With Baptist Health-Fort Smith unwilling to sign a petition, the possibility of an assessment to fund operation, maintenance and repair and improvements within the Fort Smith Central Business District (CBID) looks slim.
The CBID board has worked toward a property assessment – primarily in downtown Fort Smith – for two years. The board voted in August 2019 to pursue an assessment on downtown business. The Fort Smith CBID is the only one in the state not funded by an assessment.
Before an assessment can be levied, property owners who own more than 50% of the property value in the district must sign a petition agreeing to an assessment. There are 479 individual properties in the district, some of which are owned by the same entity. Baptist Health owns about 30% of the property in terms of value in the district, said Deputy City Administrator Jeff Dingman.
“Without the hospital for it, I don’t think we’ll ever get to the 50%,” said Bill Hanna, CBID board chair.
Kim Miller, region president with Baptist Health, said they are not yet saying no to an assessment.
“We have always expressed support for this initiative. However, we are still evaluating and negotiating an appropriate amount for a not-for-profit to participate,” Miller noted in a statement to Talk Business & Politics.
So far, about 21% of property owners in terms of dollar value in the CBID have signed the petition in favor of the assessment.
“We had this idea to go out and do an assessment. We assessed all the building that aren’t assessed (including) nonprofits, etc. At really a considerable expense. And then attempting to get the majority of people signed up, it didn’t resonate, best I can tell. For these programs, it was asking people to tax themselves and that’s kind of a nonstarter,” Hanna said.
According to state law, there are two types of assessments that can be levied against real property inside a city’s improvement district – a project/improvement-specific assessment, levied to fund a “specific ‘plan of improvement,’” or a supplemental annual assessment to be used for ongoing operations or maintenance activities, Dingman said.
The petition sets the assessment as not exceeding 10 mils. In April, the CBID board voted for a cap of 10 mils on the possible property assessment and to cap any property owner at a maximum $10,000 on assessment. There are about four properties in the assessment area that cap will affect, Dingman said. Commissioners have said they will decide each year what the coming year’s assessment will be if the assessment passes. The first year’s assessment was to be set at 8 mils.
CBID Commissioner Sam Sicard, who is also president and CEO of Fort Smith-based First Bank Corp., said more property owners might be willing to sign the petition, including Baptist Health, if the cap was lower.
“I don’t believe that is the problem. I don’t think they are going to agree to it. They don’t feel they are subject to an assessment (because they are a nonprofit entity,” Hanna said.
The CBID plans to use assessment funds to support an ambassador program that would hire off-duty police officers as part of a Safety and Security program for downtown. That program would cost about $136,000 annually, according to a proposed operating budget. The assessment would also fund a Green and Clean project that would include streetscape maintenance and landscaping, which could incorporate care of flowerbeds as well as pruning and possible replacement of trees, cleaning and repairs to benches, lighting and trash receptacles, litter control, conversion of lights along Garrison Avenue to LED and more. The CBID would need about $300,000 to fund both programs, Dingman said.
Based on property values in 2019, each 1-mil assessment on properties within the CBID would amount to $38,834.47 in annual operating revenue. However, that estimate did not take into account any property owned by not for profit agencies or local, state or federal government. Of the land parcels in the CBID, 115 are tax-exempt and have no value assigned to them. These include properties owned by governments, non-profits, churches, etc., according to information provided by the CBID.
Hanna suggested that perhaps if the assessment was to go toward capital improvement projects rather than maintenance projects, more might be willing to have one. But the elephant in the room remains Baptist Health, which doesn’t appear willing to sign for an assessment no matter what the use. There was discussion about removing Baptist Health from the CBID boundaries. The property, where Baptist Health-Fort Smith is located on Towson Avenue at the far corner of the district, was not in the original boundaries of the CBID. The hospital petitioned to be included. At the time, however, the hospital, then Sparks Regional Medical Center, was a public entity.
“At that time, being part of the district meant some beneficial possibilities for them,” Dingman said.
There are problems with removing the hospital from the district. One is that Baptist Health would have to agree to be removed. Another issue is that it could lead to other nonprofits in the district could also request to be removed from the district.
“Baptist is at the far corner of the district, which allows some reason for removing them, but it could raise problems,” said Michelle Allgood, the attorney working with the CBID on the assessment question.
Another option is to dissolve the CBID, redraw the boundaries of the district and recreate it. Dingman said if the board decides to go that route, they need to have things prepared and ready to go with recreation.
“I would advise against there being a large gap in between those two things,” he said.
The board agreed to look into having a study session in January or February and with the help of a facilitator look at exactly what the role of the CBID should be, what they need to do to get there, what the future of the district should entail and whether an assessment should be pursued further.