Motion filed to force sale of Magnet Mills
Nothing is simple when it comes to Magnet Mills, it seems. Between slum ordinances, environmental hazards and potential developers who come and go, the future of the linchpin of downtown development remains in limbo.
Despite the fact that Magnet Mills is under contract with a “community conscious” Knoxville developer, a motion for order of sale was filed Friday in Chancery Court on behalf of the City of Clinton against Clinch River Properties, LLC. The Huang family, of Knoxville, owns Clinch River Properties, owner of Magnet Mills.
What will happen next is unknown.
Why?
In August, Anderson County Chancery Court ordered Clinch River Properties to pay $105,085 because of a lien concerning multiple abandoned vehicles on the property.
That amount includes past interest and a daily $50 fine per vehicle. According to court records, there were four passenger automobiles, one large panel truck, one large tanker truck, and seven semi-truck trailers abandoned on the property. That process took between two and three years, according to Clinton City Manager Roger Houck.
The physical condition of Magnet Mills has been deteriorating for years, and in 2014, the city started work on getting the property cleaned up, according to former Clinton City Councilman Jerry Shattuck. That included getting those vehicles removed.
“It’s been a long process,” he said. “Any property owners rights have due process.”
It was settled out of court, and the property owners agreed to pay the city the amount owed in four monthly payments. They paid the first payment, but did not pay the September payment, according to court documents.
The motion asserts that “[the City of Clinton] is entitled to have the property sold to satisfy the judgment.”
Not just junk cars
There is also a lien related to a slum ordinance the city passed. The property owners did end up demolishing most of the buildings that once made up Magnet Mills. That started in 2016.
In April 2016, the owners were given 90 days to either demolish the buildings or come up with a plan to redevelop it. After many delays, they did finally pick up their demo permit, according to Houck, and slowly worked on the property.
But why tear it down rather than renovate it?
During court proceedings, the city received a quote from engineer Paul D. Tucker totaling nearly $1.6 million, which would include repair, design, and abatement of asbestos and lead-based paint, according to court documents.
Jerry Glenn, real estate agent for Clinch River Properties and contractor with past electrical engineering experience, testified that he estimated the cost to be closer to $550,000, which would include securing windows and doors, electrical repairs, HVAC repairs, paint removal and structural repairs. It was Glenn’s opinion that there was no lead-based paint.
An appraisal provided by real estate company Sellers and Associates valued the “as-is” value of the property at $730,000. That included the buildings that would not be torn down.
Because the cost of repairs would cost over half the value of the property, the court determined that “these structures must be vacated and demolished and removed from the premise.”
The city could have technically done the demolition, but, due to environmental concerns, it would have cost the city a lot more money, according to Shattuck.
“Given the concerns about the environmental issues, if the city did do it, they would have to do it right,” he said. “Doing it right meant you’d have to go in with people with hazmat suits and scrape the lead-based paint off the walls, and do all the procedures for asbestos removal. The owners just brought a backhoe in there and started tearing the walls down.”
So, the city stood aside and let them tear it down.
“The whole process has been delay, delay, delay,” Shattuck said. “That process is still going on.”
The potential purchase of the property is very attractive, said Shattuck, but city officials are skeptical.
Previous plans
Clinch River Properties, LLC, purchased Magnet Mills on Dec. 20, 1994, from Greenbrier Fidoreo, Inc. This new contract between the developer and Clinch River Properties was signed the last week of September for $1.7 million. That contract is, however, contingent on the sale of another piece of property owned by the developer, according to Houck.
“There’s no closing date,” said Shattuck. “It all just continues to smell like the delay game. The city is anxious for some responsible developer to take over, but the price is so high that a responsible developer has trouble meeting that because of the unknowns, some of which are environmental. It’s a real barrel of fish hooks.”
The remaining building has architectural significance, said Shattuck, not to mention the water tower that people have a sentimental attachment to. The city would love to see a developer that wants to preserve the property as much as he or she can, and the developer that currently has a contract on the property says he will keep the water tower.
There have been offers on the property since the owners put it up for sale over a decade ago. Just before the recession hit, there was a “really good plan” with a retail center on the front, according to real estate agent Jerry Glenn, who represents Clinch River Properties.
“The developer had planned condos up on the hill where the yellow building is,” Glenn said.
The plan was to create a mixed-use development with retail and residential facilities.
“That thing was really ready to go until the recession kicked in,” he said. “Then, every retail company bailed out on us.”
Since then, there was no retail anchor that was willing to gamble on development, according to Glenn. Even now, retail struggles as people do much of their shopping online. The new developer that currently has a contract on the property plans to use an upscale restaurant as an anchor.
“That’s probably a better anchor than a retailer,” Glenn said. “That will draw people in and the small shops around that traffic would or could prosper.”
Add in an event center and a small boat dock on the river, like the developer wants to, and you bring in even more people. According to Glenn, he is not aware of anything that is wrong with the contract.
“It appears valid and is performing on time,” he said. “They’re doing title work, easements, trying to clear up anything the city applied to the property.”
If the deal between the developer and Clinch River Properties closes before the hearing, the liens would still transfer with the property. If the court decides to sell the property on the courthouse steps, there’s no telling who would purchase the property next. One possibility could be the city itself purchasing the property; another would be the current owners buying it back.
A hearing is set for Nov. 19 at 9 a.m.
Magnet Mills was on the list of eight endangered historical properties in 2016 by the East Tennessee Preservation Alliance. It has been in decline since the 1980s.
Neither the Huang family nor the potential developer could be reached for comment.