More than four months after a city agency voted to sell The Chattanoogan hotel and conference complex, there is still no agreement for the sale of the city- owned facility.
Last October, the Chattanooga Downtown Redevelopment Corp. approved a $32 million cash offer from the Schulte Hospitality Group in Kentucky to acquire The Chattanoogan after three rounds of bidding pushed up the sales price. But Chattanooga Finance Director Daisy Madison, chair of the Chattanooga Downtown Redevelopment Corp., said last week there is still no signed agreement for the sale of the city-owned hotel.
"It turns out these kinds of deals take a while," Madison said. "As long we have some positive discussions [toward the sale], we will strive to finalize the transaction. I had hoped that this would be closed by now, but it has not."
Ray Schulte, chief operating officer for the Schulte Hospitality Group, declined Monday to comment on the status of any purchase. Schulte operates 102 hotels in 26 states, but company officials have repeatedly declined to discuss their plans for The Chattanoogan if Schulte ultimately buys the hotel.
The Chattanoogan is currently operated for the city by Benchmark Resorts and Hotels which is expected to continue to run the hotel until any sale is completed.
Benchmark has made lease payments to the city in the past two fiscal years of about $1.1 million a year, but that is less than a third of the city's annual $3.4 million of debt service on the bond issue from The Chattanoogan's portion of the city bond issue.
The city and the CDRC have each hired PFM Financial Advisors LLC as a consultant on local bond and financial issues for the city, including the sale of The Chattanoogan and the bond issue used to finance the hotel. Tom Morsch, managing director for PFM in Chicago, did not return telephone calls in the past week.
Madison said the city hopes the sale will generate enough to cover the debt expenses on The Chattanoogan and putting the hotel under private ownership will put the property back on the tax rolls.
The CDRC voted in July 2016 to put The Chattanoogan up for sale to help pare the city's $129.2 million debt issued to pay for the construction of The Chattanoogan along with the Chattanooga/Hamilton County Development Resource Center and the expansion of the Chattanooga Convention Center.
The Chattanoogan opened in 2001 and the 199-room hotel includes three restaurants and conference meeting facilities.
Contact Dave Flessner at email@example.com or at 757-6340.