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Chattanooga's controversial Business Improvement District has cleared the last legal issue looming over its formation, following a six-month battle to get it up and running.

A lawsuit filed by six property owners in the recently formed special district that claimed the city council illegally formed the district was dismissed Thursday.

Hamilton County Chancellor Jeffrey Atherton heard the case during a hearing late last week, narrowly siding with the city on the ambiguous terms of state law regarding the speedy reintroduction of an ordinance to form the district in the council this summer.

"It sure does smell bad, doesn't it?" Atherton said of the city's approach to the ordinance during the nearly two-hour hearing. The judge ultimately determined that state law did not expressly prevent reintroduction of the ordinance by a council after a citizens' petition.

"Everything in my gut tells me I should rule in favor of the plaintiffs on this," Atherton said. "But, even though [the formation ordinance] seems like an end-around, it doesn't seem to violate statute."

While the plaintiffs have 30 days to appeal the decision, attorney, Business Improvement District property owner and plaintiff Charles Paty said Friday that the group will not continue the legal fight, despite the questionable language of the law.

"We spent enough time and effort and money on it. We don't want to pursue it further," Paty said Friday. "I think the judge interpreted the law as it is written, including the 'liberal construction' requirement. I understand why that's what he did, even though it was distasteful to him. I don't know that he was wrong to interpret it that way."

The district was cleared by the judge in late September to bill for its first round of fees on property tax bills that were issued in October.

Now, the BID will collect around $1 million in special assessments from property owners within the district to contribute to safety and beautification projects in the area of central Chattanooga, despite the legal and collection hurdles facing the district earlier this fall.

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

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