A gate controls access to a city-owned parking lot at 1200 King St. Developers Hiren Desai and Jimmy White offered to pay $134,700 for the parking lot — less than the $195,000 paid a decade ago for it. The city will hang on to the land, after all, and won't sell it, city officials have announced.

Chattanooga Mayor Andy Berke's administration changed its mind and won't sell a city-owned parking lot near the booming Southside neighborhood to a developer in a proposed deal that critics had described as a "giveaway."

Developers Hiren Desai and Jimmy White had a proposal accepted in April to pay $134,700 for a roughly half-acre, city-owned gravel parking lot at 1200 King St.

It's next door to the King Storage building, a six-story, historic brick building at 1208 King St., that Desai and White plan to repurpose into a commercial development with new businesses, including a microbrewery.

The Chattanooga Downtown Redevelopment Corp. board in April chose the proposal from Desai and White. Critics — led by the Chattanooga group Accountability for Taxpayer Money — said the $134,700 offer was less than the $195,000 the city paid a decade prior for the parking lot.

Also, the developers would recoup their purchase price, critics said, since the developers' proposal called on the city to pay $140,000 over three years to lease parking spaces back from Desai and White, so city vehicles could park on the lot.

City officials said then the developer's low-ball offer was just a starting point. The CDRC voted in April to negotiate a contract with Desai based on the property's fair market value — not its then-assessed value of $134,700.

But the CDRC voted last week to withdraw its request for proposals for the parking lot.

"The Berke administration has since decided against any arrangement that would result in the sale of the parcel," City Finance Officer Daisy Madison, who's chairwoman of the CDRC board, said Monday via email. "After reviewing all our options for redevelopment of this corridor, we feel keeping the land in the city's possession is in the best long-term interests of Chattanooga's taxpayers and citizens."

The city plans to "structure future agreements" so the land can be improved or leveraged to "create greater value for the community," she said.

"We recognize that keeping this as an unimproved surface lot is not the highest and best use for this parcel, and we look forward to facilitating improvements to the land that will increase its value and make it more of an asset to complementary investments in the vicinity," Madison said.

Desai said Monday he can get by without the parking lot for the time being.

Desai, a partner in 3H Hotels, said he's focused now on the 108-room Moxy Hotel that he has under construction at King and Market streets. Only the microbrewery, WanderLinger Brewing Co., is under construction in the old King Storage building.

"I don't need the parking lot for my hotel," he said. "I think we have enough parking [space] for just the brewery."

Helen Burns Sharp, the founder of ATM, said she's pleased with the outcome.

"I want to give the city credit for doing the right thing," Sharp said.

She used her Facebook page to thank everyone who got involved and quoted President Dwight Eisenhower about making a difference: "It's about persuasion, education, and patience. It's long, slow, tough work."

Contact staff writer Tim Omarzu at or or on Twitter @meetforbusiness or 423-757-6651.

This story was updated Jan. 8, 2018, at 10:36 p.m.