Monday, July 23, 2012

Historic South High School in Knoxville

In what seems to be a replay of the Ransom School issue here in Nashville, the city of Knoxville is gearing up to enforce its “Demolition by Neglect” ordinance with regard to a school building known as “South High.” Just as in the Ransom School case, the government sold the property to the developer, but of course at just the time when the economy hit the skids. While the developer evidently had plans to rehabilitate and preserve the building, the economy delayed his construction efforts and the city now is threatening (and indeed has now taken official steps) to take over the building and do whatever is necessary to preserve the structure.

While certainly I know nothing of the historic nature of the building, and I assume for purposes of my observations here, that there is some historic value to the preservation of the structure. But as I have said many times, usually, the best chance for the preservation of any historic structure is government ownership. First and foremost that is because the government is immune to its own regulations. Take a look at most of your schools: in many communities, probably most, they’re not permitted by the zoning ordinance in the location where they were constructed.. They are immune from it. Here in Nashville, we have a very large football stadium, and it too is immune from the local zoning because it was built by the city.

That is a tremendous advantage. If you don’t have to comply with the zoning regulations, as most cities and counties do not, then it is easy to find a use for any property. Because you don’t have to worry about the kinds of regulations that hamper most small businesses.

In the Ransom School case, Metro Nashville rezoned the property on the same day that they accepted the bid of the developer to pay $1 million for the property. The rezoning was no big deal – it only removed one-third of the developmental potential on the property without giving any notice to the developer with whom the city was negotiating. And then, when the developer asked the Historic Zoning Commission for some help in finding a reasonable way of developing the property so that it would not lose his shirt (essentially by removing some components but not all of the historic structure), the HZC refused. The Tennessee Court of Appeals reversed fortunately finding that there was no evidence in opposition to the developers contention that it would lose almost three-quarters of a million dollars if some relief was not granted. Ultimately, the entire building was razed.

In this instance as well, the government applied the historic zoning designation after it sold the property to the developer. I’m not familiar with the details (this website gives a brief overview); it may be that the historic zoning designation was largely irrelevant and prevents little difficulty to the developer. But certainly in the Ransom School case, the zoning change by the city restricting the development potential had a tremendous impact on the return of the developer’s investment. One can’t help but wonder if the same thing is not true under the circumstances of this Knoxville case.

It has gotten to the point where it seems to me that before a developer purchase a property like this from a local government, an agreement should be entered into which expressly allows demolition of the structure. Otherwise, the developer remains at risk: the government can change the terms of the agreement at any point by simply amending its regulatory provisions with regard to that property. Otherwise, it is difficult for the developer to protect his investment.

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