PART 2: CROET becomes a free-standing organization, acquires first building

(EDITOR’S NOTE: The article that follows is the latest in a series of profiles on the parks in the Knoxville-Oak Ridge Innovation Valley and their unique roles in accelerating the growth of technology-based enterprises in the region. The focus on the Community Reuse Organization {CROET} of East Tennessee will include four articles that collectively explore its purpose and role in developing three distinctively different parks. This is the second of those CROET articles.)

In its early years, the Community Reuse Organization of East Tennessee (CROET) evolved from being a program of the Oak Ridge Chamber of Commerce to becoming a standalone entity responsible for helping diversify the region’s economy as federal investments declined in Oak Ridge.

Lawrence Young, CROET’s President and Chief Executive Officer, calls 1996 a seminal year in the organization’s history. It was the time when CROET leased “a small amount of space in the 1401 building” and used the initial lease as a “springboard” to launch an aggressive strategy to market a brownfield site that was then known as the East Tennessee Technology Park (ETTP).

Today, ETTP, which encompassed the old K-25 Gaseous Diffusion Plant site, goes by the name of the Heritage Center. It is one of three parks in the Knoxville-Oak Ridge Innovation Valley that has strong ties to CROET.

Young recalled in a recent interview with teknovation.biz that CROET “had the responsibility to find a way to have buildings at the end of their lives cleaned-up and reused.” Sixteen years later, Young characterizes the CROET journey as very similar to “finishing a marathon. We’re at mile 22, but the remaining miles may be the hardest ones.”

Back in 1996, CROET reached an important milestone when American Technologies executed the initial lease in the Heritage Center. It was a small amount of space, but a launch point for a revised CROET strategy.

“To my surprise, we got additional companies interested,” Young said. “We were able to use the existing space and equipment to provide very attractive lease rates.”

During the five-year period ending in 2001, CROET executed 65 leases for space in the Heritage Center. The private firms employed more than 1,000 workers.

Everything seemed to be going well, but federal priorities can change, and they did as the millennium came in 2000.

“DOE launched an accelerated clean-up program at the old K-25 site,” Young recalls. It was one of those “good news – bad news” times for CROET. On the positive side, Young said that accelerated federal funding was now available to teardown old buildings that needed to be removed. Conversely, many of those buildings were in use by commercial entities.

Where would the companies and their employees go? How would the region and CROET’s role in helping create jobs be impacted?

“We did not lose any viable companies” during the transition, Young said, noting that CROET worked with communities throughout the region to find new locations for the displaced firms. Not all of them stayed in Oak Ridge.

The accelerated clean-up ultimately created several positive benefits for CROET.

“We were (now) identifying buildings (for DOE) that had the best capability of being retrofitted,” Young said. CROET initially identified 29 facilities, but the number was ultimately reduced to 11 that could be upgraded and leased.

Another fundamental change occurred around 2003. CROET had been leasing DOE-owned buildings to private companies, something that was not without its own challenges as the lessees worked with their bankers on financing. Young said that having only a ground lease could be challenging, something that CROET experienced years later at the Oak Ridge Science and Technology Park.

Fortunately, during the first half of the 2000 decade, CROET realized one if its long-time goals – securing ownership of the property that it was trying to lease.

Armed with a better way to do business with commercial entities, CROET worked to upgrade the buildings that it said were most appropriate for reuse. It invested heavily in infrastructure – extending water and wastewater lines, investments that not only benefitted the Heritage Center but the western portion of the City of Oak Ridge.

CROET also partnered with the Oak Ridge Industrial Development Board to fund two speculative buildings to be used to lure new companies and jobs to Heritage. The buildings offered 50,000 and 18,000 square feet respectively. The larger one has been sold; the smaller one is still available.

By 2008, Young says that five of the upgraded 11 buildings were under new, private ownership, three more were under development and others were leased to private companies. Total employment in the Heritage Center is about 1,300 currently.

CROET’s work to lease or sell buildings in the Heritage Center continues at the same time that clean-up work continues.

“How do you convince companies everything is going to be OK with all of the D&D underway in the park,” Young somewhat rhetorically asks.

“We’re striving to finish the marathon – something few win, but finishing is the key for Oak Ridge.”

NEXT IN THE CROET SERIES: Focus on the greenfield site known as the Horizon Center.

The Oak Ridger published a 2008 three-part series on CROET, written by Ray Smith. The links to the articles in the series are:

Part 1 – http://www.oakridger.com/columnists/x596325760/Community-Reuse-Organization-of-East-Tennessee

Part 2 – http://www.oakridger.com/news/x1009160641/Community-Reuse-Organization-of-East-Tennessee

Part 3 – http://www.oakridger.com/news/x1435860716/Community-Reuse-Organization-of-East-Tennessee-Part-3

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