The Tax Increment Financing district surrounding the publicly-owned multi-use stadium is proposed to expand into the Magnolia Avenue Warehouse District – several blocks beyond what was originally planned.
The stadium is expected to be a springboard for tens of millions of dollars in new private investment in East Knoxville. A larger TIF district helps ensure those new investments directly benefit the area.
The expansion of the TIF district reflects a robust pace and scale for the expected private investment, and it will leverage those investments as part of a plan to address anticipated higher construction and labor costs for the stadium.
“The stadium will be a catalyst that creates new economic opportunities in East Knoxville and brings new quality-of-life improvements to nearby families,” Knoxville Mayor Indya Kincannon said. “It will generate additional investment and create jobs. By expanding the TIF district, those direct benefits to the community can come faster.”
Knox County Mayor Glenn Jacobs supports expanding the TIF district, saying the stadium and related private development will strategically help build vibrancy.
“Inflation and skyrocketing construction costs have forced us to look into other options,” Mayor Jacobs said. “One way is to expand the TIF district, which will fund the stadium with revenue that would not otherwise be generated.
“This development is important for the continued progress of our community, especially in the all-important 25- to 54-year-old demographic. We continue to lag behind our peers in retaining and attracting this age demographic, and we believe civic furniture like this will give young families more things to do, adding vibrancy to our community.”
A TIF district uses new tax revenues created by new investment and development to help pay for public infrastructure and make improvements within the district’s boundaries.
Baseball and soccer games, concerts and events at the City- and County-owned stadium will support nearby businesses and boost private investment expected to come to the district because of the stadium. All parties – the City, Knox County, the property owners and East Knoxville residents – will benefit from the newly-created tax revenue staying in the district for a set initial period of time, the Mayors said.
An independent analysis projected the total economic impact of the stadium will be $480 million over 30 years, with more than 400 full-time jobs created.
Because much of the area near where the stadium is being built just east of the Old City is now vacant and dilapidated, the new tax revenue that’s generated will reflect new economic activity in or around the stadium – not a shifting of current economic activity, the analysis confirmed.
The stadium TIF district – the second one in Knoxville and Knox County – would be expanded on its eastern end to include a rectangle bounded by Harriet Tubman Street, Winona Street, just north of East Fifth Avenue and East New Street.
The other side of the TIF district is proposed to extend westward to Central Street, Interstate 40, East Fifth Avenue and Summit Hill Drive, all west of Hall of Fame Drive.
The only other existing local TIF district was set up to support new development along the South Waterfront. Private investment there is thriving, also encouraged by public infrastructure, such as the City’s building of streets and the Urban Wilderness Gateway Park and Suttree Landing Park.
The proposed expansion of the stadium TIF district comes as City, Knox County and Boyd Sports officials are working collaboratively to address higher interest rates, supply chain problems and labor shortages that are driving up construction costs nationwide.
Under the terms of a proposed agreement to address projected higher construction costs directly due to inflation, developer Randy Boyd will pay more money up-front and will be reimbursed later for those specific costs, assuming the TIF district sees higher revenue.
Boyd has already committed to a $10 million land donation, $30 million in Smokies lease payments and $6 million in construction costs before agreeing to pay up front the expected additional inflation-driven costs.
Boyd fronting a loan to cover the higher costs associated with inflation will not alter his previous commitment of $46 million toward the publicly-owned stadium.
Boyd will be reimbursed over time for the inflation-related higher costs – but not the $46 million he’s already committed – by new revenues created by new economic activity in the stadium Tax Increment Financing district. The loan amount has not been finalized, but a ceiling on the amount will be set contractually.
The proposals to expand the TIF district and authorize repayment of agreed-upon inflation-driven costs to the developer require approval by City Council, County Commission and the Sports Authority. Votes are scheduled at meetings in August, and a public hearing will also be held in August.
The public and private partners also have been modifying the stadium design to manage costs, but doing so in a way that retains its quality and uniqueness.
For example, the design team has enhanced the most desirable and accessible street-level retail space but eliminated a second floor on buildings just outside the stadium on Jackson Avenue. The Tennessee Smokies offices would move to a privately-owned and privately-developed building outside the stadium, on the right field side.
“We’re building a public amenity that everyone can be proud of, and we’re adhering to our principles of shared partnership and careful financial stewardship,” Mayor Kincannon said. “As I’ve said all along: The public benefits of this stadium must outweigh the costs, and we’re assuring that that’s in fact what’s happening.”