Although I am tired of talking about the Crestpointe issue, it’s important to note some observations about the financial aspects of the Crestpointe proposal and some potential alternatives.
City estimates of Crestpointe finances (see http://www.cortn.org/summit/summit-crestpoint.pdf) show a net yearly gain to the city (including our schools) of $511,389 for the first year of operation. This assumes, among other things, that the $10.5 million city contribution is paid off over 20 years at $842K per year, that the city captures the county portion of the property tax, that the shopping center nets $60 million in new sales to the city (this is the portion of sales not cannibalized from existing businesses), that loss of sales at existing local stores (including closure of existing stores) due to competition from Crestpointe do not cost the city any revenue other than the lower sales taxes collections at these stores, and that the existence of the shopping center does not require the city to increase spending for municipal services.
Taking that analysis at face value (not arguing with those assumptions), I ask “What other options does this city have for raising that amount of new revenue?” Recognizing that not every option is good, I’ve reviewed a few possibilities:
*The city could increase property taxes. To raise an additional $511,389 per year, the property tax rate would need to go up by 3.1% to 3.2% (depending on whether the calculation uses a basis of $15,985,000 from the city’s FY 2007 budget or $16,436,000 from the city’s Crestpointe presentation). That’s an 8-cent increase in the tax rate, from $2.55 to $2.63. On a home with an appraised value of $100,000, that’s $20 per year. (For comparison, the Crestpointe proposal asks the city to kick in more than $800 in public money for every household in the city — to help a developer build a shopping center that we hope will produce enough sales tax revenue to allow people to equal what could come from that $20 per year in added property taxes.)
As a bonus, the higher property tax rate would also increase the yearly in-lieu of tax payment from U.S. DOE by about $50,000, so the total gain in revenue from this tax increase would be over $560,000 a year.
*The city could cut spending, on the principle that “a penny saved is a penny earned.” Of course, if it were easy to find half a million dollars that could be cut from the budget, that amount would have been cut a long time ago. However, every item in the budget should be justified, and almost anyone can find at least a few items in the budget to question. I would start by pointing to the $8000 to $8500 per month (that’s $96,000 to $102,000 per year) that goes to a lobbying firm in DC (see blog category Oak Ridge > Lobbyists); the city also pays $4,650 a month (almost $56,000 annually) for lobbying in Nashville.
[Hmm… This post was longer when I wrote it, but a big chunk got lost somewhere.  )
Added April 7th, attempting to re-create lost content:
*Additional property and sales tax revenues could be generated by fostering retail in or near existing retail districts. Until Crestpointe was proposed, most Oak Ridgers thought we had an excess of retail sites, not a shortage. It appears to me that opportunities to foster retail abound. Here are just a few:
*Elsewhere I’ve referred to the failed promise of the city center (mall) redevelopment. Even a partial redevelopment of that site would boost property valuations in the center of town (thus increasing property tax revenue) and increase sales tax revenues.
*Oak Ridge has more than its share of other unoccupied and under-utilized sites that are currently zoned for retail and fully served by appropriate infrastructure. Out-of-town retailers interested in tapping this market have plenty of options. If businesses are rejecting certain sites because the sites are over-priced or have existing structures that aren’t suitable for new uses, perhaps the Chamber of Commerce (or perhaps one of the other economic development organizations that receives public funds to market Oak Ridge) should be working to convince the private property owners to market their sites more realistically.
*Bob Monday’s 43-acre site behind Dean Stallings Ford would be, in many respects, an ideal location for a big-box store. If just 19 acres of that site were developed for a Target store, with the remainder remaining as undeveloped woods and wetland, and Target’s property value and sales results are the same as the city staff assumed in its presentation on Crestpointe, the city would receive $91,000 a year in added property taxes and $368,000 in sales tax on sales revenue new to the city. If the city had to spend $1,050,000 (a wild guess, but likely to be in the ballpark) to develop new public road access to that site and paid off the debt for the expense over a 20-year period at a cost of $84,000 per year, the new annual revenue of $375,000 per year would be nearly 3/4th of the revenue projected for Crestpointe, at 1/10th the cost to the city, without spending money solely to benefit private property, and without Crestpointe’s deleterious effects on existing retail.
