Downtown has seen a lot of investment by the city over the past dozen years or so. But that wasn’t always the case. Late last century, requests to the city’s administration to fund improvements or to invest in revitalizing our center city didn’t get much traction. Spending money to benefit a relatively small portion of the city by supporting particularly urban amenities like a trolley system or purchasing bicycles for police patrols weren’t seen as things the city could afford. If downtown businesses and property owners wanted programs that were designed to benefit a small segment of the city, it made sense that they get together and fund those themselves. After all, few Knoxvillians went downtown. And plenty more felt that the city’s money was better spent elsewhere.
To enable this, the city passed legislation that would pave the way for a Central Business Improvement District. Its mission would be “to relieve the City of Knoxville by undertaking those programs and services which government is unable to provide, which will bring more people to downtown Knoxville to work, live, shop and play.” Funding would come from a special assessment—essentially a tax above and beyond those collected by the city and county—on property owners in the district that could be directed toward a number of areas the city deemed it was unable to provide for. The ordinance went on to enumerate 20 specific programs and improvements that the CBID would be authorized to undertake with its funding, including things like improving public safety and enhancing health and sanitation downtown. They were goals that provided broad benefits and delivered basics that would have an overall effect on the center city’s appeal.
Recall that at this time, the city didn’t offer programs like tax-increment financing or many of the other tools that are now commonly employed to encourage development. Likewise, banks weren’t as open to lending for renovating decaying buildings based on the far-fetched notion people wanted to work, live, shop and play in an urban center. So at number three on the list of authorities granted the CBID was “to provide a flexible source of funds for the encouragement of improvements to existing downtown buildings.” And over the years, hundreds of thousands, if not millions, of dollars have flowed from the CBID in the form of grants to developers looking to fund projects downtown. And as many of these projects began creating higher tax revenues for the city, they created more revenue for the CBID. A lot more revenue. If you’ve read about the CBID over the past few years, it was probably about another grant to another developer in pursuit of that third goal.
But a number of factors have changed since the formation of the organization. Both lending institutions and the city are more supportive of redeveloping buildings downtown. And many programs and amenities that at one time the city didn’t feel it could provide are now paid for by the increased revenues a revitalized downtown delivers. The city has relieved the CBID from needing to fund things like the trolley system and many more areas on that list it was set up to address, which in turn has allowed it to direct more and more of its funds toward that third goal of providing funding to improve downtown buildings. It’s hard to think of a project in recent years that hasn’t benefited from the CBID’s largesse. And that’s causing friction. In recent weeks, the CBID has suspended its grant program, and is currently reassessing the criteria it employs in providing grants to downtown developers.
Maybe its time to get back to basics. When was the last time the CBID sat down with the city administration and considered the core mission the city set out for it: undertaking those programs and services which government is unable to provide? How many things on that original list are now amply provided for by the city, and just what areas now need to be subsidized by an additional tax burden on downtown businesses and residents? With controversy surrounding the CBID’s grant program, and its own board treasurer referring last summer to the organization’s $300,000-plus surplus as a “slush fund,” maybe it’s time for the city that enabled it to provide a little guidance to the CBID on just how that money might be best spent.
Remember, while the CBID’s funding may be derived from downtown property owners, it was the city that gave it de facto taxing authority. I’m sure the current administration embraces the CBID’s original mission of bringing “more people to downtown Knoxville to work, live, shop and play.” But the outdated course the city set for it last century has left the organization rudderless. It’s time for the city and the CBID to work together on a new approach to those goals with today’s circumstances in mind.