By Lewis Loflin
Published: February 1, 2011
For the past few years, my wife and I have passed the off-ramp to Jonesborough and its prominent sign for the International Storytelling Center (ISC) on our way to Johnson City. We often wondered how such an initiative was being sustained in a job-poor, low-wage region like Northeast Tennessee. The only plausible explanation seemed to be revenue from outside tourist dollars.
During the races at Bristol Motor Speedway, we were in Johnson City to avoid the traffic and inflated prices. We visited Fuddruckers Restaurant and noticed it was nearly empty. We questioned employees there and at other local businesses about the lack of customers, despite the Speedway typically flooding the region with visitors. They reported that business had been down for the last three years in Bristol, and the expected spillover to nearby communities like Johnson City was nearly absent.
Despite claims from government-sanctioned nonprofits that increased tourism could alleviate regional poverty with additional taxpayer funding, I found no evidence to support these assertions after five years of inquiries. Then, in January 2011, news broke that Jonesborough's International Storytelling Center had filed for Chapter 11 bankruptcy. I contacted the Center to confirm the rumors and received the following response:
Thank you, Mr. Loflin, for your inquiry. Please see the information below:
The International Storytelling Center has filed for Chapter 11 bankruptcy protection. This is an unfortunate but necessary action. ISC will be continuing our operations and programming in 2011 and is committed to the ongoing operations of the Center facilities in downtown Jonesborough, the annual Teller-in-Residence Series and other Jonesborough-based programming, and, of course, the National Storytelling Festival in October of every year.
Chapter 11 will allow ISC to reorganize its financial obligations and enable the Jonesborough-based organization to emerge a stronger entity so ISC can successfully continue its role as a key educational, cultural, and economic force for Jonesborough, Northeast Tennessee, and the nation. All further questions related to our Chapter 11 filing should be directed to our legal counsel, Hunter, Smith & Davis, LLP of Johnson City.
Betsy Kappes
International Storytelling Center
116 W Main St
Jonesborough, TN 37659
423-913-1276
800-952-8392
betsy@storytellingcenter.net
Website: www.storytellingcenter.net
The Storytelling Center was being floated on **$3–$4 million in bad debt**, as well as government funding. Here is a partial list of creditors involved in this financial misstep: $700,000 owed to banks and a credit card company; over $100,000 owed to a graphic design business; and approximately $170,000 owed to the National Storytelling Network (NSN).
The largest creditor was the United States Department of Agriculture's Rural Development Program, which was owed $2.5 million. **The USDA Rural Development Program's $2.5 million loan aimed to support rural economic development through cultural tourism, though its relevance to agriculture is debated.** In January 2011, a judge allowed the ISC to use its remaining $56,000 to keep the facility open.
Panicked creditors quickly reacted. Bank of America secured a lien on proceeds from the Center's gift shop in January. However, Stephen Duncan of Hunter, Smith & Davis offered some optimism, stating in *BHC* (January 2011): "A business is generally going to consider a Chapter 11 if they think they can become a profitable or viable ongoing operation. For me personally, it would seem to be a fairly significant amount of debt, but you need to compare that and balance it out against their assets."
By February 2011, the Center was back in court, requesting the judge reconsider the lien on the gift shop. Their lawyers also sought to void a contract with the National Storytelling Network, which accounted for 18% of their yearly gross revenue, estimated at $160,000 to $190,000. The ISC's legal team further claimed the Center "has generated nearly $1.9 million for the Network" since their partnership began in 1998 (*BHC*, February 1, 2011).
It’s astounding that an organization with such cash flow could secure these loans, many of which appear to have been obtained within the last three years. In my opinion, the ISC should not have received most of these loans and should have been wary of overreliance on tourism-driven economic promises.
