The Chattanooga Choo Choo Hotel will get its tax break.
The Chattanooga Health, Education and Housing Facilities Board has just approved the much-discussed property tax freeze for the historic hotel, as it seeks to convert 97 rooms into 350-square-foot studio apartments to be rented below market rate.
Under the tax agreement, the Choo Choo’s property taxes on the $4 million conversion will be frozen for 12 years and gradually increased for four years after that. Although the hotel will pay a full portion of property taxes to county schools.
That would mean the Choo Choo’s total property taxes for the apartment property will increase from $32,000 a year to $42,000 a year.
But the county general fund would be missing out on about $10,000 a year during the course of the agreement.
Separately, the hotel is undergoing a massive $8 million renovation that is not a part of the tax break deal.
The 16-year payment-in-lieu-of-tax agreement cleared the City Council and the Hamilton County Commission last month. The HEB was its last hoop to jump.
Housing board members voted 5-0 to pass the agreement.