Knoxville College Development Deal May Determine its Future

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The Knoxville College board of trustees is meeting Friday to discuss a possible deal with Knoxville-based Southeast Commercial to redevelop some portion of the college’s 39-acre campus in Mechanicsville. Board chairman James Reese says the board may vote on the agreement then, although it has not publicly discussed the contract or advertised for other proposals.

The deal would give Southeast Commercial exclusive “master developer” rights for the property even before Southeast provides details about the nature of its proposed development. The proposal was first pitched to trustees in March, before they announced the college would not hold classes in the fall.

Founded in 1875, Knoxville College once boasted its own hospital and educated hundreds of black teachers and pastors. But it fell on hard times as enrollment and funding dwindled, losing its accreditation in 1997. With less than a dozen students left, the college announced in April that it would discontinue classes at the end of the semester, although the Knoxville News Sentinel reported on Tuesday that the college plans to resume classes in 2016. 

Southeast Commercial’s proposal may have been a factor in the board’s decision to temporarily end classes, but not a deciding factor, Reese says. “I don’t think we made our decision about classes based on the outcome of the conversation,” he says.

The college is currently operating without a president. That job has had a revolving door since 2005, with the last (and unpaid) president lasting only about three months.

Last year the City of Knoxville condemned the college’s remaining occupied dormitory and its administration building, and the Environmental Protection Agency conducted a major chemical cleanup of the former science building. The college owes the federal government around $1 million in taxes and cleanup costs. A facilities assessment conducted by college officials and dated March 5 indicated that Foundation Capital has a lien of almost $6 million against the college property. The assessment also showed the college is not currently paying for any general liability, property, bond, or umbrella insurance. The only current insurance is for the board, officers and directors.

With so many problems, the college may be open to innovative solutions. Reese said Tuesday the amount of the college’s land that would be part of the redevelopment deal, and the amount of money that might change hands, had not been decided. But the board will discuss it Friday.

Also on Friday, Knoxville College board member Leonard Adams has scheduled a meeting with Knoxville Mayor Madeline Rogero to discuss the college, says Bill Lyons, deputy to the mayor. Adams, who operates a community development organization in Atlanta, declined to answer questions about the Southeast Commercial deal before Friday.

So did Southeast Commercial president Gary Smith. “I don’t want to comment because I will be finalizing my plans on that this week,” he says. “It’s premature to say anything about it.”

Southeast Commercial has developed or redeveloped high-profile hotels and commercial ventures in Knoxville, including the Hilton, the Marriott, the downtown YMCA, Dunhill Apartments, the Knoxville Expo Center on Clinton Highway, and National College.

Reese says the college board of trustees did not issue a formal request for redevelopment proposals, a common method used by nonprofits and governments seeking competitive, transparent proposals for handling a project.

Reese says that, less formally, “we let it be known we were interested” in redeveloping the land, and he says the board “has heard from other folks that were interested.”

One of those folks was Mechanicsville neighborhood activist Bentley Marlow, who contacted college officials April 22 after hearing that trustees might be about to vote on a Southeast Commercial proposal. He asked the board to give him and his partner 30 days to provide a formal proposal of their own. “More competing proposals will only serve to generate better ideas and a better long-term deal for KC, which is in everyone’s best interest,” he wrote. But emails show they were granted only a week and were unable to line up a developer that quickly. Marlow provided Knoxville Mercury with a copy of the Southeast Commercial agreement and cover letter, the March 5 facilities assessment conducted by the college, and emails related to his own development proposal.

Marlow speculates that Southeast will pursue low-income housing for the property because tax credits would probably be available. But he argues that the neighborhood, which is already home to a Knoxville Community Development Corporation public-housing complex, doesn’t need more low-income housing. And he says the nonprofit college should do any redevelopment deals in a public manner that allows competition, so donors, neighbors, and the city get the best deal and have a say in the best use for the land.

