The approval cleared one of the largest hurdles to building a new baseball stadium in downtown Knoxville.
KNOXVILLE, Tenn. — The Sports Authority approved agreements for the development and the lease of the downtown baseball stadium on Tuesday.
The Knoxville City Council and the Knox County Commission created the Sports Authority to oversee the construction and financing of the downtown stadium.
The development agreement, once finalized, would be signed by both the Sports Authority and RR Land, LLC, the development group owned by Randy Boyd who also owns the Smokies.
Boyd Sports would then lease the stadium from the Sports Authority.
Negotiators on behalf of the City of Knoxville and Knox County said the agreements were close to being finished, and that’s why they felt comfortable presenting them to the Sports Authority.
However, bonds are becoming a complicated issue. Because the Federal Reserve discussed raising interest rates, bond attorneys said their estimates of the debt service per year may change.
Knoxville and Knox County entered into an interlocal agreement. The agreement authorized the Sports Authority to issue $65 million in bonds, or debt, to pay for the construction of the downtown stadium.
Current projections said the city and county would have to pay around $3.2 million in debt every year. However, if interest rates change, it could rise. Attorneys said those changes could be in the neighborhood of $150,000 per year.
RELATED: Stocks fall after Federal Reserve signals rate hike ‘soon’
City and county finance officials said property and sales taxes from the area around the stadium and rent from the area would help pay yearly debt.
Knoxville Mayor Indya Kincannon said she expects the city and the county to pay about $240,000 towards the $3.2 million figure every year. But, with the changing interest rates, finance officials said that could increase.
Another issue still under negotiation is insurance and assurances to mitigate the city and county’s risk in building the stadium.
Tim Hill, a member of the Sports Authority and a local developer said this project has risk, but the reward is high enough so he feels comfortable with his vote.
“There’s inherent risk in any project of this magnitude, and it’s our job to minimize those risks,” said Hill. “We shouldn’t lose sight of the fact that we’re building a great project on a deep discount.”
Both Mayor Kincannon and Knox County Mayor Glenn Jacobs spoke in favor of the downtown stadium at a joint workshop between the Knoxville City Council and the Knox County Commission.
Knoxville City Councilmember Amelia Parker has consistently voted against the stadium project. She said the stadium should be built without public funds.
After the votes by the Knoxville City Council and the Knox County Commission to approve the debt issue, and the Sports Authority’s vote to approve the agreements, negotiators are planning votes on some of the details involved in the project.
Negotiators will have to work out agreements with the Knoxville Utility Board to re-vamp the utilities in the area. The city is expected to shoulder the burden of those courts, according to city leaders during a January meeting.
An agreement on the $100 million+ private development Boyd promised to build concurrently with the stadium is also still in progress.
Doug Kirchhofer, the CEO of Boyd Sports said he expects the Knoxville Smokies to play baseball in the new stadium in 2024.