City Council Meeting, Jan 22

After a nice resolution in honor of "School Board Appreciation Week," Council got down to real business.

First, an ordinance was adopted designating the Highland View Redevelopment area as a residential rental inspection district. The whole resolution is here (page 25), but in essence, it permits housing inspections in that district only.

They approved a resolution accepting $1.3 million in payment in lieu of taxes, which Councilman Abbatiello noted was about 1/10th of what it should be. Nonetheless, it was unanimously approved.

Another greenway was approved, continuing the Melton Lake Greenway under the bridge at Bull Run, which will hopefully connect our greenway with those in Knox County at some point. (Knox County? What about the rest of Oak Ridge?) Councilman Beehan brought up a need to eventually connect the West end to the East side, coming through the middle of town.

A resolution was approved to award the contract for shoreline stabilization at Melton Hill Lake. Part of the stabilization will occur on private property (now Flatwater Grill), but the owner will make a payment in lieu of taxes in the amount of the shoreline stabilization cost. A new dock is included.

Planning Commission: Council re-appointed Linda Brown and Marty Cole to the Planning Commission. There will be eight elections up for grabs at the Feb. 19th Council meeting on various boards and committees.

Golden reported on the meetings of the Budget & Finance Committee, which will meet on the first and third Tuesdays at 5:00 p.m., each month leading up to the budget process. The first meeting will be held on Feb. 6, and a calendar for all meetings will be up by the beginning of February.

Abbatiello called attention to the fact that the "corridor study" is coming up, which he promises that the Planning Commission will be apprised of. Secondly, all members got a copy of the tax incentives report "which was incomplete, as it lacks a return on investment on each of these items." O’Connor said that information would be provided. Lastly, Abbatiello asked whether any progress has been made on the AMSE property; David Bradshaw noted (as president of the AMSE Foundation) that information should be forthcoming by the end of the year.

THE BIG DEAL:

The City Manager addressed the possibility of siting a super-Target anchored shopping center (450,000 sq. ft.). The City would have to provide $10.5 million, to be paid from the redevelopment of the property. Craig Cole of GBT explained that Oak Ridge is "underserved by retail," but the desired locations are all along Illinois Avenue, where there is a shortage of available land.

Pine Ridge is a development challenge, but it’s available. They plan to call it Crestpointe, but acknowledge the significant challenge of developing the site. That’s why they need $10.5M. Much more dialogue and discussion will occur at the work session next Monday evening.

O’Connor says there will be risk for the City, as well as for GBT, but they’ve checked and double-checked the development potential and now desire community input. Really.

Bradshaw notes that it’s an opportunity, but it’s a big investment, and it will require a comfort level and approval from the community before Council will be prepared to approve the project. However, upon questioning from Councilman Beehan, it was agreed to try and hold the meeting in the Council chambers so that it can be televised, and to try to adjust the time so that School Board members may attend prior to our meeting at 7 p.m. (Thank you, Tom!)

Wrapping up was simply a discussion of meeting dates, followed by the appearance of citizens (there were none).

10 Responses to “City Council Meeting, Jan 22”

  1. on 22 Jan 2007 at 9:12 pm daco

    Thanks for the heads up Netmom. I am really excited about the possibility of a new retail venture here, but I agree with Mayor Bradshaw…$10.5M is a very big investment. Am I understanding correctly that the development is aimed at Pineridge? The hill that Revis leveled for a light industrial park?
    I thought that in the last year or so the land between Illinois Ave. and the Atomic Museum was discussed for this purpose…

    Regardless of the current details, I’m just tickled that someone…hell anyone is making Arnsdorff sit up and take notice that the City of Oak Ridge has waited long enough for him to get off of his arse.

  2. on 23 Jan 2007 at 6:18 am girlfriend

    Glad to see the possibility of more retail but what is the status of the mall? It seems to be kept hush, hush and I would like to know what the status is, does anyone know?

  3. on 23 Jan 2007 at 6:49 am Netmom

    Yes Daco, it’s destined for Pine Ridge… the same place that was originally intended for light industrial. The plan for a Target on the Museum property that we heard about a year or so ago (with a Lowe’s where Big Lots and the bowling alley are now) was a proposal by a different developer who was not selected by the Museum Foundation. Evidently, there just wasn’t quite enough space to accommodate a big-box store there.