Charles Wright, president of the Mechanicsville Community Association, says he’d prefer the property remain a college. Although he is matter of fact about the college’s ability to make its own choices, he says he’d like those decisions made in the open. “I would like the college to either get some input from the community or be more forthcoming about what they’re going to do,” Wright says.

In a March 13 letter to Frank Robinson, vice chairman of the college board of trustees, Smith wrote: “We need the local people, MPC, the City, and other neighbors believing in what is going to happen, to gain support, and the momentum we need to secure an investment in this site by Public or Private Investors or Developers.”

The Southeast Commercial Deal

Southeast Commercial provided Knoxville College officials with a proposed “master developer agreement” dated March 16.

“The ‘master developer agreement’ will allow both of us time to work together to Develop this strategic plan and determine what is the best use for the property, and how it will benefit both of us,” Smith wrote in his March 13 letter.

The agreement does not specify the type of development Southeast Commercial would pursue or whether either the college or Southeast would receive any money as part of the deal. It would give Southeast exclusive development rights for up to a year unless the parties agreed to a memorandum of understanding before then. The college could not sell or rent the property or work with another developer during the contract term.

According to a contract proposal dated March 16, Southeast would have until September 1 to present the details of its actual development concept to the board.

“If necessary as determined by the developer,” Southeast Commercial would hold public meetings to get feedback from nearby property owners, Knoxville College students, and the public before finalizing the concept.

The master developer agreement would give Southeast the authority to negotiate purchase deals; plan, design, promote, and advertise the project; negotiate leases with prospective tenants; identify public incentives and financing needed to make the project profitable, and then negotiate them with local governments. The developer could also work on the college’s behalf with its creditors as well as the EPA and the IRS, according to the proposed agreement.

If and when Southeast and Knoxville College agree on a memorandum of understanding, it would include details about all the proposed retail, commercial, entertainment, and office spaces, amount of rental income likely to be produced, specifics about public incentives and financing to be provided by the owner, and proof of financing.

Smith’s March 13 letter indicates that the first steps, however, would be to figure out the true condition of the buildings and try to stabilize them.

The letter also indicates that Southeast is open to the possibility of buying or leasing buildings or portions of the site, as well as a potential joint venture with the college. The goal, the letter states, would be to start working on a specific project before the start of the second year, or before March 31, 2016. (The letter assumed that the agreement would be signed and work would begin in April.)

The master-developer agreement repeatedly discusses the potential use of public development incentives and tax financing as part of the project and specifically states that the college will consider these, including classifying the redeveloped portion of the campus as an urban-renewal area to qualify for tax increment financing.

In its March facilities assessment, the college identified a list of “potential funding opportunities.” Number one was historic tax credits. Number two was low-income housing credits.

From College Campus to … What?

Marlow and his partner (and Mechanicsville neighbor) Scott Sherrill wrote a letter to Adams in which they argued against using tax credits to build low-income housing. He says most of the developers he consulted in the single week he was given were interested only in that type of development, which he sees as bad for Mechanicsville.

“I think exploiting Knoxville College just so a developer can get some tax credits is disrespectful to the history and legacy of Knoxville College,” Marlow says. “To have that legacy become a footnote of history is shameful, especially for the purpose of pure profit.”

When he moved to Mechanicsville 11 years ago, Marlow says, “I was the first white guy on the street. It was a pretty lawless place. Two doors down was a very active crack house with a drive-through.” In 2009, Marlow helped start a neighborhood-watch program, and the residents have since worked with police to reduce crime. The Hope VI project replaced the 1930s-era College Homes with a smaller number of roomier houses and duplexes.

Marlow says when the neighborhood watch started, the police department found that more than half of the neighborhood was KCDC-owned or -controlled low-income housing. “That’s a huge number disproportionate to anywhere else in the city,” Marlow claims. Adding more would contradict the Hope VI goal of encouraging mixed-income housing, he says.

