A gate controls access to a city-owned parking lot at 1200 King St.
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Hiren Desai is chief executive officer for 3H Group Hotels.

The city of Chattanooga is preparing to sell one of its employee parking lots on King Street to help the owners of an adjacent 70,000-square-foot warehouse redevelop the site along with plans for a nearby $20 million hotel.

But a taxpayer watchdog group is questioning why a city panel is moving to sell 0.66 acres at 1200 King St. for 30 percent less than what the city paid a decade ago for the site.

The Chattanooga Downtown Redevelopment Corp. will vote Monday on a proposal to sell the surface parking lot across the street from the Chattanooga Design Resource Center for $134,700 to Seaford Investments LLC and Rivermonth King Street LLC, the real estate partnerships jointly owned by Chattanooga developers Hiren Desai and Jimmy White.

Desai, a partner in 3H Hotels, is planning to build the 108-room Moxy Hotel at King and Market streets, which he hopes to start building in June and complete in the next year.

But to help redevelop the 70,000-square-foot King Street warehouse behind the new hotel site, Desai said he needs another city parking lot for other new development. The developers have considered leasing the bottom floor of the King Street warehouse for a microbrewery and other commercial tenants, and redeveloping the upper floors for apartments.

"This (purchase of the city parking lot) would help in our development of this King Street building," Desai said Friday. "Right now, this would be used for city employee parking while the hotel is being built. It would be surface parking, unless a parking deck is required."

In a memo to the Chattanooga Downtown Redevelopment Corp., Deidre Keylon of the city's purchasing department said an evaluation committee reviewed purchase proposals for the King Street property last month and determined the offer from Desai was the best.

"We're not wanting any tax money," Desai said. "We'll actually be putting this back on the tax rolls and creating more investment and jobs in this area."

But Helen Burns Sharp, founder of the Accountability for Taxpayer Money (ATM), questioned why the city wouldn't ask more of the purchaser to generate a higher price or provide lower cost parking for city employees who now use the surface lot for parking.

"I think he (Desai) is a great developer and what he is proposing will be great for that area," she said. "But I am concerned about the integrity of the process. It seems very odd to me that the city would buy this lot 10 years ago from Thomas Johnson for $195,000 and now sell it for $134,700 when the Southside area around it is as hot as it is right now."

Desai said he offered what the surface parking lot is appraised for by the county assessor's office.

Desai's proposal calls for his leasing up to 85 parking spaces to the city at the rate of $45.77 per space monthly, or $46,685 per year for three years.

"We think the hotel and other development fits the Southside and will really help enhance this area," Desai said.

Desai said the Moxy will be an "affordable boutique" with daily rates from $100 to $140.

Contact Dave Flessner at or at 423-757-6340.