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Andrew Johnson Building to be turned into micro-apartments before converting into hotel

The Knoxville City Council voted to allow Knox County to sell the Andrew Johnson building to a private developer on Tuesday.

KNOXVILLE, Tenn. — The Knoxville City Council voted to approve the sale of the Andrew Johnson Building on Tuesday night. Knox County plans to sell the building to BNA Associates, a Nashville-based real-estate development company after is housed Knox County Schools' administrative officers for many years.

Philip Welker, managing partner at BNA Associates said he expects construction to begin in late 2021 and last 12 - 18 months. 

The developers originally planned to turn the historic building into a hotel, with restaurants and shopping on the ground floor and a rooftop bar. 

With the pandemic, however, BNA Associates said they couldn't get financing to build a hotel. Knox County allowed them to modify their plans to build micro-apartments, which would have to be converted into a hotel within five years. 

The agreement between Knox County and BNA Associates allows for the sale of the Andrew Johnson building for $6 million. Knox County granted BNA Associates a PILOT (Payment-In-Lieu-of-Taxes) of $110,011 per year for twelve years, plus a reasonable construction buffer. 

After the end of the PILOT period, BNA Associates would have to pay property tax on the building.

Knox County Finance Director Chris Caldwell said the PILOT payment is tied to the agreement that BNA converts the micro-apartments into a hotel. 

"The pilot payment then would go up if he did not turn it back into a hotel," Caldwell said. 

The county owns the Andrew Johnson Building. It serves as the central office for Knox County Schools. This sale would allow the county to make money off the real estate. 

"[It] could be a good anchor tenant for the south part of downtown, which could connect to South Knoxville at the riverfront," Caldwell said. "We always thought it was good to get it back on the tax rolls."

Caldwell said the next step is to finalize the closing paperwork.