Bottom line: It’s clear that Crestpointe is far from the only way to enhance the city’s financial bottom line.
At Monday night’s City Council meeting, I asked several questions and made several comments about the action that Council was about to take regarding the Crestpointe proposal (more about those points later).
Mayor David Bradshaw challenged opponents of Crestpointe, who believe with me that Oak Ridge can and should do better, to find and present viable alternatives. As long as 3 years ago I was posting comments about the need to redevelop the City Center and I made similar comments not long ago (see Instead of Crestpointe, let’s redevelop the City Center), so it’s no secret that I favor that direction. Furthermore, I have commented here and in other venues about the potential merits of a retail development on Bob Monday’s land. However, Council members and staff sneer when Bob Monday’s property or the City Center are mentioned, and the Mayor cut me off on Monday night when I attempted to tell them that the reasons they give for dismissing Bob Monday’s proposal are not valid.
Thus, it seems that I need to tell the story here. (Please be assured I that I have no financial interest in any Oak Ridge real estate other than the place where I live. I am not trying to promote anyone’s property; I am just trying to give Oak Ridgers the facts we need to make an informed decision.)
 Here’s what Monday wrote to the community on March 8 (a thumbnail version of one of his site maps is at the right; click on it to open a larger version in a new window, showing two big-box stores adjacent to the DOE boundary, a parking lot to the north of them, and details of the proposed access road to South Illinois Ave.):
Dear Mayor Bradshaw, the Oak Ridge City Council, the Anderson County Commission, and Concerned Citizens of Oak Ridge,
As both a commercial developer and as an Oak Ridge taxpayer, I would like to make all aware of an alternative site that can accommodate a big box center in the City of Oak Ridge. The site is adjacent to the existing City Services Center along the commercial corridor of S. Illinois Avenue. It is an ideal location that deserves your attention.
I have developed and presently own various shopping centers throughout East Tennessee. Through the years, my company has been involved in 11 successful anchored developments in our area. We are a 30 year member of the International Council of Shopping Centers with local understanding that I feel is important to the present situation.
Monday Properties has a long-standing history with the city of Oak Ridge that stretches over a 30 year period. Beginning in 1976, we sold land, clearing the way for Dean Stallings Ford, Oak Ridge Lincoln Mercury, Oak Ridge Storage, the nearby dentist s office and the car wash along S. Illinois Ave. Our subsequent developments, which we presently own, serve the Oak Ridge community well. In 1979 we located the Quincey s restaurant (now Super China Buffet). Over the next five years we struck agreements to bring McDonalds and Sagebrush Steakhouse to Illinois Avenue. From 1991 to 1993, we partnered with a reputable developer to purchase, re-zone, and develop the Kmart and Kroger Shopping Center. Much of the raw land was below grade and required site work, which we readily provided. Finally in 1998, we sold a portion of our land clearing the way for the Oak Ridge City Services Center. These developments have stood the test of time, by their own merits, and without government subsidy. They have provided untold amounts of sales tax, property tax revenue, and jobs to the City of Oak Ridge and to Anderson County.
The 43 acre parcel, which we are now proposing, sits adjacent to the City Services Center at the end of Woodbury Lane. The site is already zoned commercial. To provide primary access from South Illinois Avenue, Target would need the city to provide a red light and roadway bridging East Fork Poplar Creek. Fortunately, this work would also have the positive effect of improving access to the existing City Services Center. Super Target would face South Illinois Avenue oriented toward the downtown area. For further explanation, please refer to the attached conceptual site plans and aerial photographs.
When comparing our 43 acre site to the much larger proposed power center site, we draw the following conclusions: Developing a smaller site that is closer to the city center makes good sense and is in better alignment with the Oak Ridge City Council s published strategic plan. While a brand new power center in Oak Ridge may seem very nice, it would vacate much of the downtown area retail. This would leave an eyesore and future economic challenges. When Super Target comes to town it should come with less surrounding shop space. A Super Target on the 43 acre parcel would be better integrated with the existing retail district. It would not require such a large public expenditure, saving taxpayers a great deal of money.
