Mark Peterson has told the Selma City Council that he is no longer interested in buying the St. James Hotel.

Peterson and the city have been in negotiations since October about a possible sale.

“I am writing to inform you that I have decided to not move forward with the purchase of the St. James Hotel,” Peterson wrote in a letter to the council.

Peterson said he disagreed with the city’s appraisal that put the hotel’s value at $900,000. Peterson said he and his advisors think that number is closer to $780,000.

Either way, Peterson said if he put that much money into the hotel he wouldn’t have sufficient funds to bring the hotel up to par.

The city’s appraisal from Hotel Appraisers and Advisors, LLC out of Chicago estimated the hotel needed $6 million in expansions and renovations to bring the historic structure up to flagship hotel standards.

“Though I agree with the proposed $6 million renovation, I do not have sufficient funds to execute this plan,” Peterson wrote. “Moreover, paying the city of Selma $900,000 for the property significantly reduces the available capital to execute my original plan.”

The Selma City Council voted at its last meeting to list the property with a national realtor if Peterson declined to buy the St. James.

The city and Peterson started negotiating a possible sale of the hotel in October. A potential sale price of $1.2 million was discussed, but Peterson said he would only consider paying that if the hotel appraised within 95 percent of that amount.

Amid the negotiations, Peterson started managing the St. James’ day-to-day operations in December at no cost to the city, but he stepped away from those responsibilities May 9.

In March, Peterson asked the city to approve a letter of intent that included a clause that he would be paid management fees similar to what previous managers made until the sale closed. The last company to manage the hotel, Strand Management, made about $4,800 per month.

At the time, several council members balked at the idea of paying more money to anyone to manage the hotel.

Peterson offered to have the management fees deducted from the eventual purchase price of the hotel. However, had the council approved the letter and the sale not close, which is what happened, it wasn’t clear if the city would still owe Peterson those fees.

The city does owe Peterson for approximately $22,000 of his own money he has put into improvements, which included air conditioning.

The council has not said when Peterson would be reimbursed that money.

City employees have been overseeing the hotel since May 10. The council tabled accepting Peterson’s resignation April 26 and never voted on his letter of intent, which he cited in his May resignation letter.

The hotel has cost the city of Selma approximately $200,000 to keep open since Oct. 1, or about $25,000 a month.

Councilman Cecil Williamson made a motion at the meeting earlier this month to close the hotel as of June 30. At Monday’s work session, Williamson said he would make another motion to close the hotel Tuesday.