Practice Swings

Practice Swings

City and county officials dig into the multi-use stadium proposal ahead of key votes on the $80.1 million project.

by scott barker • November 9, 2021
Knoxville Mayor Indya Kincannon (left) talks with Commissioner Dasha Lundy prior to Monday's work session on the proposed stadium.

Knoxville City Council members and Knox County commissioners got some clarity on issues surrounding the multi-use stadium proposed for the edge of the Old City and began staking out their positions during a joint workshop on Monday.

The stadium project arrives at its 'fish or cut bait' moment.

The non-voting workshop was held as critical votes on the future of the $80.1 million project are scheduled for the coming week. 

Discussion revolved around the potential community benefits of the project and funding — primarily infrastructure improvements around the stadium and a capital improvement reserve fund for future renovations.

Tennessee Smokies owner Randy Boyd, who first proposed the stadium as a new home for his minor-league baseball team, called the project “the opportunity of a lifetime” to reconnect the downtown area to East Knoxville.

“The worst thing that could happen would be nothing,” he told the Commission and Council members. “This is our chance to make a difference.”

Knoxville Mayor Indya Kincannon and Knox County Mayor Glenn Jacobs came to the meeting to voice their support for the stadium, which would be largely financed by public bonds that would be paid off over the next 30 years.

“Do the benefits outweigh the costs?” Kincannon asked. “The answer is absolutely they do. Hands down.”

Jacobs, a libertarian who is loath to spend public funds on non-essential functions, said he was initially skeptical of the plan to bring the Smokies back to Knoxville after 20 years in Kodak.

“I wanted to say no to this. The problem is, it really makes sense,” he said. “This is a once-in-a-lifetime opportunity to change part of our community for the better.”

Stephanie Welch, the city’s chief economic and community development officer, called the upcoming votes on an interlocal agreement a “fish or cut bait” moment.

The interlocal agreement would authorize the city-county Sports Authority to build the stadium. The Sports Authority is scheduled to vote on the agreement tomorrow, followed by votes at County Commission next Monday and City Council next Tuesday.

Benefits Disagreement

Boyd launched a preemptive strike in the discussion about community benefits, opening the session by outlining the steps he and his team have taken to hire disadvantaged business enterprises (DBEs), which are minority-, woman- and veteran-owned businesses. 

His development team is working with the Knoxville Area Urban League to recruit and prepare DBEs for work on the project, as well as engage in workforce training. The goal is to have DBEs make up at least 15 percent of the subcontracting pool.

“We talk about it as the 15 percent floor, not the ceiling,” Urban League President and CEO Phyllis Nichols told the lawmakers. “Our aspiration is to exceed that.”

Boyd is also working with the Beck Cultural Exchange Center to honor the culture and history of East Knoxville in the project’s design.

“Everybody’s for a benefit for the community,” Boyd said. “We’re in favor of a benefit for the community.”

The community workforce goals are included in a proposed development agreement, which is still being negotiated, but that didn’t satisfy two Council members. 

“What we have before us is not a community benefits agreement,” Councilwoman Amelia Parker said. “We need to ensure that the verbal promises being made are part of this project for the entire 30 years. It is reasonable the community would want more than a good faith effort.”

She said she wanted a delay in voting on the interlocal agreement.

“I have found this process unfortunate and a disservice to Knoxville,” she said, adding that the project poses risks. “We have not done our due diligence as a city.”

Councilwoman Seema Singh also said she would like to see a delay until a community benefits agreement can be reached.

“I need it to help all Knoxvillians,” she said. “I’m trying to think from the bottom up. Trickle-down economics doesn’t work.”

Singh invited Karla Campbell, a Nashville attorney who negotiated a community benefits agreement for that city’s soccer stadium, to speak at Monday’s meeting. Campbell said there’s no reason such a pact wouldn’t work in Knoxville.

Labor groups have proposed a separate community benefits agreement that would make the project’s workforce goals mandatory, but Boyd continued his insistence that a separate agreement is unnecessary.

“We’re already committed,” he said. “The things you want in a community benefits agreement, we’re already doing.”