Alvin Nance, former KCDC director and now CEO of development and property management operating divisions for Lawler Wood Housing Partners, says home ownership has increased in Mechanicsville. He says the Hope VI project reduced the number of public-housing units from 320 to 255, so the neighborhood could probably support more low-income housing. He says the area would score “very high” on a tax-credit application. “Whether that would be for the good of the community is not part of the application,” he says.

Marlow, whose Marlow Properties LLC renovates houses in Mechanicsville, has a different redevelopment vision: turning the football field into an outdoor music venue seating 40,000 to 50,000 people and renovating the dorms into mixed-use condominiums and commercial/restaurant spaces, with a hotel to cater to the music events.

“Our plan would be that we would pay a percentage of our profits to Knoxville College to help them continue, and find some way to help them keep the 14 acres on the National Register (of Historic Places), and use our profits to first stabilize and restore any historic structures worth saving,” Marlow says. “We have soft financial commitments enough to satisfy the $6 million in outstanding debts on the property, contingent on us getting the deal and clearing the title so our investors would take priority lien.”

He says his group was considering an investment of $200 million to $250 million over 10 years.

“It could become a destination, and if you spend the money we’re talking about, that’s going to trickle out into the neighborhood,” Marlow says.

History and Ruins

It’s unclear whether Southeast Commercial proposes redeveloping the oldest campus buildings, which were designated as a national historic district in 1980. The buildings are mostly more than a century old, some constructed from bricks made by the college’s students. The historic district buildings include the chapel, the president’s house, Elnathan Hall, McKee Hall, Wallace Hall, Giffen Alumni Memorial Building, and two early faculty homes.

Lyons, while stipulating that Rogero’s administration is unfamiliar with any deal in the works, says, “We want to make sure the historic buildings are preserved in any further redevelopment. It’s a critical area. The city would want to be involved in any way we could.”

The historic designation doesn’t prevent the college from remodeling the buildings or tearing them down unless it aims to use federal funds to do so. If federal housing funding is involved, the Advisory Council on Historic Preservation gets to weigh in first.

A facilities assessment conducted by Adams and several other college officials March 5 found that many of the campus buildings, including the historic structures, were in poor condition and some were recommended for possible demolition. The assessment summarizes: “The campus appears a ghost town made up of blight, abandon [sic] historic buildings,” and “each and every structure needs substantial work.” The residence halls were severely vandalized and there was evidence of squatters, although none were seen by college officials.

Marlow says he visited all the buildings when putting together his proposal and did find squatters in some. Copper and electrical wiring has been stripped, sinks have been dismantled for their brass, pipes have been removed from the pipe organ, and wire thieves have destroyed about 20 pianos in the music building, he says. “There’s not a single pane of glass on that campus that’s not been broken,” Marlow says.

Last year, the Knoxville College historic district made Knox Heritage’s list of “Fragile 15” most-endangered historic buildings. “Now is the time for bold action and an openness to out-of-the-box thinking that may or may not include [the college’s] traditional operational model,” Knox Heritage declared in its listing. “We call upon the college’s administration and board of trustees to partner with other organizations and companies to bring needed financial resources to bear before they are in a situation of having ‘loved the college to death’ and the historic buildings are lost forever.”

People outside the neighborhood, including far-flung Knoxville College graduates, remain concerned about what happens on the property because of its history. But that’s not the only reason its scope reaches outside Mechanicsville.

Nance notes, “Not only folks living in that area, but a lot of people in greater Knoxville are interested in and wondering what is the long-term future of Knoxville College, because of it being close to downtown and on such a large tract of land.”

S. Heather Duncan has won numerous awards for her feature writing and coverage of the environment, government, education, business and local history during her 15-year reporting career. Originally from Western North Carolina, Heather has worked for Radio Free Europe, the Institute for War and Peace Reporting in London, and several daily newspapers. Heather spent almost a dozen years at The Telegraph in Macon, Ga., where she spent most of her time covering the environment or writing project-investigations that provoked changes such as new laws related to day care and the protection of environmentally-sensitive lands. You can reach Heather at

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