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.
The controversial Chattanooga Business Improvement District may not be able to assess fees on the upcoming tax bill after the Hamilton County Commission reversed its agreement with the city of Chattanooga to provide collection services for the district, citing legal concerns.
(Read more: City Council votes to approve Business Improvement District)
The BID, which has been spearheaded by local economic development nonprofit River City Co., passed the Chattanooga City Council in late July after failing earlier in the summer, despite claims from property owners that the reintroduction of the ordinance violated state law.
Now, the management board is set to collect around $1 million annually from the 196 property owners within the district to contribute toward safety and visual improvements to the central Chattanooga district, but may struggle with means of collection after the use of the county trustee to do so was denied at Wednesday's meeting.
Under 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.
In the agreement narrowly passed earlier this month 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.
But District 1 Commissioner Randy Fairbanks moved to revisit the resolution he initially supported.
District 1 Hamilton County Commissioner Randy Fairbanks is seen during a County Commission meeting in the County Commission assembly room at the Hamilton County Courthouse on Wednesday, April 17, 2019, in Chattanooga, Tenn."It's just too controversial," Fairbanks said after the meeting. "There are too many questionable parts to the BID and, with the lawsuit, I just don't think [the county] needs to get involved in it."
The commission on Wednesday voted 6-2 to revisit the issue and 5-3 to deny the resolution, reversing its earlier decision to enter in the agreement.
While the re-vote on the resolution was not on the agenda or expressly planned by the commission, District 2 Commissioner Chip Baker seemed to invite two business owners who had opposed the BID at council meetings to the commission and River City President Kim White was in attendance.
Commissioners had been concerned about a lawsuit filed against the city just two days after the resolution was passedthat accuses the city of violating state law to form the BID.
The suit, filed Aug. 9 by six owners of property in the district, seeks to nullify the ordinance establishing the district.
Though the commission added an indemnity clause to the original agreement, County Attorney Neill Sutherland said the county could be brought into this or future lawsuits because "anyone can sue anybody about anything."
The city is the only named defendant in the lawsuit and has not yet filed a response.
While District 6 Commissioner David Sharpe said the commission was effectively "kicking the can down the road" by not supporting the agreement, Baker said the problem is that it's "not the county's can" and should remain a city process.
At the meeting, during which the original agreement narrowly passed, White told the commission that this had been "the plan" among the city, Trustee Bill 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 endorsed the county taking on the collections, adding that the ultimate goal would be to collect all of the city's property tax because the county is equipped to do collections, which the city now outsources, and stands to gain revenue from more collections.
Hullander and White both stressed the timeliness of the issue at the original meeting, citing upcoming tax bills. During Wednesday's meeting, Hullander said bids for collection-related services have already been awarded, but the printer had agreed to give the commission 10 days to change its mind.
Many commissioners were worried that or other lawsuits against the Business Improvement District would affect the county, though the city is the only named defendant in the suit.
After the meeting, White called the reversal of the resolution "extremely disappointing." Asked if the fee will still be assessed this year, she said, "that's exactly what we're going to try and figure out."
Contact Sarah Grace Taylor at 423-757-6416 or at staylor@timesfreepress.com. Follow her on Twitter @_sarahgtaylor.