Downtown Partnership's Specially Assessed Nonsense™
When and Why did Metro Council Give Up Its Oversight over $Millions of Business Improvement District Funds?
This is an inside baseball one aimed foremost at educating Metro Nashville Council Members, but it is still a fun read about an important local government issue I knew little about until recently.
So there’s an organization called the Nashville Downtown Partnership. You may have seen their work of late. Or to be precise (and to do some CYA), the alleged work of the vendors they hire.
You may be asking: “Who is this downtown partnership? To whom should I address my firmly worded correspondence about why I’m displeased to pay more for parking downtown and how I feel very weird with them spending very large undisclosed sums of money with this guy’s security company operating on public streets?”
Well, if you have feedback for The Downtown Partnership, you can contact them here.
Ask for Tom, tell them Mike sent you and that I’d love a response to my last email. We were having a nice back and forth until I asked him:
Given that there will be an increase in the number of people experiencing homelessness and the number of housing options disappearing, are you considering reviving your pre-COVID housing options for the unhoused? It seems like we are entering an all-hands-on-deck situation.
It probably got stuck in his “drafts”.
But what is the Downtown Partnership?
It’s more complicated than it first seems. I know many Metro Council Members find its relationship to other organizations confusing, it’s something that may require a white board and caffeine pills to explain fully. But at the same time, all the Council needs to know is quite simple.
It seems like no matter how many lobbyist-types are thrown at explaining The Downtown Partnership’s role in our city, and its relationship to our duly elected officials, it just gets real confusing.
All the who, what, where, when or how this all works… all they can tell us is that there should continue to be (a) mandatory payments collected by the government that are, (b) given to them forthwith, with (c) little to no oversight. The rest is academic!
Well, I thought I’d fill in the gaps where the downtown crowd seems to be unable to educate Council on how exactly they are supposed to be held accountable.
From what I can tell, and I’ve reached out to Metro leadership to confirm otherwise, but it does not appear like the CBID has had its budget approved by the Metro Council since 2004.
Below are some articles about Business Improvement Districts for those who like to do their deep research themselves. And for those who can be trusted to let the robits do the reading, (but you have to pinky swear you will go back and fact check before you quote it), here’s an “AI Podcast” generated from Google Notebook LM on the topic, written specifically for Metro Council Members to be informed about how this all works.
An AI overview podcast on Metro’s power over the CBID, national context, and what a Nobel Laureate for Economics can teach us about this.
Again, please don’t make any vote because Mike Lacy sent you an AI podcast. Use it to inform your learning. But also, don’t make any vote based on what someone who has a vested interest in how you vote explains your own oversight power to you, either. AI shouldn’t be trust at face value. Neither should millionaires, or those who desperately aspire to be.
Articles on Business Improvement Districts made by humans for humans:
So, what is it?
Technically, The Nashville Downtown Partnership is a non-profit that is the primary vendor of another non-profit called the District Management Corporation (DMC) that operates as a pass through for “special assessment funds” for the Central Business Improvement District or CBID from Metro Government.
You with me?
Business Improvement Districts are a whole thing.
They’re a mash up of public private enterprise that started in the ‘70s in Toronto and are a way for people to choose to pay more taxes for particular services to be implemented in that area. Anytime people are volunteering to pay more taxes, especially wealthy people, I think we should stay… curious.
It seems like they can vary widely in implementation.
They can be an effective means of enhancing neglected areas and creating targeted, community-centered revitalization. Or they can create an unaccountable shadow government with power hoarded by a few insular people who steer funds inefficiently, often with serious conflicts of interest, and in some cases, they can be straight up corrupt.
There is a spectrum, and all BIDs exist along that spectrum. We should try to identify where ours is, and make tweaks to the system of checks and balances that will help it to move further in the direction that we want.
Examples of BIDs with corruption scandals:
Audit of the Financial and Operating Practices of the 47th Street Business Improvement District
Audit Update: Little progress on City review of Enhanced Services Districts
State Audit Uncovers Potential for Corruption in Community Improvement Districts (CIDs)
Nashville’s CBID was created in 1998 to address downtown's economic decline, safety concerns, and lack of maintenance by coordinating investments and services to revitalize the area. The funds Metro collects are transferred to the District Management Corporation (ostensibly after Council approval), but notably the DMC’s board has 8 of their 12 members appointed by the Nashville Downtown Partnership (NDP). So the odds the DMC shops around for vendors to implement said improvements is unlikely.
