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(WBIR - Knoxville) A state project to rebuild the small bridge on Broadway Street will cost the Tennessee Department of Transportation millions of dollars for damages to a neighboring company.

Last week, the state paid Smith & Hammaker Enterprises more than $5.6 million for a roughly a half acre sliver of land. The property is located beneath and beside the bridge at the northern edge of downtown Knoxville along the Norfolk Southern Railroad line.

But records show the entire 3.6 acre property has an appraised worth of only $1.26 million.

TDOT says it got a fair shake at half the expense of its other option.

Spokesman Mark Nagi said officials weighed whether to buy the entire lot and then relocate the company or buy a piece of it and then "cure (the) damages from project impacts." Nagi said engineers eventually modified the bridge redesign to minimize the cost.

The $5.6 million price tag for the property includes more than the cost of the land. It also includes construction costs.

"We are paying the property owner to demolish part of their building. In this case, we have to have two parts of that building demolished and there are damages for the property owner," said Nagi. "The majority of the money was paid as damages, whereby the property owners could, if they chose, modify their property and building to remain at their current location."

The state needs the land for right-of-way purposes once the bridge, also known as the Broadway viaduct, is replaced.

In the meantime, that leaves more work for Smith & Hammaker, a document and information and management company that bought the property for $2.35 million in March 2005.

'IT'S TAKING OUR ENTRANCE'

Butch Smith, the company's founder and CEO, said the state's plans will cost him time and eventually a lot of money.

His staff currently is starting the prep work to move 700,000 boxes they currently store for more than 700 clients. They recently bought the four-story Fort Hill Building on E. Summitt Drive for $700,000, but will have to put another $3 million into it to build new infrastructure such as shelving.

Until then, however, he can't close down shop.

Because the state's acquisition will take away his company's front entrance, he'll need to tear down several sections of the building near the west side of the bridge so his employees can park. That, too, will cost money and dig into potential storage space – the key reason to move.

"The whole kicker is that it's taking our entrance," Smith said. "Now it will have to shift around. In doing that we have a data center that's affected. We have a scanning system that's affected."

Smith also pointed out the expense of such a major move while remaining in operation.

"You've got to consider the cost involved in moving a data center. It's 24-7. This is not a situation where I'm going to take a couple of weeks off to move this. We serve more than 700 clients and they need to have access 24 hours a day if needed. So I've got to make sure it's up and running at all times, no matter what's going on around us," said Smith.

Smith said he hopes to be in the new location within 18 months, and then sell the rest of the Broadway property which also includes the old White Store warehouse and distribution center.

MORE WORK AHEAD

Officials have talked about replacing the bridge for roughly four years. Built in 1927, it's long begun to deteriorate.

The work also will require the railroad to move one of its tracks, which TDOT will fund. Norfolk Southern is expected to lower the track so the trains have enough clearance to roll double-duck cargo beneath part of the new bridge.

The state will begin the bidding process in spring 2015, and the work will take another 18 months to two years to complete.

Nagi said officials are still ironing out the final bridge and roadway plans, so they don't have an estimated cost for the project. He added that the state also still needs to acquire four more parcel of property to get going.

"This is a bridge that a lot of people travel on every single day," said Nagi. "In the future this will be a more efficient and a new bridge for folks to use."

Nagi said the traffic count along the viaduct averages more than 8,230 vehicles a day.

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