It’s been a busy year. This is far from an exhaustive list of big business and economic happenings in and around Knoxville, but it’s a few of the most significant – or most commented-on – which will have an impact into 2019 and beyond.
9. Broken chains
National news impinged on Knoxville shoppers as two major corporate bankruptcies forced the closing of landmark retail stores.
Toys “R” Us declared bankruptcy in September 2017, and several months of maneuvering to keep its 800 remaining stores open failed, costing about 30,000 jobs. So at the end of June, Knoxville’s Toys “R” Us and Babies “R” Us stores on Kingston Pike – one of each – shut their doors. A Toys “R” Us outlet store in Sevierville closed too.
Then in October, the owner of Kmart and Sears stores went belly up, ending more than 80 years of Knoxville presence for those historic chains.
Sears Holdings had issued one list of store closings after another for several years as sales dropped, ending with fewer than 500 outlets. The Sears in Knoxville Center, an anchor tenant for the struggling mall, closed in July. But with Sears Holdings’ bankruptcy filing, the last Sears and Kmart in Knoxville – in West Town Mall and on Maynardsville Pike, respectively – succumbed as well. So did the Sears in Maryville’s Foothills Mall, the chain’s only other area location.
The Sears Appliance Outlet Store in Kingston Overlook Center, belonging to a corporate arm not part of the bankruptcy filing, remained open.
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8. Room rules
Even as Knoxville keeps adding hotels, short-term room rental services such as Airbnb continue to grow – and their prevalence led to regulation.
Though this year’s figures aren’t yet available, in 2017 Knox and surrounding counties had 154,000 Airbnb guests, bringing in $17.4 million to area property owners. Sevier County saw two-thirds of those guests and dollars, according to Airbnb.
Sevier County treats short-term room rental the same as other temporary lodging, requiring a county business license and tax payments. But Tennessee’s big cities have all established specific short-term rental rules; Knoxville was the last to do so, and they went into effect in January.
Under Knoxville’s ordinance, short-term rental hosts must get a permit, meet minimum safety requirements and collect hotel and occupancy taxes. Owner-occupants in Knoxville neighborhoods and owners of property in generally non-residential areas that still allow some residential use can apply for one-year renewable permits. Absentee owners of short-term rentals in residential neighborhoods can get only a one-year non-renewable permit, and then only if they can show the home was already being used as a short-term rental before March 1, 2017.
In June, Knoxville set up a voluntary tax collection agreement with Airbnb, which the company already had with other cities.
7. Flying high
Big changes happened all year at Knoxville’s McGhee Tyson Airport. In January, officials announced nearly 2 million passengers had used the airport during 2017, the most in the airport’s 80-year history.
In June, Allegiant Air said it would base two 166-seat Airbus jets permanently in Knoxville, an investment of $50 expected to add up to 66 new jobs, likely averaging $80,000 to $90,000 pay per year.
No new Allegiant destinations were announced then, but company officials said the basing decision would likely lead to more flights in the future.
Then in October, American Airlines announced its regional carrier American Eagle would fly nonstop twice daily from Knoxville to New York City’s LaGuardia Airport, starting Feb. 14, 2019.
It would be the 22nd nonstop flight offered from McGhee Tyson, though Delta Air Lines already flies from there to New York City. Several other new flights were announced in 2017. The airport is served by Allegiant, American, Delta, Frontier and United.
The airport is also in the midst of a $108 million runway lengthening and upgrade, aiming to make it easier for large jets and thus more attractive for airlines to offer long-haul destinations.
Much of the funding is expected from the federal government, with some from the state aeronautics fund; and more from the Tennessee Air National Guard. The Air Guard’s 134th Air Refueling Wing operates Boeing KC-135 tankers from the field, which need 10,000 feet of runway to take off when fully loaded. The runway work is expected to be finished on schedule in 2021.
6. Regal actions
The sale of Knoxville’s Regal Entertainment Group to U.K.-based Cineworld Group PLC closed in February. As part of the deal most top Regal executives resigned, including CEO Amy Miles, founder-chairman emeritus Michael Campbell and all board members.
The Regal name is to survive as a wholly owned indirect subsidiary of Cineworld. The agreement is a $5.9 billion deal including assumption of Regal’s debt.
Regal, which had 561 theaters in 43 states and some U.S. possessions, had faced several quarters of declining revenue as the movie industry changed. Cineworld agreed to pay $23 per share of Regal stock.
The sale does not appear to have affected Regal’s agreement with Knoxville to move its headquarters into a nine-story building at 101 E. Blount Ave. on Knoxville’s redeveloping South Waterfront. That deal includes a $12.5 million incentive package.
In July, Regal’s former West Town Mall 9 theater reopened as a Cinebarre offering a full-service restaurant and bar after seven months of renovation. The nine-screen theater now has electronically-controlled recliners with tray tables and in-theater food service.
