The Chattanooga Choo Choo Hotel will get its tax break

Jon Kinsey, left, and his son, Adam, talk about plans beneath the grand dome in the Chattanooga Choo Choo.

The Chattanooga Choo Choo Hotel will get its tax break.

The Chattanooga Health, Education and Housing Facilities Board has just approved the much-discussed property tax freeze for the historic hotel, as it seeks to convert 97 rooms into 350-square-foot studio apartments to be rented below market rate.

Under the tax agreement, the Choo Choo's property taxes on the $4 million conversion will be frozen for 12 years and gradually increased for four years after that. Although the hotel will pay a full portion of property taxes to county schools.

That would mean the Choo Choo's total property taxes for the apartment property will increase from $32,000 a year to $42,000 a year.

But the county general fund would be missing out on about $10,000 a year during the course of the agreement.

Separately, the hotel is undergoing a massive $8 million renovation that is not a part of the tax break deal.

The 16-year payment-in-lieu-of-tax agreement cleared the City Council and the Hamilton County Commission last month. The HEB was its last hoop to jump.

Housing board members voted 5-0 to pass the agreement.