GREENEVILLE — The International Storytelling Center is re-evaluating its options after a U.S. Bankruptcy Court Judge on Tuesday set the fair market value of the center’s iconic building in downtown Jonesborough at $1,319,000.
ISC Chief Executive Officer Jimmy Neil Smith, who testified in September the $1.3 million appraisal offered by the USDA Rural Development agency is beyond the ISC’s means, said Tuesday the ISC board will look again at what they may be able to do to retain the building.
“We have options. We can reorganize without (the building). Or we can negotiate repayment,” ISC’s attorney Mark Dessauer said following Parson’s ruling.
In issuing her finding, Parsons encouraged Rural Development to cooperate with ISC in negotiating a repayment schedule.
ISC filed for Chapter 11 bankruptcy in December, citing its default on Rural Development’s $2.6 million secured claim on the storytelling center property.
In a valuation hearing held Sept. 22, Smith said 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 cost of three parcels of land purchased for the center, he said ISC’s total investment came to $5.3 million and was funded through grants, gifts and three loans from Rural Development totaling $2.6 million.
Parson’s ruling on the property’s fair market value on Tuesday reduced the Rural Development secured claim on the property to $1,319,000.
In announcing her finding, the judge cited two significantly different appraisals of the property conducted by Michael Green, a private real estate appraiser hired by ISC, and Mark Headin, an appraiser employed by the government.
Parsons said while she found Green, who assessed the property’s at $748,000 “more knowledgable overall” in his appraisal, she disagreed with his rejection of storytelling as the “highest best use” of the building. Parson agreed with Green’s criticism of Headin, who put the property’s value at $1,319,000, for his failure to present comparable property transfers in the Jonesborough area.
The judge said she was not given adequate data to consider what both appraisers described as amenities that make the building “super adequate” for storytelling but diminished its value for redevelopment for other uses.
Without that data, she said she found the 27 percent of the building dedicated to porches, balconies and other common areas would bring the fair market value of the building to $1.5 million, or approximately $200,000 more than the appraisal offered by Rural Development.
Parsons said while she appreciated Smith’s Sept. 22 testimony that ISC could not pay $1.3 million, she cited evidence presented by RD that Smith told a local newspaper ISC had raised $725,000 and hoped to raise the balance through storytelling festival revenues.
Smith testified he was misquoted by the newspaper.
On ISC’s request, Parsons extended the ISC’s deadline to submit a bankruptcy reorganization plan to Dec. 31. Dessauer said he expects the reorganization plan will be filed in advance of the deadline.