Based on our experience, we strongly believe that Target will pursue the Oak Ridge market beyond April and that a rushed decision is not in the city s long-term best interest. Target has already expressed a desire to locate in Oak Ridge and will pursue any and all opportunities available. Regardless of a particular site or subsidy, it is highly likely that Target will be in Oak Ridge within the next 5 years.
We hope that the community will take more time to fully evaluate its options, since we are concerned that the City of Oak Ridge and Anderson County are giving away tax money unnecessarily. If possible, we would like for the 43 acre site to be put on the agenda and into consideration. Whatever decision is made, I sincerely hope that it will be in the long-term best interest of the Oak Ridge Community.
I am certainly open to a lively discussion and would like to hear any feedback from community leaders and the people of Oak Ridge. My office line is 865-219-9000.
Best Regards,
Bob Monday President, Monday Properties
City staff asserts that Monday’s land is unsuitable for a Target store because it is in a wetland, lacks access to Illinois Avenue, lacks the desired visibility to drivers on Illinois Avenue, and is too small for the “power center” development that GBT Realty has proposed. What’s the reality?
Wetlands are an issue I know about; I am known to have annoyed several development proponents by raising concerns about the effects of their projects on wetlands and streams. Perhaps the largest wetlands tract in Oak Ridge lies adjacent to East Fork Poplar Creek in the area of Bob Monday’s land, so almost as soon as I received his map, I showed it to a person who is very familiar with the location of the wetlands in that area. I was surprised by what I learned — the property where Monday would place stores and parking is on high ground, outside the wetland. Other maps confirm this. Wetland boundaries would need to be delineated as part of a building project, but the parcel has a good-sized area of buildable land that is not wetland.
Access is a bit more complicated. Right now, the only access is from Woodbury Lane, the new-ish road that cuts off Wilberforce to give access to the city’s Services Center. Bob Monday told me that some time ago he and city staff explored the possibility of an access road across the site of the federal NOAA Atmospheric Turbulence and Diffusion Division facility. That route would have affected a large amount of wetland and it was unacceptable to NOAA, so it was rejected. Since then, however, Monday has identified the possibility of a new road between two existing businesses, connecting to Illinois Ave. across from Quincy Road. Several problems would need to be overcome to make that work (acquiring land from its owners, bridging East Fork Poplar Creek, dealing with a natural stream that flows in a ditch on the road alignment, and minimizing traffic impacts on Quincy Road in the Woodland neighborhood), but all of these appear to be solvable. Furthermore, they could be solved at far less cost than the massive earthwork that would happen at Pine Ridge in order to develop Crestpointe.
Visibility is a non-issue. Bob Monday pointed out to me that store buildings on his property would sit at a higher elevation than Dean Stallings Ford and other existing businesses on Illinois Avenue, so stores would be readily visible to drivers over the roofs of those businesses. I confirmed this on maps — drivers would have no problem seeing the stores.
Finally, parcel size is a nonissue. Yes, the parcel is “only” 43 acres, and some of that is not buildable (due to wetlands, for example). However, Monday’s sketch plans show that it is plenty large enough for one or two big box stores plus parking, and possibly a few smaller shops. The clamor in the community is for Target, with the new shopping opportunities, sales tax revenue, and positive vibes that a Target is supposed to bring to nearby stores. This site is plenty big enough for a Target, and the nearby stores receiving positive vibes would be existing and new stores in our existing commercial areas, not newly built stores in a 60-acre isolated shopping center. GBT Realty wants to develop 60 acres, but there’s no solid evidence that Oak Ridge can successfully absorb that much additional shopping (and plenty of reason to believe it can’t absorb it…). If a new shopping center is overbuilt, either the new center will fail to meet its objectives or the competition will have devastating effects on existing stores. Oak Ridge has already been through this once, when the mall was overbuilt (and correspondingly overpriced for its tenants). I hope we are smart enough not to try that failed experiment all over again.
