Business Improvement District fee collection back on track after close Chattanooga City Council vote

Business Improvement District fee collection back on track after close Chattanooga City Council vote

September 10th, 2019 by Sarah Grace Taylor in Local Regional News

Staff photo by Doug Strickland / Buildings inside a proposed Business Improvement District are seen on Tuesday, April 16, 2019, in Chattanooga, Tenn. The proposed district would encompass downtown Chattanooga from the Riverfront to 11th Street and from U.S. Highway 27 to different areas bordered by Cherry Street, Lindsay Street and Georgia Avenue.

Photo by Doug Strickland /Times Free Press.

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 Chattanooga city treasurer will provide collection services for the controversial downtown Business Improvement District after a close vote by the city council, setting the district back on course to collect fees on upcoming tax bills that will be sent in October.

Council members on Tuesday voted 5-4 to pass an ordinance that would allow the city treasurer to provide collection services for the controversial district, which requires property owners to 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 in exchange for safety and visual improvements.

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

Initially, the fee was supposed to be collected by the Hamilton County trustee, per an agreement with the county commission. The commission later reversed that agreement with the city of Chattanooga to provide fee collection services, citing legal concerns, leaving the district without a means of assessing the fee.

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

While the city moved to have the lawsuit dismissed, claiming the plaintiffs "failed to allege any colorable basis for the challenge to the ordinance," the hearing was postponed until Sept. 23, at the plaintiff's request, after a brief initial appearance in Chancery court on Monday.

During the first reading of the ordinance, Vice Chairman and District 1 Councilman Chip Henderson introduced an amendment to require the treasurer to collect no less than a 2% fee on the roughly $1 million collected in the agreement.

The amendment also included a one-year mandatory review of the agreement and stated that the city would not pursue liens or other enforcement actions on the collection of the fee.

Council members Erskine Oglesby, Henderson, Anthony Byrd, Jerry Mitchell and Carol Berz voted in favor of the amended agreement, while members Ken Smith, Russell Gilbert, Demetrus Coonrod and Darrin Ledford were opposed.

"On behalf of the administration, I appreciate the thorough questions that [council members] have brought to the table," the mayor's chief of staff, Stacy Richardson, said last week. "I think we have a better ordinance because of your diligence."

Though the lawsuit and final vote still hang in the balance, Kim White, president of River City Co., a local economic development nonprofit that spearheaded the Business Improvement District, was confident after the city discussion that the district would manage to collect its 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 [Business Improvement District] board," White said last week. "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."

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