Fifteen years after the city of Chattanooga built The Chattanoogan conference facility to lure more business and group meetings downtown, the municipally-owned hotel may soon be put up for sale.
The city panel that oversees operation of the 199-room hotel and conference center is scheduled to vote today on whether to sell The Chattanoogan. The Chattanooga Downtown Redevelopment Corp. board will consider criteria for hiring a consultant to assist the city in evaluating purchase offers for the downtown facility.
Chattanooga Chief Financial Officer Daisy Madison, who also chairs the Downtown Redevelopment Corp., said the city has previously considered selling The Chattanoogan but the timing now seems right to solicit offers to sell the facility.
An entrance to the Chattanoogan hotel visible shortly after city officials announced their intention to seek a sale of the 15-year-old conference facility.
This 2001 file photo shows the Chattanoogan hotel prior to opening."As market conditions improve, we have seen an increased interest in the hotel - making it a good time to consider sale of the facility which will ensure the City continues to act responsibly with taxpayer dollars," she said.
Moses Freeman, chairman of the Chattanooga City Council, said the downtown hotel helped spur needed improvements to Chattanooga's Southside while helping to draw more business events and visitors to the city.
"The Chattanoogan helped serve as an anchor of the redevelopment we've seen on the Southside and it served its purpose well for the city," Freeman said. "But the timing is right now, I think, to sell it and turn it over to the private sector."
The city financed the hotel and conference center - along with the Chattanooga Resource Design Center and the expansion of the Chattanooga Convention Center - with proceeds from a 2001 bond issue. Through refunding and delayed payment features of the bonds, the city still owes about $100.9 million on the total debt for The Chattanoogan, an adjacent parking garage, the Chattanooga Resource Design Center and the convention center expansion.
Madison said with hotel has 37 percent of that bond debt, or just over $37.3 million, while the adjacent parking garage still has nearly $9.1 million of debt.
In fiscal 2015, operating profits from The Chattanoogan paid nearly $1.5 million to the city coffers to help pay the hotel's $3.5 million share on the city bond debt.
"The remainder was paid from local option sales tax revenues," Madison said.
Any sale of the hotel could be used to pay off the city debt and potentially generate a profit for the city.
Located at Broad and 12th Streets, The Chattanoogan is managed for the city by Benchmark Hospitality Inc., which is preparing to merge with another company, according to a city notice of today's meeting.
Tom Cupo, general manager for The Chattanoogan since 2008, said the conference center is coming off of two record-breaking years, the profits of which go to the city.
"We manage properties for private and public owners and we do what is in the best interest of our owners," Cupo said.
Cupo said The Chattanoogan has been successful in attracting business conferences and group events, especially from Atlanta.
The Chattanoogan includes 199 hotel rooms, three restaurants and 25 meeting rooms, which feature 25,000 square feet of exhibit space. The hotel is the only lodging facility in Chattanooga certified by the International Association of Conference Centers.
Contact Dave Flessner at dflessner@timesfreepress.com or 423-757-6340.