The frenetic effort to collect signatures from 10% of Oak Ridge’s voters is drawing to an end. As the Oak Ridger reported today, as of Friday the campaign had 2,400 signatures on hand — probably more than enough to force a referendum, which requires about 2,000 validated signatures. On Monday, a total of 3,172 signatures were turned in to City Clerk Jackie Bernard, and still more will be turned in on Tuesday (the deadline).
Not only does the campaign have many more signatures than were needed, but the total is impressively large when compared with the turnout of just 3,977 voters in the 2005 city election (see http://www.ellensmith.org/forum/viewtopic.php?t=118). Willie Golden, the candidate with the highest vote total in that election, received 2,819 votes, which is less than the number of voters who signed to call for a referendum.
Many of the people who signed to call for a referendum have made up their minds against the Crestpointe project, but many others want to be able to vote on the issue — and hope to have more information by the time the election is held. I hope we will also know plenty about some alternatives to Crestpointe — better ways to satisfy Oak Ridgers’ thirst for more shopping and the city’s thirst for more tax revenues.
I have been telling people that I know we need more retail in town – to enhance residents’ quality of life and to increase sales tax revenues – but that I believe Oak Ridge can and should do better than accept the problematic Crestpointe proposal.
We can do better. Better options are starting to emerge. 
Long-time local landowner and veteran developer Bob Monday has proposed that the City consider pursuing development of a big-box shopping center (including a Target store) on an undeveloped 43-acre tract just off South Illinois Avenue (behind Dean Stallings Ford and adjacent to the City’s Service Center on Woodbury Lane). He would like the city to assist by providing a new stoplight and a bridge across East Fork Poplar Creek. Those two improvements would cost far less than $10.5 million, and Monday points out that they would also benefit the City by improving access to the City Service Center, which houses the public works dept., electric dept., and school bus garage. Edited on Tuesday, May 13: The Oak Ridger has printed Bob Monday’s offer, but only as a letter to the editor! Surely this was news, wasn’t it? It seems like the paper is interested only in official press releases about the Crestpointe proposal. Similar news item from other businesses are accepted only as letters to the editor.
I expect that we will be hearing about other good options in the coming days and weeks. Oak Ridge can and will do better than the Crestpointe proposal.
Yesterday’s Oak Ridger carried a front page story headlined Mayor ‘committed’ to $65M retail center. The article reports on an interview in which Mayor David Bradshaw said that he believes in the Crespointe project and is concerned about the City’s need to draft a contractual agreement with the developer that will protect the city’s interests.
However, the first sentence of the article said: “David Bradshaw says he is committed to the Crestpointe retail development — with or without a referendum election.” It seems that some residents read that as saying that the City will provide $10.5 million in funding for the center, with or without a bond issue.
I don’t read the article that way, but I can definitely see how a person might reach that conclusion from the first sentence.
Let’s look at the situation logically: Without the proposed bond issue, the City lacks the resources to give $10.5 million to a developer. David Bradshaw understands that (probably better than most of us). I cannot imagine that he expects City Council to agree to a contract committing that sum of money to this development without knowing where the money is coming from.
I can’t pretend to know exactly what the City Council will do on March 19 if petitioners collect enough signatures by March 13 to force a referendum. However, I predict that a successful petition will cause them to delay action on a formal deal with the developer. They are likely to approve a proposed contract in principle, but they should not authorize an actual financial commitment to the developer until they know that the necessary bonds can be issued.
The article doesn’t actually say what the City would do if petitioners force a referendum, but it does clearly indicate that a successful petition drive would make a difference in the City’s actions:
The mayor said city officials and GBT executives are discussing the petition drive’s potential impact on the proposed shopping center.
GBT executives say they are facing an April deadline to close a deal with SuperTarget.
But a referendum election, if called for, would probably not be held until June 5, the same day as the Oak Ridge municipal election. The election would allow citizens to vote on whether Oak Ridge should borrow up to $6 million to help finance the 60-acre Crestpointe project.
Bradshaw said city officials will honor the outcome of the petition drive calling for the election. Organizers need to collect about 2,000 signatures from registered Oak Ridge voters before March 13 in order to put the issue on a ballot.
