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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.

Fee collection for the Chattanooga Business Improvement District remains in limbo amid uncertainty in the city council.

After the Hamilton County Commission reversed its agreement with the city of Chattanooga to provide fee collection services for the district last week, the district was left without a means of assessing the fee.

The district, spearheaded by the River City Co., passed through the Chattanooga City Council in late July after failing in a vote held earlier in the summer. Some property owners have claimed that the later reintroduction of the ordinance violated state law.

Under the Business Improvement District, 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.

Money collected from the district would go toward beautification and other projects to improve the atmosphere around downtown businesses.

To salvage the district's ability to assess a fee this year, District 7 Councilman Erskine Oglesby introduced a resolution to council that would allow the city's treasurer to collect the fee on behalf of the BID board.

"As you know, last week the county reversed course on collecting the fee for the BID, so now it has been duly approved by us with a 6-3 margin to move forward with the BID," said Oglesby, who co-sponsored the council's BID resolution and serves as a River City Company board member. "One of our options, or the only option available to us, is that we collect our own fees. ... I believe that this is our course of action."

Commissioners who opposed the county's involvement expressed concerns over legal liability, citing a lawsuit filed against the city to stop the BID just two days after the agreement was first approved.

While the city moved to have the lawsuit dismissed last week, claiming the plaintiffs "failed to allege any colorable basis for the challenge to the ordinance," the resolution stirred familiar qualms from council members who fear legal liability if they get involved in matters of the district.

"Is the city going to be on the hook to pay back taxpayers $1 million?" District 4 Councilman Darrin Ledford asked. "This is a rhetorical question for research but it's something that I'm concerned about."

District 6 Councilwoman Carol Berz also asked city staff attorney Valerie Malueg to answer a series of legal questions, most notably, whether the city would have the authority to impose liens on properties that did not pay the fee and is it legal for them to do so.

"My off-the-cuff answer is that it would be similar to the stormwater fee," Malueg said, citing a lawsuit by the city in 2010 when the city attorney's office took several residents who owed more than $5,000 on the stormwater fee to court and had liens placed on the properties. "That's not a tax, that is a fee just like these are."

Berz also raised concerns about whether the assessed fees would go through the council's budget — a situation that council members were explicitly against during debates about the BID. But, Berz was assured by Malueg and Chief Financial Officer Daisy Madison that the money would not go through the city's budget.

Similar concerns were raised by other council members, resulting in a request for further information on the logistical process and legal implications of the city assessing the fee before next week's vote.

"The other question would be, if this doesn't pass as presented, what happens next?" Ledford asked. "Are there other options for the BID board to collect the fee. I'm just trying to look at the outcomes."

While some questions were directed toward River City President Kim White, District 9 Councilwoman Demetrus Coonrod objected to a non-city employee addressing the council, saying, "This is our meeting," and ultimately blocked White from speaking about the issue.

After the city's response to the lawsuit and the reversal of the commission's decision last week, White said that the BID will definitely be formed and assess a fee this year.

"It was disappointing since we had been talking to the trustee since the very beginning and that's what he does, bill for other entities, but we're moving forward with putting together a nominating committee and the BID board," White said. "We're on a pretty quick timeline to get it up and running. We're going to find an alternative. [Not assessing the fee this year] is not even a consideration."

Despite her series of questions, Berz said she supports the BID and wants to make sure "it's done right" and that the city avoids "unintended consequences."

With property tax bills being sent in October, supporters of the BID are rushing to establish a means of collecting the fee, while opponents are racing to nullify the BID ordinance.

The council will vote on the fee assessment resolution Sept. 3.

The lawsuit is set to be heard in Hamilton County Chancery Court on Sept. 9 at 1:30 p.m.

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

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