Chattanooga and Hamilton County are in a multi-million-dollar legal battle over a tax incentive agreement with the developers of one of the city’s largest downtown developments.
The two governments filed a roughly $1.6 million lawsuit last month against TSO Chattanooga Development, owners of Market City Center, for allegedly violating a tax abatement agreement by operating short-term vacation rentals since last summer.
Last week, the developers denied the allegations, filing a counter-complaint for more than $16 million from the city and county for an alleged breech of contract.
The $30 million development on Market Street came to central Chattanooga in 2017 as a 10-story, mixed-use apartment and retail space. With the promise of new business downtown, the development was heavily courted by the city and offered a payment-in-lieu-of-tax (PILOT) agreement if it maintained 25 affordable housing units.