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JCDA to move ahead with negotiations on turning train depot into brewery

April 13th, 2012 5:55 am by Madison Mathews

JCDA to move ahead with negotiations on turning train depot into brewery

A locally themed brewery backed by a Sevierville attorney could give the historic CC&O Railroad Depot a breath of fresh air.
The Johnson City Development Authority on Friday unanimously voted to move forward with contract negotiations with entrepreneur Joe Baker, one of the owners of Gatlinburg’s Ole Smoky Distillery, which distributes legal moonshine across the country.
This represents a major step for the property, which sits along West State of Franklin Road, and the future of economic development in the downtown area.
“I’m excited about this opportunity,” Baker said in a news release. “The corridor between (East Tennessee State University) and downtown is developing quickly and it’s important to use the depot in a manner that embraces its history and celebrates the culture and heritage of the area.”
After hearing several proposals for the depot, board member and JCDA Depot Committee Chairman David Tomita said Baker’s proposal and proven track record with his distillery business represented the best option for the future of the depot, which is why the committee recommended the board move forward with Baker’s concept.
“What we’ve got here is somebody who’s got a track record. He’s operating Ole Smoky Distillery in Gatlinburg. His family is one of the original candy company folks down in Gatlinburg. These folks have a history of success in retail,” he said.
While the details of the contract are still in the works, pending final approval by the JCDA, Baker has presented a purchase agreement of $5,000 to the JCDA for the property. Should he not pull a building permit within a year, his company, Johnson’s Depot, LLC, would pay the JCDA an additional $150,000 above the agreed purchase price in order to protect the JCDA’s initial investment in the property, which was purchased in 2010.
That purchase agreement was not approved, but the JCDA has authorized the plan to move forward with Baker’s concept for a brewery and accompanying restaurant that is expected to highlight local culture and history.
“He’s an attorney, his wife is in medical school. These are solid folks — not that anyone else we’ve heard from is not — but they are prepared to move ahead now without financing. They can finance this internally and that’s huge. This is patient capital and that’s what this property needs. That’s what that property has been waiting for, because everybody’s got a great idea for that space but nobody’s got cash flow to fund it, especially in this lending environment,” Tomita said.
When complete, the project will represent a successful conclusion to the JCDA’s 2010 purchase of the property. The JCDA approved the use of $150,000 in tax increment financing to purchase the depot with the hope of finding a private sector buyer who would renovate the historic structure and turn it into a taxpaying, revenue-generating downtown business.
Several board members addressed some concerns with the initial purchase agreement and some of its terms, mainly stemming from his offer of $5,000 for a piece of property the JCDA purchased for $145,000 more and the option of giving Baker 12 months to pull building permits on the property.
“I guess I’m always uncomfortable when you pay $150,000 for something and you sell it for ($5,000),” board member and City Commissioner Ralph Van Brocklin said.
Depot Committee members said the $5,000 figure offered by Baker represented the cost the JCDA had to pay when it put up a tarp last year to protect the structure’s roof after a particularly rough winter.
Another concern raised was what would happen if Baker pulls a permit within the 12 months stipulated in the contract but nothing is ever done with property.
While that is certainly a risk associated with the deal — and an issue that is likely to be addressed when the final contract is taken before the JCDA’s attorney — Washington County Economic Development Council CEO Robert Reynolds told the board that is not Baker’s intention with the depot-to-brewery project.
“He came to us with the purchase agreement and the assumption that he’s ready to roll. We put the 12 months in there in case the economy takes another dive, or some unforeseen circumstance happens to him in the personal arena and we can’t convince him to go forward, we’d want it back,” Reynolds said. “He didn’t ask for all this. He’s ready to purchase the building and begin his project. We thought things happen and in the worst case how can you protect it and that’s where we put in the 12 months.”
Once negotiations are finished and a contract is approved, it’s Baker’s intention to have crews begin renovation work on the warehouse section by early summer.
“Other than the roof, the structure is generally in good shape,” he said. “Historic renovations aren’t simple, but without too many unforeseen problems, the building could be operational within the year.”

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