PROVO — The Provo City Council will give $50,000 to the Downtown Business Alliance, keeping alive for three more months the nonprofit group that markets Provo's Historic Downtown to businesses and customers.

Mayor Lewis Billings applauded the decision, crediting the alliance of area business and property owners with creating "massive momentum" in downtown Provo.

The cash is necessary because the council dismantled the system that funded the alliance in May, when it determined the flat rate charged to downtown businesses was unfair since some benefited more than others. But the council made it clear it wanted the alliance to survive, and it's spending the money to prove it.

The City Council paid $40,000 from the city's general fund to operate the alliance from July through September, hoping a new funding scheme would be in place by the end of this month. The new $50,000 appropriation will cover the alliance's operations through December, covering the busy holiday season.

On Tuesday, the council gave notice it intends to resurrect the downtown business assessment with a new funding mechanism — tiered rates.

The proposed downtown economic development district would be split into three zones, with businesses on Center Street and close to it paying the highest rate and those in the other two zones paying lower assessment rates because they receive less benefit from alliance activities.

Provo will mail notices of its intent to create the district to property owners and businesses in the proposed zones. Written protests are due Oct. 15, and a public hearing is scheduled for Oct. 16 during a City Council meeting.

Strong opposition prompted the council's decision to abolish the flat assessment rate last spring, when about 30 percent of area property owners filed formal protests. The tier plan has muted some of that opposition but not all.

Richard "Dee" Bradford questioned whether the proposed district is legal and said if passed, it would spawn a lawsuit.

He argued that the proposal does not meet the Utah legal standard of a fair and equitable assessment, even with the tiered rates for the three zones. He also told the council the alliance fails to spend less than 30 percent of its funds on administrative costs — salaries, benefits, rent, travel and costs incidental to publications.

That raised a red flag for council members, but council attorney Neil Lindberg said he doesn't believe the 30 percent rule applies to the alliance. The council asked Lindberg for a legal opinion.

Bradford also argued that the alliance's future should depend on its track record since its establishment in 2001.

"They've had six years of public subsidy, of drawing this money out of the businessmen's pockets. Is it worth it?" Bradford said. "Go persuade those people you have developed an organization that is good for them. After six years they should be able to do that. If they can't, why should we continue it?"