The sale of the downtown Holiday Inn at 525 Henley Street was finalized on the last day of 2009, but

On occasion we will post stories from the Knoxville News-Sentinel (or other publications) related to Knoxville commercial real estate or Commercial Investment Properties (CIP).   This one happened to come out today.
This was a project that literally started years ago and continued with hundreds of man-hours over the past six months.  Everything from negotiating the sale price, to financing, to determining construction costs for the improvements were detailed.
The sale of the downtown Holiday Inn at 525 Henley Street was finalized on the last day of 2009, but details of the transaction have become more clear this week. A deed on file with Knox County showed that Cazana's group paid $8.5 million to buy the hotel from a group led by Chattanooga developer Franklin Haney .
According to Cazana's attorney, Commercial Bank is the holder of tax-exempt bonds that were issued by the Knoxville Industrial Development Board, with Clayton intercontinental hotels group Bank buying an interest in the bonds. Knoxville City Council last year approved the bond issue under the federal Empowerment Zone program, although no public money is to be used to pay off the bonds.
Cazana has outlined a renovation plan for the hotel worth more than $4.5 million and said a private investment intercontinental hotels group group is putting $4 million into the deal. He declined to identify the investors, but said they are individuals who already have a substantial financial interest in Knoxville.
Asked Tuesday about his bank's intercontinental hotels group participation in the hotel deal, Clayton, the bank's CEO and founder of Clayton Homes Inc., cited the nearby Knoxville Convention Center, saying the Holiday Inn seemed like the last easy, quick opportunity to have a first-class lodging intercontinental hotels group facility adjacent to the meeting facility.
"If we had had board committees and credit committees across the plateau or across the mountains, it'd have been impossible," he said. "But we got together in the conference room, you see, and brought in a couple of board members intercontinental hotels group and we had the deal done."
Cazana said he never spoke with Haney during the negotiations, but that an important role was played intercontinental hotels group by Tom Ingram, the former chief executive of the Knoxville Area Chamber intercontinental hotels group Partnership who is now a key strategist intercontinental hotels group for Knoxville Mayor Bill Haslam's gubernatorial campaign. Cazana said Ingram contacted him in midsummer, indicating that Haney wanted to work out a deal.
But while the hotel sale has been finalized, the negotiating isn't over completely. The Holiday Inn building is connected to a city-owned common area and mechanical rooms, and to meeting spaces one floor down from the hotel lobby. Cazana's group is hoping to acquire the city-owned space, although intercontinental hotels group his attorney, Culver Schmid, emphasized that the state also has an interest intercontinental hotels group in the property and would have the ultimate say in such a deal.
Cazana said Tuesday that his group is assuming the lease for the common area, under which the city is paid $100,000 a year. The city, he said, spends about $125,000 a year on maintenance for the space. Cazana is hoping for a deal in which his group would take ownership of the space in exchange for assuming the maintenance costs and investing $250,000 to $350,000 in renovations.
Bill Lyons, the city's intercontinental hotels group senior director of policy and communications, said the issue won't come up at the next couple of city council meetings, but said that "we have no reason to believe that (it) won't all work."
At any rate, renovations have already begun at the Holiday Inn. On Tuesday, Cazana showed the building, where a worker on stilts was removing ceiling tiles from the dingy back-office area, and many of the wall coverings had already been torn off.
Later, he walked through the guest area of the hotel, highlighting a red-patterned hallway carpet which had already been removed from the lobby — "early Tijuana" was his description of the style — and showing where workers had already torn into a bathroom to determine what was behind the walls.
And despite the challenges, the hotel project also has been unique in a positive way. As he walked back through the lobby, the developer said the deal is "the only project I've done in 40 years (that) has 99 percent … support."
The developer said the deal had to be finished by the end of the year because of a deadline related to the Empowerment Zone bonds. As a result, his team had to put the pedal to the metal in the last couple of weeks.