“If they have 2,000 signatures, we’re going to respect that,” Bradshaw said.
I believe that when the mayor spoke of “commitment” he meant that he believes strongly in the proposal, not that he is determined to do this project even if there’s no way to pay for it.
Oak Ridge is in the midst of the 20-day drive to collect enough petition signatures to force a referendum on the proposed bond issue for the Crestpointe shopping center.
As a general rule, I don’t think that voters should be able to insist on voting on individual financial decisions by elected officials. (At the February 19th Council meeting, I urged Council to delay a vote on the bond resolution, in hopes that we could avoid a referendum. I actually hoped that with another month’s time, four of them might decide to oppose the project, or there would be an alternative proposal available for them to consider.) I do, however, believe in systems of “checks and balances” in government, and the Tennessee law that allows for voters to petition for a referendum on a bond issue provides one important “check” on the decisions made by elected officials. The law doesn’t make it easy to call for a referendum (it’s not easy to gather the signatures of 10% of a community’s registered voters in just 20 days), which assures that this mechanism will be used only in extraordinary situations — when voters feel that their elected officials are making a serious mistake.
I consider the Crestpointe proposal to be a sufficiently extraordinary situation that I have been carrying petitions around town, and otherwise supporting the petition campaign. I expect that petitioners will be successful in gathering at least 2000 valid signatures, so the voters will get to decide this issue in June.
In the course of petitioning, I have started to take special notice of the number of registered voters who don’t live here any more — and have not voted here since some time in the 1990s. These include folks who moved out of the area, as well as Oak Ridge kids who registered here when they were 18, but have long since established new residences in other parts of the country. I believe it used to be that Tennessee purged the records of people who had not voted recently, but current law requires that election commissions keep a voter on the list until they receive written confirmation that the voter has died, moved out of the area, wants to be removed from the voter list, has been convicted of an “infamous crime,” or has changed their name (other than by marriage) and failed to inform the election commission. The law does include a provision allowing the election commission to investigate by sending “confirmation notices”, but it’s pretty cumbersome: “If the voter fails to respond to a confirmation notice, and if the voter fails to otherwise update the voter’s registration over a period of two consecutive regular November elections following the date the notice was first sent.” (Since November elections happen only in even-numbered years, this process takes a bare minimum of two years.)
I’m very glad to know that people aren’t losing their right to vote without good reason. However, it occurs to me that those extra names on the voter list inflates the total number of voters. In a normal election, that reduces the reported voter turnout percentage, but otherwise it makes little difference. When applied to a petition that must be signed by 10% of voters, however, it inflates the number of required signatures – raising the bar even higher than lawmakers intended. Harrumph!
Furthermore, I can’t help but recall that failure to remove people from voter lists in a timely manner sometimes leads to situations in which corrupt politicians “vote the graveyard.” I hope our local election commissions are working to avert electoral fraud by mailing out “confirmation notices” to those folks who I believe to be phantom voters. (Additionally, future petitioners will be grateful.)
Previously I posted my views on the Crestpointe proposal. The obvious follow-up question is “What would you do instead?”
My answer is “Let’s commit to redevelopment of the City Center.”
A little history may be necessary to explain what I’m talking about…
Back in 2000 the City (with the help of consultants) developed — and City Council adopted — a conceptual master plan for the 293-acre heart of the city (roughly, the area bounded by Oak Ridge Turnpike, South Illinois Ave., and Rutgers Ave., including the Oak Ridge Mall area, Civic Center, and Oak Ridge Associated Universities campus); see the city’s website for some details. Some of the details shown in the plan maps (such as relocati ng Recording for the Blind and the Children’s Museum of Oak Ridge) were ill-conceived and caused citizens to criticize the entire proposal, but those were details, not the main thrust of the recommendations. At the heart of the plan was a recommendation to increase the overall density of development in the city center area, while reconfiguring the area with additional roads and walkways that would draw people in to shop, visit attractions, and participate in community events. Notably, the plan recommended “de-malling” the mall (which was already moribund), putting roads and pedestrian ways through it and eliminating about 40% of the enclosed space, to convert it into a “town center” type of shopping center development. The City’s consultants had concluded that the mall was greatly overbuilt (the local market could not support the amount of shopping space it contained) and recommended this change to bring new vitality to the area.
