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Contributed rendering from Jonathan Armstrong / The concept drawing of the TownPlace Suites East Ridge development.

When Chattanooga-based developer Dynamic Group first proposed building a 104-room TownePlace Suites by Marriott in East Ridge two years ago, it included an indoor water park. The $27 million project on Ringgold Road was originally a joint project with developer Exit One LLC.

Since then, the indoor water park has been scraped due to its size, and now Exit One, which owns the 50-acre Jordan Crossing shopping center, is opposing the development.

Russell Gray, who represents Exit One, spoke in opposition to the East Ridge City Council providing Border Region tax incentives to the Dynamic Group to build the hotel at the intersection of Ringgold Road and Frawley Road. At the council's Feb. 13 meeting, Gray said the developer previously signed on to build the project at Jordan Crossing.

"We're not opposing this because of sour grapes or because we object to developments in East Ridge that don't involve Exit One," Gray said, citing a pre-existing ground lease between Exit One and Dynamic Group.

Gray said engineering and site work had already started and investors had been secured when Dynamic Group abandoned that project.

"The city understood this to be a separate project. It's the same project," said Gray.

He also noted that the council would be voting on a matter that the city's Industrial Development Board has taken no action on. On Feb. 4, the board, which normally would submit recommendations to the council on items like these, discussed offering incentives for the project, but the approval failed for lack of a motion.

Despite Gray's arguments, the council approved a 40-60 split of the Border Region Tax with Dynamic East Ridge, in favor of the developer. In 21 years, the project is expected to generate a projected $6.9 million.

With this split, the developer should earn about $1.6 million over a 21-year period, while the city will receive $1.07 million in border region taxes. Additionally, the city should make about $5.3 million from city, local option sales and hotel/motel taxes.

Jonathan Armstrong, the regional and marketing director for Dynamic Group, spoke on behalf of the project. He initially proposed a 20-80 split with the city, in favor of his group.

"This is a high-end build," Armstrong said, boasting the Marriott brand's 75% occupancy rate and $100+ daily room price tag. He said the $13.5 million extended-stay hotel will not have a bar or restaurant, but will have an outdoor patio and grill. Currently, there is no development on the property.

City Manager Chris Dorsey said one of the reasons for the 40-60 split is to keep with precedent set by the incentive package offered to extended-stay Candlewood Suites on Ringgold Road.

East Ridge is one of three cities in the state with a Border Region District Retail Tourism Act incentive. For sales within a 940-acre district around Exit One and Ringgold Road, the state gives East Ridge back 4.125% of the 7% sales tax revenue. This act encourages commercial development within the city by allowing it to offer financial incentives to builders.

Dynamic Group also owns Holiday Inn & Suites in downtown Chattanooga, TownePlace Suites in Cleveland and Staybridge Suites at Hamilton Place in Chattanooga.

Email Sabrina Bodon at sbodon@timesfreepress.com.

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