Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the University Financing topic
No spam. Unsubscribe anytime.
TSSBA approves lease with purchase option for University of Tennessee–Knoxville's Cherokee Mills Complex
Summary
The Tennessee State School Bond Authority approved a 10-year lease with early purchase options allowing the University of Tennessee at Knoxville to expand into the Cherokee Mills Complex; the university plans to seek a bank loan and return to TSSBA before exercising the purchase option.
The Tennessee State School Bond Authority on May 19 approved a resolution allowing the University of Tennessee at Knoxville to enter a 10-year lease with two 10-year renewal options and early purchase options for the Cherokee Mills Complex, a 92,000-square-foot facility associated with TUF 2200 Sutherland Avenue LLC.
The lease will allow the university to expand from its current occupancy of about 53,000 square feet to additional space as current tenants move out. The agreement as described to the authority carries a proposed total annual effective cost of $4,131,713.38 and includes early purchase options in 2026 and 2027 plus a continuous purchase option throughout the lease term.
Austin Oaks, a University of Tennessee representative, told members, “The University of Tennessee has 1 request for your consideration today. Our request is on page 6 of your package, and this is for the approval of borrowing by another method in the form of a lease agreement with a purchase option between UT and TUF 2200 Sutherland Avenue LLC, which is an affiliated entity of the University Financing Foundation Inc.” Oaks said UT currently leases “approximately 53,000 square feet of this 92,000 square foot facility, and this agreement will allow the university to lease and occupy additional space as current tenants move out.”
A member of the authority asked whether the board would see the purchase proposal again before UT exercised an option. Oaks replied that UT “anticipates using a bank loan as part of our process to exercise the purchase option. That bank loan would require TSSBA approval. So that's why we anticipate coming back again before this body.” When asked whether the acquisition had been disclosed in the state budget, Oaks said, “No. This is not disclosed in the budget, and that's why we would be considering a bank loan as opposed to state debt.” The commissioner who asked the questions requested additional conversations with university staff before any purchase moves forward.
The authority approved the resolution by voice vote. The university indicated it intends to exercise the early purchase option in 2026 and to return to TSSBA for subsequent approval related to acquisition financing.
The lease and purchase-option approval allows UT to proceed with the lease agreement but does not itself authorize state debt or final acquisition financing. Any exercise of a purchase option that requires financing will return to the authority for formal consideration.
