When former Mayor Bob Corker was negotiating to keep BlueCross BlueShield of Tennessee in downtown Chattanooga, the city agreed to give up a downtown fire hall and six surrounding acres in exchange for a BlueCross building valued at $3.8 million.
But five years after Mr. Corker signed the deal on his last day as mayor, the city estimates the now-empty office building on Chestnut Street is worth less than $2.1 million, or 46 percent less than in 2005.
Despite the drop in value on the six-story building, city officials insist the swap was a good deal and that without it downtown properties could have been hit even harder.
"We helped to keep BlueCross and nearly 4,000 employees downtown, and by relocating the fire hall we were able to also help in the revitalization of Main Street," said Danny Thornton, the city's manager of real property.
The empty Chestnut Street structure now is being swapped yet again and could help with even more new development.
The City Council last week agreed to exchange the Chestnut Street building for a former U.S. Postal Service coding center near the Eastgate Center in Brainerd. The 32,000-square-foot structure is owned by Luken Holdings, the city's largest office landlord.
"Both of the buildings involved in this exchange have declined from an income-producing valuation, but this will give us a bigger building for our Brainerd library and space for a Brainerd museum," Mr. Thornton said.
In turn, Luken Holdings will get a building under contract to be acquired by the same Gainesville, Ga., hotel developer who has proposed converting the 12-story Maclellan Building into a luxury Indigo hotel.
The Chestnut Street building would be converted into retail use and parking behind the hotel, if developer Ben Parker of the Performance Hospitality Group is able to arrange financing.
"The city wanted the building we had next to the Brainerd Mission, and we thought it was the right thing to do to make this swap," said Russ Elliot, vice president of leasing for Luken.
BlueCross relocated nearly 4,000 employees from 10 Chattanooga buildings onto its new campus atop Cameron Hill last year.
The city agreed to the property swap and provided BlueCross more than $36 million in property tax breaks over 16 years to convince the insurer not to relocate to a riverfront site it bought in Lupton City near the Chickamauga Dam.
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