|By Josh Flory, The Knoxville
News-Sentinel, Tenn.McClatchy-Tribune Regional News
January 1, 2009--The sale of a prominent downtown hotel was finalized on Thursday, clearing the way for a major renovation project that is slated to begin next week.
A news release from developer Nick Cazana's firm said HI World's Fair Park LLC bought the Holiday Inn Select from an ownership group led by Chattanooga developer Franklin Haney. Terms of the deal were not disclosed.
The 293-room hotel at 525 Henley St. occupies a key site in downtown Knoxville. It is adjacent to World's Fair Park and located across Clinch Avenue from the Knoxville Convention Center.
"This property is just too important to downtown, and Knoxville as a whole, to let it sit in its current condition," Cazana said in a news release. "Improving this hotel helps tourism, the convention center and the city itself."
The release said renovations to the facility will begin Monday and last approximately two years.
"This hotel was state of the art when it was built for the World's Fair, and we want to return it to the same level of service," Cazana said in the release. "We are going to drastically improve the accommodations and the expectations as a whole for hotels in Knoxville."
In November, Cazana said his group budgeted $3.5 million for renovations to the property during the first year of ownership and that more than $1 million in additional renovations would be done later.
That same month, Knoxville City Council approved a $15 million, tax-exempt bond issue -- under the federal Empowerment Zone program -- to support the project. The bonds would be issued by Knoxville's Industrial Development Board and paid back by the developer, with no public funds used to pay them off.
The Holiday Inn has been the subject of sale rumors in the past that failed to materialize. In 2008, Cazana said the Haney company -- which has offices in Chattanooga and Washington, D.C. -- had contacted him regarding a sale of the hotel and the two sides agreed to terms but that the seller backed out at the last minute. Later that year, a New York firm had reportedly reached an agreement to buy the property, but that deal was never finalized.
Franklin Haney is a native of McMinn County who got his start in real estate development in Chattanooga before expanding nationally and was one of several key developers of projects tied to the 1982 World's Fair. Partnerships or entities controlled by Haney built the hotel at a cost of $13 million for the fair.
Some City Council members have expressed disappointment with Haney's stewardship of the building, indicating in November that plans for a major renovation of the property had not been as extensive as advertised.
Cazana, meanwhile, is also the developer behind Metropolitan Plaza, a proposed $78 million hotel-office-condo complex slated to be built across Henley Street from the Convention Center. That project is slated to include a 200-room boutique hotel.
Business writer Josh Flory may be reached at 865-342-6994.
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