When the area's commercial Realtors thought Chattanooga taxpayers were going to be on the hook for the Edney Building -- the anchor property of the city's much-touted Innovation District -- they said the Enterprise Center's sales pitch for the property was "not a financially feasible investment."
But as long as private developers buy the building, the Realtors say, they have no concerns.
Mayor Andy Berke's office announced last month the Edney Building would be the heart of the new district and would be home to a technology business incubator that would offer space to startups at below-market cost.
The Enterprise Center plans to find a private buyer for the building, then funnel the buyer's money to the Tennessee Valley Authority, which owns the building -- skirting a public auction of the property.
Late Friday, Berke's office added an ordinance to this week's City Council agenda to pass $1.6 million to the The Enterprise Center, so the center could purchase the building from TVA before the center had its buyer.
City spokeswoman Lacie Stone said the measure was there only because TVA had not yet extended a closing deadline with the Enterprise Center.
On Monday TVA agreed to extend the deadline, and the agenda item was pulled. But not before the Greater Chattanooga Association of Realtors fired off an email to council members criticizing the request for proposal.
In the letter, Robert Nodes, the group's government and public affairs director, said there were $1.65 million in additional costs hiding behind the building's $1.3 million purchase price.
Nodes cited $650,000 in heating and air repairs, $100,000 in elevator upgrades, $618,000 in required tenant improvement costs and other fees he said were required by the request.
"The way the [request] is structured it is just not a financially feasible investment for a private owner as just a straight-up real estate play," Nodes wrote.
But after the agenda item was pulled, Russ Elliot, the group's president over commercial Realtors, who asked Node to write the letter, said the criticism was a misunderstanding.
Downtown Chattanooga's planned Innovation District. "I want to make sure that it's clear, the Commercial Realtors Council ... we totally, 100 percent support the idea of the Innovation District," Elliot said. "We just didn't want an incubator that was funded by tax dollars that we would have to compete with."
Elliot said Monday so long as private developers were inquiring on the property, the Realtors association had no opposition to the request, the extra costs or the process.
"I think that's just something that each individual will have to consider. If a private group chooses to do this, that's their decision," he said.
Misunderstanding about the agenda item aside, Enterprise Center President and CEO Ken Hays said he wished the Realtors had called him.
"I've met with the Realtors over there, and I don't know why they wouldn't have called me," he said.
The Enterprise Center's original contract with TVA called for a Feb. 23 closing date, which was tight, Hays said.
"I just didn't want to have our back against the wall. I had talked to the city about advancing the funds. TVA came through and said they were going to extend it," he said.
TVA verbally agreed to move the date up two weeks, Hays said.
And the additional $1.65 million in costs that the Realtors' letter lists doesn't accurately reflect the status of the project and what's required, said Hays.
The HVAC and elevators work, but upgrades would help with maintenance and efficiency, he said.
"We're not telling them they have to do it," Hays said.
Many of the improvements the Realtors cited are optional or unnecessary, he said.
"People who have indicated that they may bid on this building have gotten that information," said Hays.
He said several developers have shown interest in the property.
Contact staff writer Louie Brogdon at lbrog don@timesfreepress.com, @glbrogdoniv on Twitter or 423-757-6481.
Contact staff writer Mitra Malek at mmalek@timesfreepress.com or 423-757-6406. Follow her on Twitter @MitraMalek.