At the time, it was understood that implementing these concepts would require a public-private partnership — because the proposal promised to benefit both the community and center-city businesses, both the city and private landowners/developers would need to share the costs. City staff and prospective developers proposed a modified version of the “de-malling” plan in 2002, but the extravagance of the plan and other issues (too numerous to review here) caused the $23.2 million bond that was proposed for the project to be defeated in a referendum. Chattanooga developer Steve Arnsdorff ultimately purchased the mall with the intention of revamping it. He has publicly stated his intentions to proceed, but he has been offered far less city financial assistance than GBT Realty is now requesting.
If in 2007 Oak Ridge is now so desperate for retail that the City would spend $10.5 million in public funds to flatten a mountain to build a shopping center (in a location that is zoned industrial and is isolated from our existing retail areas), it stands to reason that we should be willing to consider committing some public funds to bring functioning retail back to the center of the city, particularly to the site of the dead Oak Ridge Mall, by recommitting to the vision that the City embraced in the City Center Master Plan.
There is no denying that there are significant issues to overcome in bringing new retail to the center city area (not the least of which are deed restrictions imposed when Wal-Mart bought the tract where its store is located from former mall owner Crown American), but I believe these issues are not insurmountable, and I am convinced that if we do not try to resolve these issues we will never recover a functioning retail sector in our center city.
Well, if you have been paying attention, you know that on Monday evening the City Council passed a resolution authorizing the issuance of up to $6 million in general obligation bonds for the Crestpointe project.
Actually, the bond resolution doesn’t name Crestpointe; instead, it says the bonds would pay for various types of generic civic improvements (which are listed in the resolution). This vagueness is necessary because a municipality can’t borrow funds backed by the full faith and credit of the municipality (that’s what “general obligation” means) to benefit a private entity, but it can borrow funds for public purposes such as road improvements, electrical lines, and other civic improvements that happen to benefit a particular project. This resolution calls for public improvements that are intended specifically to benefit Crestpointe.
Some city informational materials and press reports have generated a misconception that the developers would be responsible for paying back the loan. For example, today’s Oak Ridger says “The proposed 60-acre Crestpointe project would require a $10.5 million repayable city contribution.” Don’t be misled — the city would be responsible for paying off the debt using tax revenues. All that means is that the city is counting on future tax revenues from the project (mostly sales taxes) being more than enough to compensate the city for its “contribution.”
The publication of a legal notice on Wednesday that announced the bond resolution started the clock on a 20-day period during which Oak Ridge voters can petition to force a referendum on the proposed borrowing. Petitioning is under way. If 10% of the city’s voters sign the petition, the city’s voters will be the ones to decide whether to issue $6 million in bonds. Conveniently, I expect that the referendum could be held in June at the same time as the city election, avoiding the costs that the city would incur if it were necessary to call a special election.
We’ll all know the outcome of the petition process well before March 19, which is the date set for City Council to consider a development contract with GBT. If the petition drive is successful, the City Council will not be in a position to make any contractual commitments on March 19.
There’s a website for the petition process — click to download blank petitions, register as a petition volunteer, or find out where to drop off your signed petitions.
I had to laugh when I heard that some project opponents are signing another petition that’s circulating around town — a petition with no legal significance that states support for the project — because they heard “SuperTarget petition” and they assumed it’s the referendum petition they’ve heard about in the news. Whatever your views are, pay attention to what you’re signing, folks!!
Well, it’s no secret that I’m a candidate for City Council in the June 5, 2007, election (with the filing deadline still several weeks away, all of the local papers have reported that I have filed as a candidate). It’s also no secret that the hottest local issue of the season is the proposal for City taxpayers to help fund the GBT Realty proposal to build a shopping center (”Crestpointe,” expected to be anchored by a SuperTarget store) on the site formerly known as Pine Ridge.
