Then first floor of the St. George Hotel has been painted for a colorful decorative view of the old building facing Market Street in the 1400 block. The owner of the old St. George Hotel site across from the Chattanooga Choo Choo has sued a well-known local businessman in a dispute over the property.
St. George Holdings, a company controlled by Marta Alder, who bought the building in 2013 and has plans for a new hotel, has sued James D. Hutcherson. He had loaned her $700,000 in 2017 to get the project started, Hamilton County Circuit Court papers show.
Alder said in the suit she tried to repay Hutcherson, managing partner at the city's biggest locally owned accounting firm, Henderson Hutcherson & McCullough, but he won't accept the money and rather wants to take ownership of the 1445 Market St. location.
Fast fact
The St. George Hotel opened in 1924 on Market Street and operated to about 1980.
"I feel I've been wronged," she said. "It has been my dream. I'm about there."
But Hutcherson has denied wrongdoing and, in a counterclaim, said he's exercising his right to buy the site in accordance with an option agreement in the contract.
"As part of our contract, both sides understood that if she was unable to secure the funding necessary for her development plan, I had the option to acquire the property," he said. Hutcherson said that "from the beginning, my loan was to help her move forward with her development and restoration plans for the property."
The former St. George Hotel had been vacant since about 1980, and fire damaged the building in 2004. The rear part was removed by order of the city in 2012 as it was deemed unsafe, said Alder's suit filed by attorney William Horton.
Alder bought the site to renovate the building and put up a 55-room hotel, keeping the facade, the suit said. She got the $700,000 loan from Hutcherson as bridge financing for pre-development planning to get construction financing.
In connection with the loan, a deed of trust and right of first refusal and option to buy the property was executed, the suit said.
The loan agreement provided a bonus payment of $25,000 to Hutcherson upon payment of the loan.
The suit said Hutcherson was given the option to purchase in the event Alder "does not receive and close on a development loan on or before Dec. 8, 2018."
The hotel plans included using existing facade for construction of the hotel, according to the suit.
Alder spent funds on engineers, architects, consultants and contractors to evaluate the planned project, and it was determined by the third parties that plans to use the facade weren't possible due to the deteriorated condition of what's left of the building, the suit said.
Arch Willingham, president of Chattanooga construction company T.U. Parks, said it extensively examined options to save the building's facade, but none were feasible.
"It proved to be infeasible to keep the building standing and not have someone get killed in the process," he said. Willingham, president of the Chattanooga historic building preservation group Cornerstones, also cited concerns about water leakage inside the building if trying to blend the old structure with a new one.
The suit said Alder then pursued an alternative plan that did not use the facade but would build a new structure, including a facade and increasing the number of rooms to make the project financially feasible.
The suit said she told Hutcherson she wasn't able to obtain a development loan for the original plans due to infeasibility and she sought an extension, but the request was denied.
She also said she was ready to pay off all amounts owed under the loan agreement, said the suit. But Hutcherson said he was inclined to take the property, build his own project using the facade for an office building and restaurant, and he exercised his option, according to court papers.
After Alder again sought to pay off the loan and secure a release of lien and option rights, Hutcherson said he'd allow Alder to repurchase the site for $1.75 million, said the suit.
The suit said Hutcherson isn't entitled to exercise his option "due to frustration of commercial purpose and impossibility of performance."
"The status of the facade was not under the control of either party," said the suit, which called for Hutcherson to accept Adler's request to pay off the loan and a release of options on the property.
But, in the counterclaim, attorney Gary Patrick said the option agreement was "very specific" that Hutcherson would have the right to purchase the site if Alder failed to obtain the development loan in the option agreement.
The counterclaim said Alder's company "has admitted that it did not obtain the development loan" by last Dec. 8 and Hutcherson exercised his right to purchase.
Patrick said Alder's company is in breach of contractual obligations and entitled to convey the property to Hutcherson.
Hutcherson said that he and Alder "entered into a contract with the assistance of our respective attorneys."
"I have exercised my option and am simply trying to comply with and enforce the terms of the written contract as agreed to by Marta," Hutcherson said.
Contact Mike Pare at mpare@timesfreepress.com or 423-757-6318. Follow him on Twitter @MikePareTFP.