Staff file photo / Sen. Todd Gardenhire, right, listens to Sen. Bo Watson on Jan. 5, 2016, at the Chattanooga Times Free Press.

Before the Chattanooga Business Improvement District board held its first meeting, board member and state Sen. Todd Gardenhire already began considering legislation to change rules about the district's board.

Under a state law from the 1990s, Gardenhire, R-Chattanooga, and Rep. Robin Smith, R-Hixson, are required to serve as ex-officio members of the governing board, which will oversee Chattanooga's controversial new community development district.

"Rep. Smith and I are on this board, not because we wanted to be, but because of this act from the '90s," Gardenhire told the Times Free Press after the board's first meeting late Wednesday. "In that same act, we were supposed to be a part of any 'recommendation' that was made about the board anything to do with the BID."

The board in question governs the BID, which has been spearheaded by local economic development nonprofit River City Co., and 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 to provide safety and visual improvements to central Chattanooga.

Gardenhire said he and Smith were left in the dark during this summer's dramatic BID formation process.

"Somebody clearly gave recommendations about the ordinance, the budget, the fee and a number of other things before this was formed, but I just got some email three weeks ago telling me I was on the board and that's it. Had we been involved in the recommendation process, I would have raised my objections at that point," the senator said, citing his concerns about exemptions for government and nonprofit buildings.

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The Business Improvement District area. Map provided by River City Company

"Why [are] the city and county exempting themselves when they should be providing these services anyway, and yet they're going to benefit from extra fees to do their own jobs?" Gardenhire said. "I also would have objected to having that part in the ordinance] that allows people to apply for an exemption because of the history of the state of Tennessee giving exemptions to everybody. I have been going through [state code], in the last seven years, looking for all the special exemptions given to businesses and individuals to try my best to do away with them. All exemptions do is keep the cost of business and government down, benefiting some people but raising other people's fees or taxes."

Gardenhire said he is working on legislation allowing state representatives and senators to opt into service on the boards, which he has discussed with colleagues in the senate at a recent Republican caucus and plans to introduce during the next legislative session.

Smith was not immediately available for comment and did not attend Wednesday's meeting.

During the meeting, Gardenhire abstained from many points of discussion and votes, but cautioned other board members about state open meeting requirements and warned against allowing exemptions.


Board treads carefully

The 15-member board — comprised primarily of residents, property owners and business owners within the BID — spent its more-than-two-hour inaugural meeting establishing protocols and contracting outside help, with notable trepidation in light of the opposition the district has faced.

"I think because of the amount of opposition about this we need to be careful and we need to listen to the public to make sure this succeeds," Chairman Steve Hunt said. "We need to remember that we're a public board making decisions that impact the public."

While the meeting was run mostly by River City representatives, the board elected officers to lead future meetings.

Steve Hunt, a commercial tenant of the BID, was elected chairman; Kelly Fitzgerald, a commercial tenant of the BID, was elected vice chairman; and Charles Perry, a residential property owner in the BID, was elected secretary. All officers will serve one-year terms.

Despite River City being the undeniable parent of the district and offering a year of marketing and other support services to the board, President Kim White said the company will not be as involved with the district going forward.

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.

"We started this process of looking at a BID in July 2018. It started because several property owners came to us concerned about the level of services downtown," White said. "We have been working on the process for over a year. But one thing I want to make clear is that this is not a River City project or program. One of the beauties of a business improvement district is that it's paid for an managed by property owners. Because [River City's] mission is to improve downtown, we took this on to help birth the BID and we do want to be there to make sure it succeeds but we're here today to say 'move on and prosper.'"

In addition to the River City contract, the board approved a proposal to enlist Progressive Urban Management Associates, a Denver-based consulting group used by River City during the BID formation process, for up to $25,000 in start up services as well as agreeing to keep attorney Rachael Ruiz, also hired by River City to help with the BID formation, subject to approval of an engagement letter to be sent to the board before the next meeting.


Next steps

In upcoming meetings, the BID board will focus on hiring a BID manager, creating bylaws and establishing other pertinent foundations for future work.

After lengthy discussion, the board is set to meet on the third Wednesday of every month at 2 p.m.; Venue was not discussed at the meeting, so, per an earlier email from a representative of River City Company, the meetings will continue to be in the River City conference room at its office in Miller Plaza until further notice.

Public comment will be allowed at the meetings following the city council's current rule set through the end of the year, at which point the board will re-evaluate its meeting procedure.

A hearing on a lawsuit filed against the city to stop the BID is scheduled for Nov. 1.

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