Still following? The details are not hugely important, unless you’re one of the 40 Metro Council members who are meant to oversee their budget on a yearly basis. If that’s you, you should be taking notes. There’s a test on Tuesday.
In 2023, the last available year of their IRS 990s, the two organizations, the DMC and the NDP, had staff that were basically identical.
All of this matters because the District Management Corporation gets all of its money from tax payers. The Downtown Partnership has some other revenue streams, but I believe that 100% of the money that goes into the District Management Corporation flows into the Downtown Partnership.
God, explaining this is like when someone tries to explain crypto to you. You kinda just nod and go: “Uh huh. Uh huh. And so that’s the block chain? No, that’s the public ledger. But isn’t that on the block… Hey! Look at the time…”
Certain Metro officials seem to be interested in splitting hairs, and explaining this is not “tax money”, but rather a “special assessment”. I won’t say that’s a distinction without a difference, but the difference when it comes to Council’s delegated oversight is irrelevant.
Call it a “special assessment” or “tax”, the thing is if you own property or a business in this area, you have to pay these fees via property assessment. Or you pay these fees as additional sales tax if you buy things in that area. If you don’t, you face the same legal consequences as any other form tax evasion.
The real difference is that “special assessments” are meant to be used for particular purposes, while “taxes” are for general use by a government.
Keen observers might ask: Do these particular purposes include hiring a shadow police force and maintenance crews who moonlight as demolitions techs inside our public parking garages?
No, unfortunately, some of these things seem a little out of scope. They may need to be reviewed the next time the CBID submits it’s activities for review to the Metro Council, a requirement as per ORDINANCE NO. O98-1037.
These are the things that these funds are meant to supplement alongside government activities.
The ordinance that established this Business Improvement District is very clear that the board overseeing the District Management Corporation must present a review of how they spent their funds last year, and how they plan to use them next year.
It’s about as straight forward as language gets in municipal code.
It reads:
The District Management Corporation shall annually submit to the Metropolitan Council a financial report and a written report of its activities for the preceding year together with a proposed budget for the next year. The annual budget shall include a projection of revenues from the special assessment and a projection of expenditures for projects, services and activities of the District Management Corporation and shall be reviewed and approved by the Metropolitan Council, or if not approved shall be returned to the Board of Directors for revision and resubmission until the Metropolitan Council shall approve the annual budget.
So pretty normal so far.
Tax money… sorry… special assessment money is collected from one particular area of town for a select number of uses in that area. It’s lumped together by Metro, and the board of the DMC needs to submit a budget that’s essentially: “here’s what we plan to do with it next year” to Council.
Council reviews it, checks it against what they’re allowed to use it for, ideally takes input from the community affected by these funds, has space for public comment and democratic debate, makes sure they’re not doing anything absurd (like, I don’t know, paying the CEO of a non-profit’s $500,000 a year or something), and either sends it back for revision, or approves it as-is.
Timeline of CBID Budget Approvals
So in 1999, the CBID was brand new, and they submitted their first budget and it’s approved by Council. Nice!
Then again in 2000 they submit it again. Way to go, gang!
2001 comes, and so does another budget for the CBID! Wow! You’re on a streak.
2002 [file not found]. Um. Maybe it’s just not online.
2003 Back in action! Here’s the CBID budget, let’s get back on track.
Nothing.
Nothing.
Nothing
Nothing.
From what I can tell, and I’ve reached out to Metro leadership to confirm otherwise, but it does not appear like the CBID has had its budget approved by the Metro Council since 2004.
This means that tens of millions of dollars have flowed from tax … special assessments (I’ll get it soon I’ll swear) to a non-profit that has had no oversight on how those funds are spent — despite the founding document it is based on clearly saying that its board must submit their budget for approval.
Weird!
I haven’t been given any explanation of why this happened, and there is nothing I can find that says it’s no longer a requirement.
I’ve asked around about this to Council Members and Metro watchers, and there’s a lot of weird rhetoric floating around about this.
There is a conversation I’ve had in my imagination with the personification of an entity I’ll refer to amorphously as “Mr. Downtown”. Mr. Downtown tries to make some points, and I have counter-points. Here’s a back and forth I’ve had, in my mind, with “Mr. Downtown.”
Point: This isn’t actually tax, it’s a “special assessment.” It’s different.
Counter-Point: Sure, call it that, making up words is fun. I get it, the “AR” in AR-15 doesn’t stand for “automatic rifle.” But if it’s money the government can force you to give, thats called coercive revenue, and its the same category as “taxes”. It doesn’t matter if an area opted-in to it and could in theory opt-out. If you don’t pay now, you could get prosecuted. The only major difference is that these funds can only be used in particular ways, which is why there is a need for oversight on how these funds are used. And to do that, they need to submit a budget and have it reviewed and approved by Council.