    I wish I knew the status of the mall; I wish I had any indication that Arnsdorff is planning to do anything — including sell it to someone who would do something. However, the City Manager did mention to me yesterday that the Wal-Mart covenants continue to be a problem (after I’d said something about how it’s a shame that the Target development can’t go there instead), and in his remarks at the 5 p.m. announcement, Mayor Bradshaw noted the absolute frustration of the citizens AND City Council to get anything moving on the Mall.

    Sorry for the abrupt nature of this post; I was truly writing as the meeting occurred… my attempt at “liveblogging.”

  4. on 23 Jan 2007 at 8:09 am Joel

    Liveblogging is way cool, netmom. I’m totally impressed.

  5. on 23 Jan 2007 at 8:24 am Netmom

    If I’m going to liveblog, I have to get better at writing succinctly on the fly. However, as I was sitting on the front row of the audience, I got some odd looks from a couple of council members, who undoubtedly guessed what I was up to.

    It’s okay. I didn’t editorialize too much… this time.

    And yes, you can hit the public wireless access (from the library, I think) from the city courtroom where Council meets. Perhaps I need to try and cover the Budget & Finance committee meetings (it should work from the training room too), or at least arrange for several of us to take turns with it.

  6. on 23 Jan 2007 at 11:51 am AT

    Excellent job, Netmom.

  7. on 23 Jan 2007 at 5:27 pm daco

    This isn’t tongue in cheek…can someone explain to me again why eminent domain isn’t a reasonable tool to move Arnsdorff off the dime?

  8. on 23 Jan 2007 at 8:35 pm Netmom

    The City Paper had a good article on that subject last year, and the Legislature subsequently passed a bill that further tightened restrictions on the use of eminent domain.

    In Tennessee, you can’t just take someone’s property because you don’t like what they’re doing with it. It can be taken for a defined public need (e.g., to build a school, sewer plant, interstate, etc.), but even then, fair value must be paid for the property.

    As much as we want somebody who’s going to DO something with the mall, you really don’t want to go down the eminent domain road.

  9. on 23 Jan 2007 at 10:26 pm Jacket

    Daco,

    The process as NM states above is 1)costly, 2)has to be for a specific purpose now defined by law, 3)Fair Market Value would still have to be paid. If that is not agreed upon, a court would decide. Only government can issue eminent domain. Making COR the owner would do exactly what to Arnsdorf?

  10. on 03 Feb 2007 at 3:51 pm Guran.Bangalla

    Do we need a Super Target / Crest Pointe and should the city invest $10.5 million on it?

    To answer this question we will need to ask the following other questions.

    Who will shop at Super Target?
    What will it cost?
    Why do we need a Super Target and can we support it?
    What is the break even scenario?
    Why does Target want to come to Oak Ridge?
    Can Target go else where?

    Who will shop at Super Target?
    Yes Oak Ridgers will definitely shop at Super Target. Target Stores are modeled to cater to the middle class population with a median income of $58,000. Oak Ridge’s median income is not too far from that ($41,900 as per 2000 census thus approximately $53,300 at a growth rate of 3.5% conservatively).

    Will the people of the surrounding communities shop at Oak Ridge Super Target? Firstly let’s look at the major communities involved. They are Clinton, Lake City, and Andersonville on the east of Oak Ridge and Kingston, Harriman, and Rockwood on the west, Oliver Spring and Wartburg on the north and Claxton on the south.

    The communities on the west travel to Oak Ridge via I-40 and access Oak Ridge on Gallaher Road at Exit 356. The distance from Exit-356 on I-40 to Campbell Station Road /Turkey Creek is 18 miles with a travel time of 20 minutes and the correspondingly to the proposed Super Target site in Oak it is 16 miles with a travel time of 22 minutes.

    Now let us look at the communities east of Oak Ridge. All travelers from these communities have to pass through the junction of Charles G Seivers Blvd and 25W in Clinton. The distance from this junction to Oak Ridge Super Target is 11 miles with a travel time of 20 minutes; likewise the distance to the Target at Clinton Highway/Schaad in NW Knoxville is 11 miles with a travel time of 20 minutes.

    Also the sales tax in Knoxville and Farragat is 0.5% lower than Oak Ridge.

    Thus the likelihood of potential customers shopping at the Oak Ridge Super Target from either the west or east of Oak Ridge is at best low to nil.

    This leaves Oliver Springs and Wartburg north of Oak Ridge. The median income of Oliver Springs and Wartburg as per the 2000 census is $32,600 and $19,700 respectively. Extrapolating them at an annual growth of 3.5% the median incomes are $41,400 and $25,000 respectively. They are below the market base of Target and will continue to shop at other stores in Oak Ridge.

