Randy Boyd, the owner of the Smokies, agreed to front a loan to be repaid using property taxes for new developments in the area around the stadium
KNOXVILLE, Tenn. — Knoxville and Knox County negotiators said they have a plan to close a potential funding gap for the downtown Knoxville baseball stadium proposed for the Tennessee Smokies, now expected to open in 2025.
“We’re watching the economy change with inflation, and increased interest rates and we’re trying to take a proactive approach,” said Chris Caldwell, the Knox County CFO and one of the negotiators.
Under a new proposal, Smokies Owner Randy Boyd would agree to front a loan for any gap in funding. He would be re-paid through a larger Tax Increment Financing, or TIF, plan.
The Knoxville City Council and the Knox County Commission would have to approve the modified TIF agreement, according to a joint release by the City of Knoxville and Knox County.
Tennessee law allows local governments to pay for improvements to an area using future tax revenues, through TIF. Property taxes from new developments in a ‘TIF district’ would go towards paying for improvements.
Local leaders already approved a TIF for improvements to the area around the stadium. However, to cover the cost overruns, negotiators agreed to expand that TIF area.
“This would be new property tax revenue because of new private investment,” said Deputy Mayor Stephanie Welch, one of the negotiators on the stadium project.
Knoxville leaders and Knox County voted to enter an agreement allowing the Knoxville Knox County Sports Authority to issue $65 million in bonds. In 2021, developers said they expected the stadium to cost $90.5 million.
In a November proposal, negotiators said the maximum exposure of public funds is $74.3 million.
However, because of rising interest rates, inflation and rising labor costs, city and county leaders said there may be a gap in funding.
“The city and the county are not willing to and nor will we borrow more money,” said Deputy Mayor Welch. “Therefore, Mr. Boyd has stepped up to say, ‘Yes, if there’s a gap, I will front those dollars.'”
Developers said they won’t know how much the stadium project will cost, and how much of a gap they will need to make up, if any, until late 2022 or early 2023.
Construction crews began site demolitions on Friday. Boyd is paying for the demolition.