GREENEVILLE — Two days before the start of next month’s International Storytelling Festival, a federal bankruptcy judge will announce her determination of the value of the International Storytelling Center in Jonesborough, a ruling ISC’s president says will govern whether the ISC retains the building or operates solely from its offices in the neighboring Chester Inn.
“We’ll either have a party or we’ll have a big crying,” Jimmy Neil Smith, the ISC’s founder, president and chief executive officer, said of the Bankruptcy Court’s pending valuation of the property.
U.S. Bankruptcy Judge Marcia Parsons heard a full day of testimony on the value of the building Thursday, including dramatically opposing appraisals presented by the nonprofit ISC organization and by the USDA’s Rural Development, which holds a $2.6 million claim on the property.
Michael Green, a private real estate appraiser hired by the ISC, testified that he determined the storytelling center’s value to be $748,000 based on his evaluation of the property’s “highest best use” as a multi-tenant facility.
Mark Headin, an appraiser employed by the federal government, set the center’s value at $1,319,000 based in part on his determination that its best and most productive use is as a single-tenant facility for storytelling or a community center.
Both appraisers said the property’s value is depreciated by its “super efficiency” or “super adequacy” for storytelling, the cost of redeveloping the building for other uses, amenities that greatly exceed the value of other property in downtown Jonesborough and several years of overall declines in real estate values. While Green described the center as “overbuilt,” Headin testified the building, with its 56-foot tower and 20-foot ceilings, is “in the wrong place.”
Smith testified the cost of center included an initial $3.5 million construction contract, $1 million in construction overruns and $600,000 in unexpected remediation costs to correct soil issues.
Combined with the approximate $200,000 cost of three parcels of land purchased for the center, the ISC’s total investment came to $5.3 million.
Smith said, because the center was built in Jonesborough’s historic district, the ISC was required to adhere to codes that required “a certain type of building with a certain appearance.”
In designing the building, he said, it was also the ISC’s desire for the center to have an “iconic” impact on both the town and the international storytelling community.
According to Smith, the ISC funded the construction through grants, an original $980,000 loan from Rural Development, and two subsequent loans that brought its total debt to Rural Development to about $2.6 million.
Since the center’s opening in 2002, Smith said the ISC has reduced to the principle on the loans but not by much.
He said the ISC remained current on the first $980,000 loan through the end of 2010 when it filed for Chapter 11 bankruptcy.
At that time was behind on payments on the two subsequent loans by almost two years.
When asked about the feasibility of retaining the building in its bankruptcy reorganization,
Smith said the ISC will be able to meet the appraised $748,000 value determined by Green but not the $1.3 million price set by Headin.
“It is beyond our capability to carry that ($1.3 million) and function,” Smith said.
“We have looked at it every way, left and right, up and down, and there is only so much we can afford to do with that building.”
Smith testified that if the court’s determination of the center’s value exceeds the ISC’s financial capability, it will continue operating from its administrative offices in the Chester Inn, a state historic site located next door the storytelling center. “We can do that,” Smith said.
Parsons deferred a ruling on the center’s value, telling attorneys she will announce her findings in hearing set for Oct. 4.