Hamilton County commissioners spar over Chattanooga Business Improvement District fee collection agreement

The Hamilton County Commission meets at the Hamilton County Courthouse on June 5, 2019, in Chattanooga, Tenn.

Amid a hectic vote to pass the Fiscal Year 2020 budget, the Hamilton County Commission narrowly voted Wednesday to participate in the collection of fees assessed by Chattanooga's Business Improvement District.

The BID, which has been spearheaded by local economic development nonprofit River City Company, passed the Chattanooga City Council in late July after failing earlier in the summer. Now, the management board will collect around $1 million annually from the 196 property owners within the district.

In the agreement approved by the commission, the Hamilton County Trustee's Office will be responsible for collecting the fees and will retain the service fees associated with the collections.

However, with the BID's hard-fought formation and notable opposition, many commissioners opposed the county having any role.

"I see unforeseen liabilities associated with collecting this fee through the county," District 8 Commissioner Tim Boyd said, expressing his concern that the county may get sued by a property owner for imposing the fee. "The county has no business, no business at all, being involved with city issues and River City [Company] issues."

Boyd and Chairwoman Sabrena Smedley, of District 7, referenced emails between the city, county and River City's attorneys, in which County Attorney Rheubin Taylor said it would be "cleaner" to leave the county out of the process.

What is the BID?

Commercial and nonprofit landowners in the district will pay an annual assessment of 9 cents per square foot, of either the lot or building size, whichever is greater, plus $4.95 per linear foot of lot frontage. Residential property owners with townhouses or condominiums would pay a flat annual fee of $150 per unit.

"Since the adoption of the BID is approved by the City Council, and since the state statute clearly speaks of the 'municipal' establishment of Business Improvement Districts, I would assume that lien enforcement and 'back tax sales' would be handled in exactly the same way as a delinquent City property tax," RCC attorney Allen McCallie wrote in response to the emails last week. "In essence, if delinquencies arise in BID payments, they would be enforced and collected the same way as an unpaid City property tax. Even if annual collections of BID assessments are handled through the County, I think enforcement would still fall to the City."

In a similar discussion, the city council established a clause indemnifying the city of all liability related to BID issues, a move Boyd called "shoving the dirty business" on to the county.

County Trustee Bill Hullander argued that collecting the fee would be no different than collecting sanitation and other fees for different municipalities in the county, which he already does, and would increase his office's revenue, and ultimately the county's budget, by around $80,000.

"I think it has a lot to do with their IT department," Hullander said, maintaining that the issue was with a lack of capacity at the city, not a fear of legal ramifications and adding that he hoped to some day take over more of the city's tax collection responsibilities.

District 2 Commissioner Chip Baker called on District 4 Councilman Darrin Ledford, who was in the audience as a "spectator," to speak to the process.

Ledford, an opponent of the BID, said the council "did not want this money to flow through their city office."

While the city council did ensure that the fee would stay out of the city budget, recent city level debate had centered on the budget, not the actual collections.

River City President Kim White told the commission that this had been "the plan" between the city, Hullander's office and River City for several months and that if the commission did not approve the agreement, no fee could be assessed and collected by the BID in its first year because Hullander was the only person "set up" to assess the fee that soon.

Hullander added that he had not spoken to any councilmen about the issue throughout their voting process, adding that he wished they "had the respect" to have reached out to him directly about the issue.

After a tie vote while one commissioner was absent and a later re-vote, the commission passed the revised resolution 5-4, approving the agreement under the added stipulations that the county is indemnified of legal liability and the agreement is set to end on July 1, 2020, at the start of the new fiscal year.

A business improvement district is a method of collecting money from business owners in the downtown area to provide services making the area cleaner and safer, as well as to fund enhanced beautification and other special projects.

Contact Sarah Grace Taylor at 423-757-6416 or at staylor@timesfreepress.com. Follow her on Twitter @_sarahgtaylor.