KNOXVILLE, Tenn. (WATE) — The Andrew Johnson building is one step closer to becoming a new hotel here in Knoxville, despite the timeline of the project being pushed back due to supply chain issues according to Knox County Finance Director Chris Caldwell.
The historic building opened in downtown Knoxville in 1924. In recent years it’s been the home for Knox County Schools’ offices and other county government offices. They’re now in the process of moving out.
Caldwell said when the boutique hotel is able to open its doors, it could mean more jobs and increased revenues for the county. “It’s a historic hotel for Knoxville. It’s got a lot of rich history.”
The former hotel brought in people from around the country which in turn brought in money to Knox County.
Now, as a government building, Caldwell said, “city and county both get 0 in property taxes of the AJ building since it is a county asset.”
The new developers, BNA Associates, are trying to change that by turning it back into a hotel, but their plans have been delayed until county offices can move out.
“Knox County will be the owner until June 30th and then we will officially sell the building to BNA for $6 million,” Caldwell explained.
BNA released renderings in March of what they want the building to look like which includes a rooftop bar and jazz club.
BNA was approved for a 12-year payment-in-lieu-of-taxes, or PILOT, program by both the city and county in July 2021.
“They’re asking for a tax incentive to make the deal work,” said Caldwell. “They basically at that point pay a reduced amount of taxes for a period of time until they start to pay the full amount of taxes.”
The developers estimate the project would cost over $30 million in renovations. Cadwell explained that with the PILOT program, “the base amount will probably be set at six in what we would assume until the renovation is complete and at that point, it will be reassessed by the property-asser.”
Once the project is complete the new hotel will bring in a high property tax, along with sales tax, and tax fees associated with hotels, bars, and restaurants.
All good news for the county which is currently making no money off the building. Cadwell said, they’re hoping for a two-year build-out, which could mean the hotel would open in 2024.