In an article by John Huotari entitled “Potential candidates weigh in on Target,” the Oak Ridger correctly reports my opposition to this proposal:
…two other potential council candidates said they oppose the Pine Ridge project, tentatively called Crestpointe of Oak Ridge. They would prefer that redevelopment efforts be focused on the city’s downtown area, which includes the former Oak Ridge Mall.
“If we develop retail on the top of the mountain, on Pine Ridge, we’ll be putting a nail in the coffin in the center of the city for a long time,” said Ellen Smith, who serves as chairman of the Oak Ridge Environmental Quality Advisory Board.
Smith, who has qualified to run in the June 5 election, said she is also concerned about Crestpointe’s potential impact on existing Oak Ridge businesses.
I’ve studied the proposal, and I’ve concluded that it is the wrong proposal for Oak Ridge, although I believe that its proponents are pushing it for valid reasons.
Yes, I do think there are some good reasons for this proposal:
- There is a substantial pent-up desire for more retail in the city. I have long believed that the dearth of retail in Oak Ridge (not a shortage of housing, as some others have said) is the single most important reason why people who work here choose to make their homes elsewhere. Many local residents identify Target (which calls itself an “upscale discounter”) as the single store that would go the farthest toward satisfying their shopping needs. Target claims to be particularly attractive to “young, well-educated, moderate-to-better income families who live active lifestyles,” who are exactly the kind of people that Oak Ridge would like to have more of as residents.
- The local sales tax is an important source of revenue for Tennessee municipalities and counties. When Oak Ridgers spend their money outside the city, the city loses out on potential sales tax revenue. Conversely, if we spent more money in town — and if our stores and restaurants brought in more trade from people who live elsewhere, local public coffers would benefit.
- Oak Ridge’s retail sales (and sales tax collections) are declining from one year to the next, indicating that the city is losing more and more business to surrounding communities, the Internet, and mail order.
- Shopping center developers say that they have been unable to identify available commercial sites in the city that are both big enough to site a Target store and would give the company the visibility and accessibility to potential customers that it wants. Therefore, GBT, the Chamber of Commerce, and city staff have looked for a creative siting solution.
Good reasons notwithstanding, the proposal before the city right now is all wrong. Here are some of my thoughts on it:
- It’s contrary to good planning. The proposed Crestpointe shopping center would occupy a site (on Pine Ridge) that is not zoned or planned for commercial use (its zoning is industrial), is not adjacent to or connected with any existing retail areas, and currently even lacks road access. Locating retail at this site would, in effect, mean tearing up the city’s existing comprehensive plan. I believe that the city’s demonstrated eagerness to abandon comprehensive plans in order to accommodate every development request is a principal reason why the city’s recent survey of a sample of residents found that, when asked to “rate how well you think the City does overall in providing each of the following services,” 29% of respondents (40% of those who gave a rating) rated Planning and Zoning as “poor” or “fair.” (Only Attracting Industry and Economic Development drew stronger negatives.)
- What we are being asked to subsidize is the continued destruction of the ridge, not the creation of something of value. The $10.5 million that the city is being asked to contribute to this development would not be an “investment” in something of value, as some citizens have been led to believe. Rather, about $9 million of this money is budgeted to pay for continuing the flattening of Pine Ridge (note that among other things, this would involve extensive bedrock blasting, which likely would be detrimental to nearby high-tech industrial companies) and building massive retaining walls (estimated to be 50 feet in height and totaling more than 2000 feet in length) on the sides of the ridge in order to make this privately owned site buildable. Basically, we are being asked to spend public funds to finish the destruction of the ridge.
- Crestpointe would not boost the city’s existing retail. Retail developers and planning consultants tell us that retail begets retail. Thus, if new stores or shopping centers are established near existing retail centers, both the new stores and the existing stores will experience more shopping activity than if they sat by themselves. One of the reasons I have wanted new retail in Oak Ridge is that I expect that new stores would enhance our existing shopping areas. However, because the Crestpointe site is a stand-alone site that is not convenient to any existing shopping areas, it would not have this positive impact. Thus, we would miss out on the opportunity to boost our existing retail sector. Instead of locating a smaller shopping center near existing stores where the new stores would get positive synergism from other shopping areas, the developer proposes a large development (on a scale almost as large as the former Oak Ridge Mall) where synergism (and profits) would come from stores within the shopping center.
