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Knox News: The 200 block of Gay St. can now be developed. But what will go there to ‘bridge that gap’?

Wilusz, Ryan. “The 200 block of Gay St. can now be developed. But what will go there to ‘bridge that gap’?” Knoxville News Sentinel 22 Jan. 2019. Knoxville News Sentinel Original Article Web. 6 Feb. 2019.
The 200 block of Gay Street, home to two parking lots and no storefronts, can now be developed following an agreement made between the Knoxville Community Development Corporation and downtown developer Leigh Burch III, who has released control of the lot to KCDC.

The lot, which sits next to the Crowne Plaza and across from the Cradle of Country Music Park, currently acts as private parking for tenants of Burch’s Sterchi Lofts. Tenant parking will move to behind Crowne Plaza in a Vine Street parking lot Burch recently purchased from KCDC.

The purchase of the Vine Street lot, Burch said, opens up the possibility for him to develop a hotel or residential project on the site.

“The first thing we need to do is sit down with the city and meet with several people in the business community in that area,” said Ben Bentley, executive director and CEO of KCDC. “I heard from a number of people it would make sense to have street-level retail to bridge that gap between the 100 block of Gay Street and the area of Gay Street south of Summit Hill.

“Right now, people on Gay Street get to Summit Hill and can see the 100 block, but it isn’t an easy transition.”

Striking ‘while the iron is hot’
Burch was supposed to control the Gay Street lot for 50 years.

Around 2001, amid his redevelopment of the Sterchi building, Burch began his lease on the lot from KCDC, which acts as the housing authority and development agency for both the city and county.

Burch said signing the 50-year lease was necessary to fulfill his vision.

The U.S Department of Housing and Urban Development viewed Knoxville as an unproven market at the time, Bentley said, and required dedicated parking before it would assist in the Sterchi development.

“For me to acquire and secure that parking was a real long, drawn-out process,” Burch said.

But times have changed, and both Burch and Bentley agree what’s best for the 200 block is development.

The parties involved were in talks for years about KCDC regaining control of the lot before an agreement was reached in late 2018. That agreement had four major components:

  • The 50-year lease was canceled, and Burch released the Gay Street lot to KCDC.
  • Burch purchased the Vine Street parking lot from KCDC to provide new parking for Sterchi tenants.
  • Burch signed a new two-month lease on the Gay Street lot to ease the transition for his tenants.
  • Burch agreed to develop the property on Vine Street down the road.

The Vine Street lot has around 90 spots compared to 76 in the lot on Gay Street. Sterchi, however, has 150 bedrooms.

“We were always challenged with essentially having half as many parking spaces as we really needed,” Burch said. “Downtown parking is already difficult for most everyone.”

But for those who find downtown parking difficult, there is some good news. Bentley said the Gay Street lot will likely become public until the beginning of the development process, which includes property surveys, public input, a request for proposal, evaluations and a selection before construction begins.

“It makes sense for (the request) to happen in the next six to 12 months,” Bentley said. “Right now, interest rates are going up, which is not a great thing for people trying to finance projects. But based on historical rates, they are still in a pretty low range. … We want to make sure we strike while the iron is hot.”

Developing ‘something significant’

Although KCDC works with housing, the potential use of the Gay Street lot is much broader.

Burch is one of those people who believes a mixed-use development with street-level retail space and residential units above would be a smart move for the site.

While securing a larger lot for his tenants was part of Burch’s reasoning behind the agreement, he also views the Gay Street and Vine Street developments as beneficial to downtown properties, including his own.

“I think (developing Gay Street) will help the commercial component by having this development but, then again, it doesn’t help the residential component,” he said.

That is, unless Burch can create more residential units, he said.

“It’s such an important piece of downtown, and I am a big proponent of high density,” he said. “I don’t want to get anybody’s hair up over the whole thing, but I can’t imagine why I wouldn’t be one of those proposing on the lot.”

Bentley said it is difficult to put out requests for proposals that dictate a property’s potential use.

“We’re open to more general options,” he said. “It’s one of the four or five best open sites in the downtown area, so we have to make sure whatever goes there is something that is significant and serves some kind of public interest.”

As KCDC works through drafting its request, it will complete a market analysis and multiple surveys. The analysis might make KCDC aware of a potential use to rule out in its request.

The surveys, which will include geotechnical and environmental evaluations, will clarify site conditions. This reduces some risks for potential developers, Bentley said.

“It’s going to be, hopefully, an opportunity to put one piece in place to what’s already an outstanding downtown,” he said.

Of course, other pieces include a renovated Cradle of Country Music Park directly across Gay Street and the property Burch plans to develop up the hill on Vine Street.

Vine Street a project of great magnitude

The Vine Street lot Burch purchased sits across from the Immaculate Conception church.

“It had a lot of deferred maintenance,” Burch said. “We have been working for two weeks to clean up the lot.”

Trees and limbs were hanging, and the stripes were not clearly visible, he said.

The plan is to have the lot striped next week and to begin moving tenants from the Gay Street lot to Vine Street.

Tenants will have to move lots again once Burch follows through on his plans to develop the site into a hotel or residential building.

Burch did not share details about how large his development could be or the number of units it would have. He did say preliminary drawings have been completed and that he is working to bring a partner on board.

“A project of this magnitude, complication and financial resources — that’s something that will take three years before it will start on construction,” he said.

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