Northampton BID petitions City Council for permission to lower fees, prepares to take a renewal vote

Tuesday, February 11, 2014
NORTHAMPTON — The Northampton Business Improvement District is petitioning the City Council to lower the fees it assesses most members by 50 percent, a first step toward a required renewal vote that would force all property owners within the downtown district to become members.

The plan under consideration calls for a new structure that would cut the fee in half for most commercial properities. The change, if approved by the council, would be implemented July 1.

The proposal starts the process for a renewal vote that is required as a result of August 2012 changes to the BID law that eliminates the ability of property owners to opt out of a BID. Given that roughly 60 percent of property owners downtown chose not to join the BID when it was created nearly five years ago, a positive renewal vote would significantly increase the size of the organization.

“This proposal acknowledges the expansion of the district and allows us the opportunity to lower fees and still work within the same budget,” said Natasha Yakovlev, interim executive director of the BID.

The changes before the council were initiated by the BID’s former executive director, Dan Yacuzzo, who stepped down from his position last month. Yakovlev said the board has yet to set a timetable for a renewal vote. While the organization could wait three years before taking such a vote, she said the board is considering acting sooner given that the BID is approaching its five-year anniversary later this year.

Up first, however, is the petition to change the fee structure. Such a move requires a new petition and approval by the council, similar to the process the BID went through in 2009. Organizers submitted the petition to the council last week and councilors will hold a public hearing at their March 20 meeting to hear arguments for and against the changes. The hearing will begin at 7:05 p.m.

Under the proposal, members would pay a fee based on the calculation of assessed valuation multiplied by .0025, down from .005. A building assessed at $500,000, for example, would pay $1,250 rather than $2,500.

Under current rules, residential condominiums and single-family residences are exempt from the BID and do not pay a fee. In its petition to the council, the BID proposes to keep the condominium exemption the same, but would like to change the exemption for single-family homes to mean any “exclusively residential buildings with less than four units.” In addition to reducing the fee that most commercial property owners would pay, the BID also wants permission to drop fees for residential buildings and mixed-used residential and commercial buildings. The new fee would be set at $50 per residential unit and 50 cents per square foot of commercial space, compared to current rules that charge $100 per residential unit and $1 per square foot of commercial space.

Hotel owners would be charged a fee based on the assessed value of the property multiplied by .0025, rather than current fees of $200 per room.

There are no proposed changes for single-purpose entertainment or cultural venues, which would continue to pay a fee equal to the assessed value multiplied by .0025.

The BID has about 110 commercial properties, or about 40 percent of the total number of commercial parcels within its downtown district. The owners of the remaining roughly 165 commercial properties within the district opted out when the BID was created in 2009.

Without lowering fees, the organization’s budget would rise considerably, something Yakovlev and the board believe would be unfair to property owners who are being forced to join by the change in state law.

“Lowering the fees is more fair,” she said. “We’ll have what we need.”

Yacuzzo said shortly after the state law was amended that the board would seek to address two complaints from both members and non-members: Fees are too high and the district is too big. Few argued with the work the BID is doing, such as beautification and maintenance efforts and event sponsorships, Yacuzzo said at the time.

While the BID is proposing a fee structure change, the petition does not seek to alter its boundaries. The BID includes the central business district, Smith College and is bounded by Trumbull Road to the north, Holyoke Street to the south, West Street to the west and midway between Hawley Street and Pomeroy Terrace to the east.

The new state law has drawn the ire of a handful of downtown property owners, two of whom filed a lawsuit against the city and the BID in federal court. In their suit, former judge W. Michael Ryan and Alan Scheinman of Holyoke argue that the law is unconstitutional. They are seeking to prevent the BID from taking a renewal vote as outlined in the new law and from assessing a fee as a result of that vote.

Scheinman said Monday it’s clear the organization is attempting to influence people about the BID before the renewal vote by offering to lower fees. He could easily see a scenario in which the BID seeks to the restore the fees in the future.

Additionally, Scheinman believes the BID cannot legally petition the council to change the exemption for single-family residences.

“There is no provision in Chapter 400 that allows for the modification of who shall and shall not be a member of the BID,” Scheinman said.

Scheinman is also part of a separate lawsuit challenging the BID’s creation three years ago. That lawsuit, which he filed with Eric Suher and David Pesuit, claims that the city violated state law in forming the BID. The city denies the claim. The case is pending in Hampshire Superior Court and could be heard this spring.

The federal lawsuit is on hold pending review by the state attorney general’s office.

Events the BID will continue to sponsor as it has for the last four-plus years include the fourth annual ice festival scheduled for this weekend. Other BID initiatives include the holiday lights, First Night, Sidewalk Sales, Restaurant Week and the Chalk Art Festival.