No other Council member or commissioner joined Singh and Parker in calling for a delay in their votes on the interlocal agreement.

Dollars and Infrastructure

The overall construction budget would be $80.1 million, which includes a $7.25 million contingency fund to cover small overages and materials price fluctuations. RR Land LLC, Boyd’s development company, would be responsible for any construction cost overruns.

The interlocal agreement would authorize the Sports Authority to issue $65 million in revenue bonds to pay for construction. A state grant for $13.5 million is also part of the mix. 

In addition, Boyd is spending $5.8 million in direct construction costs and absorbing the $4 million already spent to demolish the former Lay’s Packing Plant and other buildings on the site. He’s also donating the land, which he said is valued at about $10 million.

The bonds would require about $3.2 million a year in debt service, which city and county officials say would be mostly paid for with a combination of sales tax revenues generated at the stadium, revenues from a payment-lieu-of-tax (PILOT) agreement for adjacent privately funded development and a $1 million a year lease the Smokies would pay as the primary tenant.

But the city and county would be responsible for making up the difference in the debt service each year. Initially, estimates show the city and county would each have to pay about $240,000 a year to cover the payments.

“This is less than we pay to maintain one of our municipal golf courses,” Kincannon said, noting that projections show the amount should shrink to zero by the 10th year, as stadium revenues rise.

“Sales tax revenues from the stadium are expected to increase dramatically over 30 years,” said Mark Mamantov, bond counsel for the project.

Commissioners and Council members had questions about a capital improvement reserve fund that would be used to pay for major stadium improvements over the next 30 years. (As the managing tenant, the Smokies would be responsible for ongoing minor repairs and maintenance.) 

Knox County Chief Financial Officer Chris Caldwell said staff looked at other stadiums and determined that it would be best to take a “stair-step” approach to reach a $10.2 million reserve fund over the next three decades.

“There aren’t a lot of capital needs in the first few years,” he said, though over time the need for renovations or other capital improvements would probably grow.

The capital improvement reserve fund would be seeded with $1 million of money from the construction contingency fund, assuming some is left over after the stadium is built. After that, the city and county would be required to split annual contributions that would grow over time.

The $1 million in seed money would fully fund the capital improvement reserve through nine years. In the 10th year, the same year the city and county should be shed of paying for debt service, the annual contribution to the capital improvement reserve fund would be $100,000 each. The funding model maxes out at $300,000 each in the 30th year of the deal.

In addition to the $80.1 million stadium cost, infrastructure upgrades would be needed in the area. The city would take responsibility for the streets, sidewalks and a public plaza to be built on the western side of the stadium. Knoxville Utilities Board would make utility improvements.

Welch said the public plaza would be about the same size as Market Square. 

“We’re talking about a $10-14 million infrastructure cost,” she said. “That’s less than half as much as Cumberland Avenue” streetscape upgrades. She said the Kincannon administration would seek an amendment to the Magnolia Avenue Redevelopment Plan that would allow the city to use tax increment financing in the area to pay for the work.

Welch didn’t have an estimate for the utility work, but noted that KUB has a fund in place to address aging infrastructure and that federal funding could be available. 

Voices of Support

Several officials expressed support for the project. Commissioners Larsen Jay, Charles Busler and Carson Dailey, along with Council members Charles Thomas, Janet Testerman, and Gwen McKenzie declared their intentions to vote for the project. Others spoke well of the effort but stopped short of showing their hands.

“This is a huge opportunity for economic investment, not only for the city but for the community,” said McKenzie, who represents East Knoxville.

Testerman noted Boyd’s personal investment in the project, which would run to about $50 million over 30 years. “If that doesn’t show commitment and reflect a true love affair with the city, I don’t know what does,” she said.

Busler said the project is needed to move the community forward. 

“We need this kind of development to bring people in,” he said. “They will spend more money on sports than anything else.”

Dailey said that, like Jacobs, he was a skeptic at first but has since become convinced the stadium would be good for the county. “I fully support it,” he said, adding that he’s known Boyd since childhood. “He’s an honorable man,” Dailey said. “He’ll do what he says.”