Point: No, you don’t get it. They DID submit their budget, silly! It was in the packet attached to the general budget the Council approved.
Counter-Point: Sorry, you mean this page? The one that says “This component unit’s budget is presented here for information only, and is not subject to line-item modification by the Council”? I’m not sure that gives Council the sense that this is their opportunity to “review and approve” these funds… Council has no ability to adjust anything in these documents attached to the general budget. This is a very flimsy argument, where did you say you went to law school?
Point: Look, how were we supposed to even know what ordinances are relevant to things like this? It was so long ago! Do you remember what you were doing in 1998?
Counter-Point: The ordinance is listed right here. You can look it up in Legistar.
Point: You know, there’s just so many moving pieces. Who is supposed to keep track of what needs to be approved when for all the money that goes everywhere?
Counter-Point: The Director of Finance. Metro Charter Sec. 8.103. (f)
Point: Here’s the thing. I’ve always thought of myself as kind of a mentor to you. Mikey, can I call you ‘Mikey’? I think you’re… misunderstanding the whole point of the CBID. The board say what they want to do with their money and Metro gives it to them to them so they can do it. It’s their money, kinda sorta. You know, Mikey, the world’s a little more complicated than on the West Wing. You’re gonna have to get that if you wanna play the game.
Counter-Point: Please don’t call me that. But you’re saying a group of private citizens can have the government obtain taxe… assess… look they’re just taxes, ok! They take taxes from people, and then an unelected board takes that money and they use it however they want, including paying their CEO $485,196 a year? All while they hire a rotating cast of vendors to do the actual labor—some operating like a shadow police force, and others somehow transforming our library parking garage into something out of Chernobyl?
Point: You’re shouting.
Counter-Point: You’re describing a shadow government that is accountable to no one. You know, there’s nothing stopping them from pooling their money in a regular non-profit and doing community clean-ups and hiring private security. That’s what it looks like to use their own money and resources however they want. But if they’re using public infrastructure, including the threat of legal penalties for not paying your non-tax, there has to be some oversight.
Point: But who is Council to say where money goes for what reasons?
Counter-Point: Literally it is their job.
Point: Yeah. But like, what is a “job”, you know?
Counter-Point: They have the legal obligation to review these budgets. Otherwise all expenses sent to the District Management Corporation are unauthorized and illegal.
Point: Well, what can you do?
Counter-Point: I could contact the state comptroller and inform they that you’re allocating millions of dollars a year without authorization?
Point: Wow! So you’ll burn it all down just so you can have your way. Homeless shelters on every corner in this guy’s Nashville. Needle exchanges in the Gulch, and sex change clinics up and down Lower Broadway.
Counter-Point: I never said anything like that. I do have opinions about what a good use of this money is if we actually improve our city, especially with BILLIONS of dollars disappearing from the social safety net the next few years. But mostly I’d just appreciate it if we actually followed the democratic process, and had some checks and balances. And I’m not asking you to change anything, I’m saying we should just follow the law as it is already exists. And the way it exists will create better outcomes for the city. It’s going to force debate and conversation about how best to use these funds in that area. We will get better results when we have more diverse voices in the mix deciding how these funds are used.
Point: DEI! He said DEI! Arrest him!
Counter-Point: Ok now you’re the one shouting. Look I’m not inventing these problems and they’re not unique to our city. Business Improvement Districts (BIDs) solve some problems, but they create new ones. You need things oversight place to keep them from getting out of hand. Here’s a report from the Goldman School of Public Policy at UC Berkeley called “Improvements for Whom? Business Improvement Districts and Their Impact on Communities” you should read it. It has four recommendations to make BIDs have a better influence on the community:
Restrict political advocacy by BIDs.
Increase transparency and public oversight.
Include renters, artists, and community members in BID governance.
Study BID impacts in more cities and across different district types.
Point: Well. I still think they should be able to hire off duty police to handle the homeless problem. One time a homeless guy asked Morgan Wallen for bus money but we’re pretty sure he was going to use it to buy drugs, and I’m normally very comfortable around bum… unhoused people. Every week I take my leftovers from The Catbird Seat and I give it to this African American gentleman on my street who …
Counter-Point: Hey, I gotta run. But hold that thought, and maybe bring that up at public comment when the CBID budget is up for discussion! I think it’ll go over really well!