    This leaves Oak Ridgers as the anchor shoppers at Super Target.

    Table of Distances and Travel time
    ———————————————————————————————————————————————
    From:Exit 356/Rt I-40 to:Oak Ridge Target distance:16 miles travel time:22 minutes

    From:Exit 356/Rt I-40 to:Turkey Creek Target distance:18 miles travel time:20 minutes

    From:Clinton to:Oak Ridge Target distance:11 miles travel time:20 minutes

    From:Clinton to:Schaad Road Target, Knoxville distance:11 miles travel time:20 minutes
    ———————————————————————————————————————————————
    Source Google Maps

    What will it cost?
    Currently the cities/county share is $10,500,000 to develop a private site. The annual cost of servicing this debt as per the city is $800,000 over twenty years. The property tax recovery on the whole development (when completed and occupied two to 5 years out) is approximately $600,000 annually thus the net expense to the city is approximately $200,000. A point to be made is that the $10,500,000 requested is for land development and will be needed immediately. The total cost for the project is $15,000,000 for the buildings and $20,000,000 for land development totaling to approximately $35,000,000. The $10,500,000 represents 30% of the total project cost.

    Why do we need a Super Target and can we support it?
    Apparently we need a Super Target for growth in cities/county revenue through sales tax. There is a projection of a net additional sales tax revenue stream of $2,000,000. This is a sizable number to recon with; it represents a 25% growth in our current sales tax collections of $8,000,000. With the current rate of 2.75% city and county sales tax, the proposed Super Target and other retail outlets will need to make annual sales of approximately $75,000,000 to realize the net revenue goals of $2,000,000. The city’s numbers project the total sales forecast for Crest Pointe to be $142,000,000.

    Since Oak Ridge residents are the primary shoppers to support the proposed Super Target they will have to collectively have an additional purchase power of $75,000,000. We cannot realize the addition $2,000,000 revenue if the shopping transfers from the existing stores in Oak Ridge to the Crest Pointe. Given the approximate number of households in Oak Ridge are 13,000. Thus the average increase in purchase power per household has to be approximately $5,800 post individual federal tax. To realize this increase in purchase power each household in Oak Ridge will need to get an annual pay raise of $7,500 starting next year. That’s a 14% increase over Oak Ridger’s median income of $53,300.

    Is that possible?

    What is the break even scenario?
    Let’s assume that we do not make any additional revenue ($2,000,000). The city will still need to service the $10,500,000 debt. Not only will we need to pay the interest but also the principal as shown earlier will be $200,000. To realize this from the sales tax revenue will need an increase of the purchase power of Oak Ridgers by $550 (by same formula discussed earlier). That’s a 1% increase over our median income of $53,300. That’s a manageable goal to attain. At least we won’t go bankrupt.

    Why does Target want to come to Oak Ridge?
    It seems Target wants to enter the Oak Ridge Market to realize a share of the existing purchase power of Oak Ridgers. In Tennessee there aren’t too many communities that have a median income over $50,000. A Super Target in Oak Ridge is eyeing at the revenue it can seize from existing businesses such as K-Mart, Sears, Belks, Home Deport, Goody, J C Penny, Wal-Mart, and Kroger among others. It does not look like the city will benefit in any way in terms of additional revenue and at the end of 20 years when we have fully paid our debt we wont have anything tangible to show. Over twenty years the owner of the property will be collecting their rent, the property will be increasing in value, the benefits of which will have no consequence to the citizens of this town who dished out over $16,000,000 principal and interest included.

    Target Corporation have run their numbers and they definitely see benefit in opening a Super Target in Oak Ridge. The benefit is theirs not ours. What we will get is a debt for our children and our grandchildren, maybe some competitive prices. But the cost involved does not justify this corporate welfare.

    Can Target go else where?
    Oak Ridge seems to be only viable location in the foot hill region of the Cumberland because of its high income customer base. Not only there is a relatively sizable population of high income earners but Oak Ridge also has a significant population of elderly citizenry with high pensions that are close the median income of this town and they bring to bear a higher purchase power. Super Target will not go to North Knoxville. Drive around there and you will know why. And even if they do they are too close to their Clinton Highway / Schaad Road store and will not have access to Oak Ridger’s money. Why would they put a store in Clinton if they want a bite out of the Oak Ridge Pie?

    Sit tight and they will come irrespectively.

    You can download the accompanying map – http://rapidshare.com/files/14645028/Map.jpg

    Many numbers obtained from COR Summit/Crestpointe Presentation.

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