- This development would eliminate chance of redeveloping the City Center (former Oak Ridge Mall) area. The 450,000 sq ft of new retail space at Crestpointe would fully absorb any need for retail growth in the city — the city population would have to grow quite a bit to generate enough additional demand to support additional retail in the City Center area. Thus, if we support this new development, we can expect the City Center property to remain in its present state for many years to come.
- Not only that, but Crestpointe would detract from existing in-town retail. If the stores to be located at Crestpointe are as successful in drawing retail business as GBT’s projections and the city’s analysis assume, their gross sales revenues would total $140 million a year, of which the city assumes about $80 million would be diverted from existing retail business in the city. Retail sales in the city currently total about $440 million a year, so diversion of $80 million in retail activity would mean a loss of 18% of the business from our existing stores. That’s a big loss o f business that I expect would lead to the closure of more than a few existing stores. (If you think that some of our shopping areas look blighted now, just wait!)
- The financial analysis of benefits to the city government appears overly optimistic. As some of my fellow citizens have pointed out (see Oak Ridge Citizens for Due Diligence and Citizens for a Progressive Government of Oak Ridge), there is reason to question whether the city has done appropriate “due diligence” on this proposed deal. The developer’s analysis of site preparation costs were checked out with TVA staff — that’s a good start. However, the city’s optimistic analyses of tax revenues rely on the developer’s assessment of market potential, which the city has not independently verified. For example:
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- It appears that in order to achieve the $60 million increase in Oak Ridge sales that the city projects, Oak Ridge would have to change from a community that “leaks” sales of consumer goods (clothing, electronics, home furnishings, etc.) to other communities into a community that sells more consumer goods than its residents buy. That seems very unlikely in view of our city’s position as a secondary city in the Knoxville metro area. I don’t want to stifle optimism, but I don’t want to bank on unrealistic assumptions.
- The analyses seem to implicitly assume that the people who live outside Oak Ridge would shop at Crestpointe instead of at similar centers located closer to their homes. That’s little more than wishful thinking, if you ask me.
Additionally, the city’s analysis of potential tax revenues assumes that increased property taxes (from the value of the store buildings) and sales taxes (from new sales) will flow in starting with the first year after the proposed bond issue. That’s just plain impossible! If it takes 2 years to build the shopping center (as expected), there would be 2 years without any additional tax revenue. If someone like myself can find that kind of mistake by reviewing presentation graphs and summary tables, what other errors are buried in the analysis? Remembering how poorly the last city’s last “can’t possibly lose” investment (the Centennial Golf Course) turned out (last time I looked we citizens were subsidizing the golf course at the rate of $300,000 per year), I think it is irresponsible to put taxpayer money into this proposal without some independent verification of the numbers.
- Aesthetics (another planning issue). I don’t want the most prominent view from many parts of the city (and the scene that greets people arriving from Knoxville) to be of the neon commercial signs atop a hill that resembles a medieval fortress, but that’s my impression of what this development would look like. We might as well change the city’s nickname to “Target City.”
- Traffic (yet another planning issue). Now that the road has been 4-laned, traffic flow on South Illinois Avenue en route to Knoxville is pretty smooth now at most times of the day (at least until you reach the Solway Bridge area), but retail traffic from Crestpointe is likely to change that. Access to this shopping center would be from South Illinois Avenue (a new stoplight would be installed) and the Boeing interchange, adding tremendously to traffic volume on this main highway into and out of town…
Now, I imagine you are asking “What would you do instead?” I have some thoughts, but I’ll save them for another post.
In the meantime, I’d like to note that if City Council votes Monday night to authorize general obligation bonds for this project, there almost certainly will be a successful petition to place a bond referendum on the June ballot. That will give voters the opportunity to make their own decisions. I hope, however, that Council will exercise some leadership on Monday night and vote this down, sparing voters the need to go through another divisive referendum process.
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