Council unanimously approves AMSE land transfer

 

Note: This story was last updated at 11 p.m.

The Oak Ridge City Council on Tuesday unanimously approved the transfer of the American Museum of Science and Energy property. The roughly 17.42 acres will be transferred from the U.S. Department of Energy to the City of Oak Ridge. It could then be transferred in two phases to a company set up by the developer of Main Street Oak Ridge.

Under the agreement, the AMSE missions will be relocated within about one year to 18,000 square feet of space in a two-story building that once housed a Sears store next to JCPenney at Main Street Oak Ridge. That space, once finished, will be provided by TN Oak Ridge Illinois LLC, a Main Street Oak Ridge company, to the city at no cost for 15 years.

The city will, in turn, sublease the former Sears space to DOE at no charge for 15 years, and it can be used for the public outreach and education missions now conducted at AMSE—as well as for a temporary visitor center for the Manhattan Project National Historical Park. That visitor center is now housed at AMSE.

The southern portion of the AMSE property, or about 7.5 acres between the tree line and South Illinois Avenue, will be transferred first to TN Oak Ridge Illinois LLC. It could be transferred in late 2016 or early 2017, according to the resolution approved by Council on Tuesday. Officials expect that parcel to be developed within about two years.

AMSE would have about one year at its current location before it would move to Main Street Oak Ridge.

The transfer of the northern portion of the AMSE site, which includes the building itself, will occur later, after the museum moves to Main Street.

TN Oak Ridge Illinois LLC will not pay for the two parcels. Instead, officials calculated that the company will be providing “equivalent consideration,” preparing and providing 18,000 square feet of rent-free space for 15 years, and covering the cost of maintenance, taxes, and utilities. The company will also provide public amenities such as bicycle and pedestrian paths, and the transferred parcels are expected to generate new property and sales tax revenues. Considering the going rate for commercial space, as well as the cost of preparing the space, along with the other factors such as no maintenance or utility costs, the deal makes financial sense, city officials said.

Council voted 7-0 for the transfer.

Several Council members—Kelly Callison, Rick Chinn, and Chuck Hope—made calculations on the value of the rent-free space using, for example, a commercial lease rate of $12-$15 per square foot. The rent-free space would have an equivalent value of $270,000 per year at $15 per square foot for 18,000 square feet—or $4.05 million over 15 years.

A conservative full-service rate would be $20 per square foot, said Chinn, a local businessman and developer.

The rate of $12 per square foot is “a bang-up deal,” Chinn said.

Callison calculated a roughly $3.7 million equivalent, including a $2.7 million property tax equivalent and $374,000 for trails and amenities. That’s not even including potential sales tax revenues.

“It looks to me, financially, to make a lot of sense to do this,” Callison said. Sales and property tax revenues at the AMSE site are now zero, he said.

Advocating for the land transfer this summer, RealtyLink, the Main Street Oak Ridge developer, said that any development on the AMSE property that competes with Main Street Oak Ridge could hurt its 58-acre $92 million mixed-use town center, where development has started and which is expected to include retailers, restaurants, residential units, and a hotel.

AMSE is across South Tulane Avenue from Main Street Oak Ridge. The concern was that if the AMSE site was developed after Main Street Oak Ridge, tenants might relocate from Main Street Oak Ridge to the AMSE site after their five-year leases expire, leaving empty buildings at Main Street and possibly causing other tenants to leave.

In June, Council authorized Oak Ridge City Manager Mark Watson to enter into land transfer negotiations with RealtyLink and the U.S. Department of Energy. DOE owns the museum but has said it is not in the museum business. The agreement approved during the special meeting Tuesday is a follow-up to that earlier authorization of negotiations.

City officials said the agreement approved Tuesday gives AMSE a 15-year reprieve. Other possible, less desirable outcomes could have been the closure of AMSE or having DOE get rid of the museum through the federal General Services Administration, or GSA, where it could have been liquidated, officials said. Then, the museum would be gone, and the city would not have had any control of the development of the AMSE property along South Tulane and South Illinois avenues in central Oak Ridge, officials said.

