KNOXVILLE, Tenn. — The Knox County Commission voted to approve a measure to enable a developer to move forward with plans for the Andrew Johnson Building in downtown Knoxville.
The commission voted 7 to 2 in favor of delegating the Industrial Development Board of Knox County the authority to negotiate, accept and waive payments on the property in lieu of taxes. Two commissioners abstained from voting.
The project for the historic Gay Street building would include apartments and other commercial uses, and had originally included a plan to use several rooms as a boutique hotel.
The building has sat vacant for decades and has served as a temporary home for Knox County Schools administration, which is set to move from the old hotel to the TVA East Tower soon, making way for the AJ Building to go back on the tax rolls.
The developer, BNA Associates, plans to close on the property in September.
The commission was somewhat reluctant to approve the measure, but did so in order to ensure the building would be able to return to county tax rolls in a timely fashion -- saying there was a very real possibility that the building would have trouble finding another developer if the deal were to fall through.
The county had been very keen on the hotel portion of the plan, which would have created more jobs and hotel-motel tax revenue from the onset.
When the COVID-19 pandemic devastated the hotel and travel industry, the developer ran into financial snags with finalizing the purchase of the building. The developer told the county it hadn't been able to secure financing for part of the deal that would have transformed it into a boutique hotel -- so it proposed another development agreement that would move forward without it initially, but eventually convert some micro-apartments into hotel rooms.
Knox County Mayor Glenn Jacobs said accepting the altered deal would have set a bad precedent for the county, but commissioners voted in December to allow BNA Associates to move forward with its altered plans that included penalties if it did not convert portions of the building into hotel rooms within 5 years.
Commissioners who were in favor of moving forward Monday said it was important for the county to keep its word to the developer after roughly 5 years of planning and negotiation.