Sharp: The Downtown Business Improvement District is a case study of power in Chattanooga

Sharp: The Downtown Business Improvement District is a case study of power in Chattanooga

May 14th, 2019 by Helen Burns Sharp in Opinion Columns

Staff photo by Doug StricklandBuildings inside a proposed Business Improvement District are seen on April 16, 2019, in Chattanooga, Tennessee. 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.

Helen Burns Sharp

Helen Burns Sharp

Photo by Erin O. Smith

The Chattanooga City Council soon will consider an ordinance to create a Downtown Business Improvement District. BIDs are common in other cities and could be an excellent tool here in making the business area more attractive and safer.

BIDs are private sector initiatives for private property. Recent news articles suggest that city and county government are being viewed as private property owners and asked to provide public taxpayer funding based on the BID's assessment formula. Really?

The ordinance the River City Company submitted to the city reads quite differently from the ordinances that set up BIDs in Nashville and Knoxville. It appears to have been written by the local law firm that represents a majority of the major property owners in the district and has represented most of the successful applicants for various tax breaks awarded by the city and county. These private attorneys are good at advocating for their clients' financial interests. That is their job.

But who is doing the work for local government to look out for the public interest in negotiations? Based on my experience in monitoring tax incentives, I would say no one. That needs to change. Hamilton County leads the state in the amount of tax revenue abated through payment-in-lieu-of-taxes agreements, more than $26 million last year alone. Food for thought as the county considers a major property tax increase.

Chattanooga's proposed ordinance must change before passage to clarify that the BID cannot require our local governments to pay anything; that nonprofits exempt from property tax do not fall under the ordinance, and that properties under tax break agreements do not get special treatment.

The Nashville and Knoxville BID ordinances specify that special assessments only apply to taxable real property. Government properties are tax-exempt. The ordinance River City submitted to the City Council refers to property rather than taxable property.

The current draft of the ordinance includes the handful of tax-exempt nonprofits (two churches, the United Way and the YMCA) as commercial property to be assessed. In another departure from Nashville and Knoxville, the special assessments on commercial properties are not based on assessed value as determined by the county but primarily on (the larger of) building square footage or lot size.

The proposed Chattanooga ordinance states that any property located in the district subject to a payment-in-lieu-of-tax agreement shall be subject to the special assessment. Good. It goes on to say: " ... such special assessment may be abated upon written approval of the City Council" ... and extends this abatement to future PILOT or TIF properties. Bad.

What is the rationale for abating a special assessment on three properties that already enjoy substantial property tax breaks totaling about $6 million over the 14 to 18-year terms of the agreements? Those properties are the Market City Center Apartments, the Heritage Maclellan Apartments and the River City Company Majestic 12 Theater. Currently these properties pay zero property taxes to support fire protection, public safety, streets, courts, parks, etc.

If the city and county choose to approve funding for the BID, it would be approved as part of their upcoming budgets. It is a political decision. Mayors Berke and Coppinger can propose any amount or none for action by the council and commission.

Some may say that government is a major downtown property owner and should contribute as an economic development partner. Others might point out that our governments already provide major funding annually to the Convention and Visitors Bureau and the Enterprise Center; that the county nominated downtown as a "distressed" area for opportunity zone tax benefits, and that the city is spending more than a million dollars on Miller Park and Patten Parkway.

Even if you are not particularly interested in downtown, you may want to pay attention to this story. It is a fascinating case study on the power structure in Chattanooga. Public-private partnerships are great, provided we have a strong public sector willing to ask questions of the strong private players.

Helen Burns Sharp is the founder of Accountability for Taxpayer Money, a public interest advocacy group focused on tax incentives and government transparency. Contact her at

Getting Started/Comments Policy

Getting started

  1. 1. If you frequently comment on news websites then you may already have a Disqus account. If so, click the "Login" button at the top right of the comment widget and choose whether you'd rather log in with Facebook, Twitter, Google, or a Disqus account.
  2. 2. If you've forgotten your password, Disqus will email you a link that will allow you to create a new one. Easy!
  3. 3. If you're not a member yet, Disqus will go ahead and register you. It's seamless and takes about 10 seconds.
  4. 4. To register, either go through the login process or just click in the box that says "join the discussion," type your comment, and either choose a social media platform to log you in or create a Disqus account with your email address.
  5. 5. If you use Twitter, Facebook or Google to log in, you will need to stay logged into that platform in order to comment. If you create a Disqus account instead, you'll need to remember your Disqus password. Either way, you can change your display name if you'd rather not show off your real name.
  6. 6. Don't be a huge jerk or do anything illegal, and you'll be fine.

Chattanooga Times Free Press Comments Policy

The Chattanooga Times Free Press web sites include interactive areas in which users can express opinions and share ideas and information. We cannot and do not monitor all of the material submitted to the website. Additionally, we do not control, and are not responsible for, content submitted by users. By using the web sites, you may be exposed to content that you may find offensive, indecent, inaccurate, misleading, or otherwise objectionable. You agree that you must evaluate, and bear all risks associated with, the use of the Times Free Press web sites and any content on the Times Free Press web sites, including, but not limited to, whether you should rely on such content. Notwithstanding the foregoing, you acknowledge that we shall have the right (but not the obligation) to review any content that you have submitted to the Times Free Press, and to reject, delete, disable, or remove any content that we determine, in our sole discretion, (a) does not comply with the terms and conditions of this agreement; (b) might violate any law, infringe upon the rights of third parties, or subject us to liability for any reason; or (c) might adversely affect our public image, reputation or goodwill. Moreover, we reserve the right to reject, delete, disable, or remove any content at any time, for the reasons set forth above, for any other reason, or for no reason. If you believe that any content on any of the Times Free Press websites infringes upon any copyrights that you own, please contact us pursuant to the procedures outlined in the Digital Millennium Copyright Act (Title 17 U.S.C. § 512) at the following address:

Copyright Agent
The Chattanooga Times Free Press
400 East 11th Street
Chattanooga, TN 37403
Phone: 423-757-6315