5. DENSO booms
On Dec. 14 advanced auto-parts maker DENSO celebrated the opening of its latest Maryville factory, which is expected to add 1,000 jobs at an already huge complex.
Production of advanced systems for the transition to electric and autonomous vehicles will begin in spring 2019, according to a company news release.
The 360,000-square-foot expansion represents most of a $1 billion investment announced in October 2017, at the opening of a previous $400 million expansion which added 500 jobs.
Workers will be hired in phases over four years; jobs there are expected to pay an average of $26 per hour.
Japan-based DENSO now employs more than 6,000 workers in Tennessee. As project incentives the state is providing a $20 million economic development grant, while local authorities gave a six-year tax abatement, estimated to be worth $14 million and a $2.2 million job training grant. Tennessee Valley Authority also apparently offered incentives, but TVA typically does not reveal what it provides.
4. Bass mastery
Local officials and representatives of B.A.S.S. LLC announced in April that the 50th annual Bassmaster Classic will be held in Knoxville in March 2019, the first time the “Super Bowl of Bass Fishing” has taken place here.
The event, sponsored by GEICO and presented by Dick's Sporting Goods, is expected to draw more than 100,000 people. Fifty competitors will vie for $1 million in prizes, with $300,000 going to the winner.
Starting from Volunteer Landing on Knoxville’s riverfront, competitors will fish on a 55-mile stretch of the Tennessee River and connected waterways, upstream from the Fort Loudoun Dam to the Interstate 40 bridge on the Holston River and the State Route 168 bridge on the French Broad River, plus Fort Loudoun and Tellico lakes.
City, county and state each contributed $100,000 for the event, with “substantial” assistance coming from Visit Knoxville, according to Kim Bumpas, Visit Knoxville president.
3. Misguided Pilot
Legal fallout continued through the year for Knoxville-based Pilot Flying J, stemming from a fraud scheme that ran from 2008 to 2013, when federal agents raided company headquarters.
Prosecutors estimate the company bilked trucking firms more than $50 million through inflated fuel prices or discounts that were never given.
Nineteen former Pilot executives or staffers have been convicted or confessed to the scheme, with the three most recent sentenced to prison Dec. 19.
Former company president Mark Hazelwood got the longest sentence, 12 1/2 years. Others must report to prison after Jan. 1, 2019, but Hazelwood remains free on bond while he appeals his fraud conviction. He argues jurors shouldn’t have heard recordings of racist remarks he made at a party for sales staff.
Pilot Flying J’s board of directors admitted criminal responsibility and paid a $92 million settlement for the fraud. Members of the Haslam family were not implicated.
In November, the company announced Kevin Wills – formerly chief financial officer of a New York fashion firm – would become the travel center operator’s CFO in February. Mitch Steenrod, Pilot CFO since 2004, retired in August 2018. Court testimony showed fraudsters worked to keep Steenrod out of the paperwork loop, and he’s not mentioned in any publicly-released court records of the fraud plot.
2. Discovery unknown
The $14.6 billion cash-and-stock sale of Scripps Networks Interactive to Discovery Communications closed in March, leaving Scripps’ 1,000 Knoxville employees wondering what would happen to their jobs.
The deal was announced in August 2017. Scripps’ ability to produce content less expensively than Discovery was a major reason cited for the purchase. Discovery hoped to save $350 million over two years by combining operations.
In January, Discovery announced it would move its national operations headquarters to Knoxville; but in July, word came that the company would move its pre-recorded transmission functions from Knoxville to Virginia.
The latter move resulted in some layoffs, and more occurred in August, but the company would not disclose how many. Kristin Alm, senior director of corporate communications for Discovery, has said the changes would ultimately be “headcount-neutral” for Knoxville.
Changes also occurred in the executive suite, mostly with Discovery executives moving in to control former Scripps functions.
1. Sevier alterations
Sevier County’s recovery from the November 2016 wildfire is not a new story, but it continued through 2018 as people rebuilt their cabins, new hotels and attractions sprang up, and area governments examined their safety procedures.
The fire destroyed more than 2,500 buildings, burned 17,000 acres and killed 14 people. After-action reports blamed tardy realization of the fire’s threat, worsened by lack of communication between emergency services themselves, and between first responders and the public.
Since then Great Smoky Mountains National Park rangers have gained the ability to talk directly with surrounding emergency services, while the county and its cities have installed new emergency notification services for residents and tourists.
Fewer than 40 percent of the burned buildings have been rebuilt, and the loss of so many rentals highlighted a long-standing shortage of affordable housing for Sevier County’s service industry work force. The county has sought state help in encouraging developers to build more affordable apartments.
And many new attractions have gone up, or are under way: the Mountain Mile, Pigeon Forge Snow, Ole Red Gatlinburg, and expansions at Governor’s Crossing and Dollywood.
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