This story was updated Thursday, Aug 1, 2019, at 2:45 p.m. with more information.

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Business improvement district ordinance

In a move some believe will bring life to downtown, a controversial Business Improvement District in central Chattanooga was established Tuesday night after months of heated debate and an hourlong public hearing.

Under the ordinance, 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.

Property and business owners concerned with the BID board's power to assess a fee spoke in opposition to the legislation, while many spoke in favor, citing potential increases in business traffic and improvements to downtown's safety and appearance.

After the hearing, council members voted 6-3 to approve the ordinance on its second and final reading.

The first attempt to create the district, formed by a survey of property owners within the proposed district boundaries, failed on second reading in June due to a lack of a motion at the end of a similarly heated two-hour meeting.

A new version was proposed as a council resolution by three councilmen just one week after the first one failed, and it was amended several times to regulate the district's board and remove liability from the city.

Changes to the legislation since the first set of votes included:

» Ensuring no city tax money is expended on the BID.

» Indemnifying the city from legal actions related to the BID.

» Requiring annual financial and behavioral audits of the BID board.

» Requiring the BID board to adhere to state open meetings law.

» Keeping all BID income out of the city budget.

» Removing the city council from the BID appeals process, sending appeals directly to circuit court.

» Including all properties within the BID, requiring any seeking exemption to file for exemption with the BID board.

Even with the changes, constituents came out to plead against the formation of the district. After the vote, more than half of the attendees in the overcrowded council chamber left and the council called a short recess before resuming agenda business.

"In a world where there are those who only operate for financial gain, there must be someone willing to say 'no' to the theft of democracy," Darin Wright, owner of Elea Blake Cosmetics, said, arguing that the district would not be fair or representative of small business. "I care about this city and I care about small businesses, those that exist today and those that are yet to come."

"This is civic democracy at its finest," Market Street property owner Dana Perry said, arguing that private contributions to city improvements would help the city continue to "come alive."

"I thought the public hearing went great; it expanded opportunities to more citizens in the downtown area to speak so we were able to hear more voices and more opinions," District 7 Councilman and Chairman Erskine Oglesby said afterward. "I see it as an improvement for our city ... Downtown, as I see it, needs a little life injected in it, and this [district] will drive new energy and will bring new businesses and foot traffic and will benefit everyone including small businesses."

Under state law, the ordinance establishing the BID was to be effective at the end of the council meeting.

How they voted

The final vote on the ordinance was:

› Chip Henderson (District 1): Yes

› Jerry Mitchell (District 2): Yes

› Ken Smith (District 3): No

› Darrin Ledford (District 4): No

› Russell Gilbert (District 5): No

› Carol Berz (District 6): Yes

› Erskine Oglesby (District 7): Yes

› Anthony Byrd (District 8): Yes

› Demetrus Coonrod (District 9): Yes

Only one amendment was introduced during a relatively short discussion before the final vote.

The amendment, proposed by councilman Gilbert, would have excluded all property owners on the "outskirts" of the BID who had requested to be exempted. It failed 5-4.

"From my perspective, everything we have worked for over weeks and months was good the way it was," Oglesby said after the meeting. "When you get to playing around with boundaries, something gets lost in the process ... You can't exclude one and not the other."

Many members of the community and council had been frustrated throughout the process by the ambiguity of state law on forming a BID.

Councilwoman Berz, who introduced a majority of the amendments to the original legislation and had the city attorney clarify language in the state law leading all the way up to the vote, called the law "inarticulate at best." River City Co. President Kim White largely attributed the chaos of the process to the same law.

"I think that this is something new for this city, so I think a lot of it was the way the statute was written," White said of the state law. "I again want to thank the city council for bringing back the BID and listening to a majority of property owners."

White also denied claims made by Coonrod during the meeting that her enthusiasm for forming the district was related to any potential run for mayor of Chattanooga.

"The mayor's race is a long time off, so this has nothing to do with that," White said. "Part of my job for the last 11 years has been making downtown great, and I'm thrilled that I've been a great advocate for it, and that's what this is all about."

Under state law, the Business Improvement District took effect at the end of the final voting meeting.

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