City to sell The Chattanoogan for $32 million

Staff Photo by Dan Henry / The Chattanooga Times Free Press- 7/5/16.  The Chattanoogan Hotel on Tuesday, July 5, 2016.
Staff Photo by Dan Henry / The Chattanooga Times Free Press- 7/5/16. The Chattanoogan Hotel on Tuesday, July 5, 2016.

The city of Chattanooga will get out of the hotel business - debt-free, city officials say.

The city will sell The Chattanoogan, the city-owned luxury hotel and conference center at 1201 Broad St., for $32 million to the Schulte Hospitality Group of Louisville, Ky.

That was the decision Monday afternoon of the Chattanooga Downtown Redevelopment Corp. (CDRC).

"The price has been proposed will be sufficient to retire all the debt that is related to the construction of the hotel," said City Finance Officer Daisy Madison, who chairs the CDRC.

Schulte Hospitality Group operates 102 hotel in 26 states.

The sale of The Chattanoogan will put the hotel on the tax rolls, and should generate about $650,000 annually in tax revenue, said Tom Morsch, managing director, PFM Financial Advisors, LLC. He's the Chicago-based consultant who handled the sale for the city.

Offers for the Chattanoogan started in the $20 million range, Morsch said, but three rounds of bidding pumped up the sales price.

"In three rounds of bidding, we think we've pushed the market to what the market will bear," Morsch said.

The city had bids for the hotel in the past, Madison said, but they weren't high enough to retire the debt.

Read more in tomorrow's Times Free Press

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