Brent E. Zepke
The invitation arriving for the wedding of Erin and Joe was the stimulus.
A “stimulus” is “a thing that rouses activity or energy in someone.” The bride, being my wife’s niece and a really nice woman, was an expected stimulus for us.
The location of the wedding was an unexpected stimulus for me.
It was not that the town was in rural east Tennessee. It was not that the town was Erwin, Tenn., a town of 6,097 residents.
It was that Erwin was “only” 13.7 miles from Johnson City, Tenn. For me Johnson City stirred the synonyms for “stimulus” of “prompt, impetus and inspiration.”
Now I must admit that I have never met anyone who viewed Johnson City, Tenn., as an “inspiration,” including me, until the day I took the time away from my teaching business administration at the University of Tennessee, where I was also a law student, to drive the 105 miles from Knoxville to Johnson City.
Over lunch at the soup-and-salad restaurant, the owner proposed that I write a feasibility study for a hotel near the medical center in the city. A feasibility study is “a study of the practicality of a plan or method.” I knew I would study the demand (such as the population of town, expansion plans for the hospital), the competition (existing hotels and restaurants), supply (labor) and government regulations.
As the wedding invitation was prompting these memories of the Johnson City project, a talking head on television was explaining that the White House would continue the high supplemental unemployment benefits because they “had no evidence” that the high benefits were handicapping employers’ abilities to hire workers.
It was obvious that in the 50 years since my due diligence in Johnson City showed that the demand could not support a hotel larger than 50 rooms, the White House had not learned the value of due diligence.
My involvement with feasibility studies was quite fortuitous.
A student in my course on management at the University of Tennessee suggested an idea for returning an area in downtown Knoxville back to its 1890 roots for an entertainment center.
My rough calculations were that $13 million was needed. We had the first $26 between us.
A pitch to a local entrepreneur, Ted West, introduced me to the concept of feasibility studies being necessary to procure finances. Ted asked me to write a feasibility study to obtain the financing to build the Sheraton Hotel in Gatlinburg, Tenn., which would overlook the Great Smoky Mountains. My due diligence included studying the demand through the number of tourists passing through Gatlinburg, the breakeven point for occupancy (62%), the optimum number of rooms to support amenities (100), the uniqueness of the location (very overlooking the Smokies) and the cost of labor (reasonable), and used the format from a leading Chicago firm to write a feasibility study.
When the project was funded for $10 million, my percentage changed my life. However, the change was short lived as the union thought the wages were “too reasonable” and struck, killing our ownership. In the ensuing years practicing labor law, I became sensitive to including labor issues in the same way that experience should have taught the White House that increasing the minimum wage during COVID would hurt employers in low-cost states.
Shortly thereafter, Ted introduced me to a young man whose father had just financed a new restaurant near the university. The restaurant was Ruby Tuesday.
The question was: Would I write a feasibility study for his proposed second restaurant in Gatlinburg? \
My wife — being pregnant with our second child through a C-section — was sufficient inspiration for this study.
The proposed location was in a strip of stores with no, as in “none,” parking. Since this is typically a deal-killer for restaurants, my assumptions were critical and included that the parking lot in the next block was sufficient in this walking town.
My calculations for an average ticket for the seating capacity was not sufficient to support the cost, so I changed something: I added a second dinner seating.
The cost/benefit analysis in my study raised the financing for the second Ruby Tuesday restaurant and for the birth of my daughter Hollie.
Maybe if the White House had used the same cost/benefit analysis, it could have changed “something” before raising the cost of everything by reducing the supply of oil by shutting U.S. pipelines while opening the Russian one.
Ted and I flew to D.C. to place a bid for the Southern Railway station in Knoxville that was shut. We bid the requested $250,000 as my planning showed a favorable cost/benefit analysis to convert it into a theme restaurant.
The railroad sold it to the other bidder for the same money. Did I mention that the other bidder was a group led by the local congressman? Or that they never developed it? Of course, this is one lesson the White House already knew, having previously funded a solar panels factory of a “friend,” which would have flunked every cost/benefit analysis. Politics prevail.
Ted’s next project took me to Johnson City, then a town of 33,770.
A feasibility writer’s credibility is dependent on the reasonability of his assumptions. I did find estimating the future growth of Johnson City was complicated by its being part of what was called the Tri-cities, which also included Kingsport and Bristol. The latter city is located on a border, so part of the city is Bristol, Tenn., and the other part is Bristol, Va.
Still, I thought the growth too uncertain to “bet the farm.”
In the next 50 years Johnson City did double to 66,906 people (2019). However, the feasibility for a project to be successful for a long term requires that it first be successful in the short term.
The White House’s approach is to raise the cost of everything by increasing the minimum wages and reducing the U.S. supply of oil while increasing the dependence on foreign oil with the hope that other nations “act nicely” so that in 10 or more years, the U.S. will be less dependent on fossil fuels.
The goal is for the U.S. to contribute toward stopping the climate change of perhaps one degree. That is, of course, dependent on the actions of the other 96% of the world’s population not increasing their use of fossil fuels in order to make up for the U.S.’s reductions. Do those countries do feasibility studies?
We wish Erin and Joe a successful wedding to begin their life together. COVID-19 will prevent us from attending the wedding or my 50-year reunion with the area.
Last week the White House called a meeting to discuss regulatory priorities such as climate-related financial risk and agency actions to promote financial inclusion and increase access to credit. Any chances in the last 50 years that they have learned to do the same type of feasibility study?
Any mention of the cost/benefit analysis to monitor the effects of the White House’s previous actions, such as the supplemental unemployment benefits, the raising of the minimum wages, the shutting of pipelines? Any mention of a feasibility study on the effects of the additional $4 trillion the WH plans to spend?
Any mention of visiting the “border,” even the one between Tennessee and Virginia?
The author lives in Santa Barbara.
