The KEDB on Tuesday voted unanimously to ask Model City leaders to grant it a six-month option on the property — through the end of this year — on behalf of the unidentified company, which wants dibs on more than 200,000 square feet of building and other Quebecor property adjoining West Sullivan and Clinchfield streets.
That is the newest section of the old Quebecor property. Part of the 1 million square feet of buildings formerly housed the Kingsport Press and Holliston Mills.
The proposal is code named Project Friday, the day of the week KEDB Chairman Larry Estepp was approached about the idea.
“This group has been looking for property for several months now and stumbled upon this,” Estepp told the board.
He said representatives viewed the property last Thursday and asked about getting an option Friday.
Estepp said City Manager John Campbell told him the group has definite plans for the section of the building fronting the parking lot off West Sullivan but also is interested in developing or co-developing the parking lot between that building and West Sullivan and the section immediately to the west.
Estepp said the project, which could cost more than $16 million, would include the business taking the first or second floors and using the third floor as speculative space.
“We may not yield to six months,” Campbell said, explaining that the city may not want to tie up all the property for that long.
For one thing, Campbell said the city is exploring possible development of part of the property into residential loft apartments.
However, Estepp and KEDB Secretary/Treasurer Bill Dudney said the potential redeveloper likely will know if the project is a go and how much property it would need to include well before Dec. 31.
Campbell said the proposed development is a good fit with overall city plans for that area of West Sullivan.
Estepp said the unidentified company may partner with others and would like to have some input into how entrances are made in that entire section.
The KEDB is asking for the option at no cost.
On another matter, Assistant City Manager for Development Jeff Fleming told the board that representatives of Kingsport Town Center, formerly the Fort Henry Mall, would appear before the board at its Aug. 5 meeting to request the KEDB grant property tax breaks for a proposed renovation and expansion of the city’s largest retail center.
Fleming said Sullivan County for tax purposes today values the mall at $33 million, and owner Somera Capital Management of Santa Barbara, Calif., plans to spend $45 million on the property it bought for $52.65 million. The mall is managed by Chicago-based General Growth Properties.
However, if the project as proposed were completed, Fleming said the county would value the mall at $92.2 million.
Since the mall is not in a redevelopment district, it is not eligible for tax increment financing.
However, the plan still under development is to give it PILOT (payments in lieu of taxes) over five years, working its way up from a discounted property tax bill in year one to a full bill after the fifth year.
“In the next few years, every lease in the mall is going to come up for renewal,” Fleming said.
Plans call for demolition of the 87,000-square-foot J.C. Penney in the mall and construction of a 104,000-square-foot new J.C. Penney next to the mall but with a separate entrance.
In addition, the section of the mall at the Garfield’s entrance would be built out into a two-story atrium with two escalators leading to the second floor. A food court would be on the right, and a dining terrace would be atop the expansion.
The old J.C. Penney building site would be the site of a new 30,000-square-foot area of smaller specialty shops with separate outside entrances, he said.
All told, the existing mall had 530,000 square feet, and the renovated one as proposed would have 633,000, compared to East Stone Commons with 270,000 and the Kingsport Pavilion at 484,000 with more expansions planned.
Campbell said a wild card is that J.C. Penney could choose to renovate its existing space for about $3.5 million rather than building a new structure for $16 million.
However, he said the incentive would not be as large if the J.C. Penney store is renovated instead of being built new.