UPDATE: County commissioners voted 6-3 Wednesday to give tax incentives for a project to convert part of the Choo Choo hotel into affordable housing.

The Choo Choo Partners plan almost 100 rooms in the old downtown hotel into "affordable housing" studio apartments. Each 355 sq. ft. unit will cost about $800/month.

With Wednesday's vote, the $4 million project has cleared the final hurdle for Payment In Lieu of Taxes or PILOT.

READ MORE | Chattanooga Choo Choo announces $8 million expansion and renovation

Three commissioners voted against the PILOT, including Tim Boyd who said other areas in town need tax incentives more than the Southside.

"You don't need a PILOT in areas that are economically thriving, where people want to be, you just build it and they will come," Boyd said.

Chester Bankston and Sabrena Smedley were the other two commissioners who voted against the Choo Choo PILOT.

The City Council approved the PILOT 8-0 last week. Boyd said this was the last hurdle for the program.

PREVIOUS STORY: The Chattanooga Choo Choo you've grown to love will look a lot different come summertime.

The $12 million dollar facelift is bringing in new restaurants and entertainment and Wednesday they announced there will even be a few new places to reside.

Officials say they will be adding close to 100 affordable apartments and they said it will make the Choo Choo an entertainment hub of downtown.

97 rooms of the 363 available at the Chattanooga Choo Choo will no longer be rented out on a nightly basis, but instead converted into multiple family housing.

"With the lifestyles we are living people want a smaller place, they want convenience, they want access to restaurants and attractions and entertainment to park. That's where the Choo Choo has come in," said Bob Doak, President and CEO of Chattanooga Area and Visitors Bureau.

95 of the apartments are expected to be 350 square feet, with the remaining two doubling in size at 650 square feet. It's expected to cost $4.1 million dollars in renovations.

"All of the units will have small kitchenettes and we will also be redoing the pool area," said Adam Kinsey.

100 percent of the units will fall under the affordable housing ordinance the city passed back in the summer. Each unit will range from $750- $800 per month, including utilities and 1 gig wifi.

"Part of moving Chattanooga forward is affordable housing. So we think it's important to have housing for service industry, young entrepreneurs, and people that just want to be downtown," said Kinsey.
They say the additional housing downtown will help the south side grow into an entertainment hub.

"You've got entertainment, great place to stay, great place to eat and then you've got the rest of the city from the lookout mountain to downtown. So, wow, we really do seem to have it all now," said Doak.

Rooms will be leased out starting in April.

Construction on the apartments is set to begin in January. They expect the entire $12 million dollar project to be finished in June of 2015.