DOE has made it clear that they were going to transfer the property and preferred to work with the city, Oak Ridge Mayor Warren Gooch said. The alternative was to sell it through GSA, he said.

At this point, it’s not clear what might happen to the AMSE employees or the building itself—whether it would be torn down or re-used—or what might happen to the museum’s relocated missions after 15 years. It’s also not clear whether the relocated museum missions will still be referred to as the American Museum of Science and Energy. It’s also not clear what the long-term plans for the National Park Service visitor center might be. The park, which includes Oak Ridge, was formally established about a year ago, and planning is still under way.

There was some opposition to, or concerns about, the land transfer on Tuesday. A few people said that 18,000 square feet of space is too small, and others wanted to make sure the historical story now told at AMSE continues to be told.

“AMSE is a significant member of this community,” said community leader and volunteer Tom Row. “AMSE is now being asked to move to a smaller location…It is a community resource.”

City Council member Ellen Smith said AMSE now has about 54,000 square feet of space, although the exhibit space occupies about 15,000 square feet, not including the museum lobby.

“I would hate to see this museum downsized,” said Lloyd Stokes, an active member of the historic preservation community. “What we are doing here is trying to tell a story. This story needs to be told. We can’t do it in 18,000 square feet.”

Historic tourism can generate a lot of revenues, Stokes said.

“You sell the property,” Stokes said, “you sell the golden egg.”

Former AMSE Director Steve Stow advocated for keeping the museum where it is and persuading DOE to set up an endowment and then contribute to upgrades and capital improvements.

“We can get AMSE off of life support,” Stow said.

 

There have been various proposals to help secure the future of AMSE dating back to at least 2000. The museum has been at its current home in central Oak Ridge since 1973. At least one proposal involved the City of Oak Ridge, and another involved Oak Ridge Associated Universities, which is next door to AMSE. There was a series of community meetings on the future of AMSE in 2014. But none of the previous proposals have led to an agreement like the one approved Tuesday.

Three DOE sites in Oak Ridge—Oak Ridge National Laboratory, Y-12 National Security Complex, and East Tennessee Technology Park—have provided funding to AMSE. In Fiscal Year 2015, they gave $1.5 million to the museum. Officials have said the museum’s operating and labor costs have been as high as $1.7 million to $1.8 million per year, and there have been reports that DOE is interested in cutting its costs. DOE has said AMSE is “over-sized” and “operationally challenged.”

Still, the museum is considered a top tourist attraction. Row said the museum has had 8.8 million visitors total over the years, and now has about 65,000 visitors per year.

In part, the museum helps tells the history of Oak Ridge. The city was built during World War II as part of the Manhattan Project, a top-secret federal program to build the world’s first atomic weapons. But there are other exhibits at AMSE, including scientific exhibits, in addition to community meetings and presentations in the museum’s auditoriums.

As part of the agreement approved Tuesday, TN Oak Ridge Illinois LLC will provide community-oriented amenities such as bicycle and pedestrian paths and “enhanced” landscaping on the AMSE property. In return, the city will include about 1.87 acres of city-owned land adjacent to the AMSE property in order to increase the size of the area that can be developed. The 1.87 acres would include the Tulane Place roadway, a roughly 12.5-foot wide strip of right-of-way along the eastern side of Badger Road (the city would retain any easements needed for power poles), and a triangular parcel between the Oak Ridge Municipal Building and the AMSE property.

TN Oak Ridge Illinois LLC will be responsible for the relocation of any and all utilities required to “maximize” the development of the AMSE property, according to the agreement.

See previous AMSE story here.

See story on Council’s approval of the land transfer negotiations this summer here.

Learn more about Main Street Oak Ridge here.

See the AMSE website here.

More information will be added as it becomes available.