KINGSPORT — Downtown soon may have a new oyster bar and a new owner for the old Kingsport Foundry next door, thanks to the Kingsport Economic Development Board.
The KEDB may be inching toward a deal to buy the old Kingsport Foundry site, but the negotiations so far haven’t resulted in a purchase agreement.
However, the head of the KEDB said Tuesday a deal is almost done for an oyster bar to open in the old Jack’s Restaurant building adjoining the foundry property in disarray.
The KEDB earlier this year bought the restaurant property at 808 E. Main St. for $143,167.
KEDB Chairman Larry Estepp told the board he met Monday night with Robert Thompson and his daughter, Crystal Stone, about leasing the restaurant building for $2,500 a month for three years with the first right of refusal to buy.
The board voted to proceed with negotiations for a contract with Thompson.
Estepp said Thompson plans to open an oyster bar about 120 days after an agreement is finalized. Plans include getting a liquor license and adding a 24-foot-by-50-foot deck on the Unicoi Street side of the property for outside dining.
Interior updates would include removing some walls, putting a bar in a corner, removing the carpet and painting.
KEDB Secretary/Treasurer Bill Dudney and board member Charlie Floyd said the KEDB needs to keep an option to end the lease after three years in case the restaurant land is needed to combine with the foundry property for future development.
As for other potential development in the area, City Manager John Campbell said a “public” group is interested in locating a facility on about two acres of the foundry land, which Mayor Dennis Phillips said needs to be cleaned up.
Also Tuesday, the board turned down the latest proposal from New Shenandoah Co. LLC, owned by John Marrotta of Unicoi, to sell most of the property and some other land Shenandoah does not own for $700,000.
Under the deal, Shenandoah would give 1.2 acres to the city or KEDB but keep about one acre of land, including the former site of the Mullins-Quillen operation known as the Glutz property. Shenandoah would keep an acre and try to sell it for retail, Estepp said.
Estepp said the offer came through a real estate agent representing Shenandoah, and that part of the offer would be for Shenandoah to tear down buildings on the properties. However, the KEDB was asked to cover the estimated $4,000 cost of removing old tires from the Glutz property and excuse $10,000 in taxes.
KEDB Vice Chairman Bob Feathers said the board has a Redevelopment Incentive Grant that can help pay for demolition costs, but Estepp said the KEDB could not just excuse tax liability for Shenandoah.
Dudney said the contingencies would kill the deal for him but that the Asset Management Committee that includes him, Estepp and Feathers decided to bring the offer to the KEDB as an update.
“To me, that’s a show stopper right there,” Dudney said, adding that an outright purchase of the property was “the only thing I could support.”
After an extended discussion, the board decided not to accept the deal, instructing Estepp to respond to it by saying the KEDB was not interested in the property at the offered price and would prefer to acquire all the property.
“We’ll just keep the file open and keep communication open,” Estepp said.
Shenandoah, which once had options on the Jack’s and Glutz properties, once offered to sell all three properties for $1.5 million, while the KEDB offered $650,000.
Estepp said a KEDB-paid appraisal on the Glutz property is $54,000, although the owner wants $240,000 — the amount of the option Shenandoah once held on it. The private appraisal on the other land in question is $570,000, said Estepp.
The appraisal for tax purposes on the Glutz property is $41,800, while the foundry site tax appraisal is $609,000, Estepp said.
City officials have discussed using eminent domain to acquire the property for a public purpose, although Estepp said the general plan was to clean up the land, seed it in grass, and keep it mowed as a gateway to downtown until development occurred.
Campbell said the owner seemed receptive to the city taking a 1.2-acre landscape easement on part of the property.
The city earlier this year rezoned the land and other property bounded by Main, Sullivan, Market and Unicoi streets from M-2, general industrial district, to B-2, central business district, after Marrotta talked about putting a metal reclamation business on the foundry site.
Even if the KEDB reached an agreeable price to buy the property, Estepp said such a large expenditure would limit the board’s ability to buy more property along the proposed River Walk development near Netherland Inn and other projects, which board member Tony Falin said may prove more pressing than buying the foundry property.