs and over $1.5 million in local sales and hotel/motel tax revenue, with an initial investment of $43 million. The proposed purchase price to Knox County is $2-6 million plus a site for Knox County Schools. BNA’s local team includes Denark Construction, McCarty Holsaple McCarty Architects and Knox Heritage. “We are prepared for an all cash closing within 180 days.”

Terminus Real Estate Inc. and Legacy Capital Partners (88 points) The Knoxville-based development team proposed a 125-room hotel with condominiums on the top five floors. Principals are Leigh Burch (Terminus) and Dean Smith and Steve Davis (Legacy) plus Design Innovation Architects and Merit Construction. Team members restored Sterchi Lofts, The Commerce Building, The Farragut Hotel and The Medical Arts Building. The group would create a Class A Hotel from Choice Hotels, Cambria Inn and Suites to be managed by Crescent Hotels and Resorts, with Clayton Bank to provide financing. $31.2 million project with $5.3 million to Knox County.

Development Services Group (85 points) from Memphis – Specializes in restoration of historic buildings in urban areas. President Gary Prosterman is UT graduate whose wife is a Knoxville native. Team included Blaine Construction of Knoxville. Vision includes 116 market rate apartments, large co-working space with memberships available to residents and non-residents, retail, upscale restaurant and casual bistro. $21.5 million project with $3.55 million to Knox County.

LHP Capital (84 points) – The “all local” team consisted of LHP Capital (Phillip Lawson), plus Conversion Properties (Joe Petre), McCarty Holsaple McCarty Architects, and Johnson & Galyon Construction. It proposed a mixed use of 142 apartments (30 percent of which would be “affordable”) and street-level retail including a fitness center. Proposed a $26.7 million budget with $4.6 million payment to Knox County.

BET Investments (79 points)Ohio-based development company with properties in 12 states (none in Tennessee). Interesting proposal for limited change – 144 apartments with “live/work” spaces on ground level; restoration of grand dining room; shared space for residents on 16th and 17th floors. Proposed a $24 million project, paying Knox County $4.475 million.

Sun Development (79 points) – Indianapolis-based company proposed 105 new hotel rooms on floors 3-9 to be under the new Tapestry by Hilton brand. Would create 76 Homewood Suites by Hilton on floors 10-17 to serve extended-stay travelers. Retail, dining and fitness center on main level. $28.7 million project, paying $3.5 million for property acquisition.

Crescent Bend & Safe Harbor (75 points). Local developer Paul Murphy proposed 104 luxury apartments with retail on the ground level and a signature restaurant on the 17th floor. $23 million project.

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