Archive for the ‘City Council’ Category

What Pubic Retiree Healthcare Costs You As A Taxpayer

Tuesday, January 16th, 2018

What Pubic Retiree Healthcare Costs You As A Taxpayer

 

January 16, 2018

 

Years ago, I started investigating healthcare costs for active employees and retirees at the MLGW, the City of Memphis, Shelby County and the school system. At that point (before 2007) there was no requirement that the unfunded liability of medical and other costs for retirees be put on the financial statements of the various local governmental units. I started checking on the unfunded liability which was called OPEB. (Other Post Employment Benefits, mainly health care costs and life insurance).

I was shocked by the amount of unfunded liability. Look at the history of this huge unfunded liability over a certain time period.

OPEB History- unfunded liability

MLGW 2007            658 million

MLGW           2015              461 million   down 30% from 2007

 

City of Memphis 2008                  857 million

City of Memphis 2015                  730 million

City of Memphis 2017                  504 million  down 58% from 2008

 

Old Memphis School System 2008                   1.34 billion

Current Shelby County School System 2016  1.25 billion   down 9% from 2008

 

Shelby County Government 2007                     319 million

Shelby County Government 2016                     101 million   down 69% from 2007

It is obvious that this is still a large problem. But as usual, our Shelby County government recognized the problem early (in 2007 when notified by GASB) and acted. The City of Memphis was slow in acting but eventually addressed the problem. The Memphis school  system as usual has stuck its head in the sand and is hoping for a government bailout. The MLGW is well healed and is slowly addressing the problem.

The next question that occurred to me was “What is the cost to the taxpayers for the portion of annual health care premiums for retirees paid by taxpayers?” I asked for and received the following answers.

MLGW           2528 retirees’ cost/retiree paid by rate payers            $11,733/year

City of Memphis 1524 retirees’  cost/retiree paid by taxpayers            $6466/year

Shelby County   1941 retirees’   cost/retiree paid by taxpayers            $4658/year

 

It is obvious that the MLGW is different and that Shelby County Government is more efficient. In my next posting I will take up the cost to public employees (active and retired) for their annual health care premiums so that you can compare your cost to what public employees pay and look at the annual cost rise since the affordable care act came into our lives.

More Info Needed Before Moving Brooks Museum Downtown

Wednesday, December 27th, 2017

December 27, 2017

What We Need Before Spending Millions On Moving Brooks Museum Downtown

 

Citing “declining enrollment” and “overwhelming real estate debt,” the Memphis College of Art — the storied Overton Park institution that traces its origins to at least the 1930s — on Tuesday announced plans to close. This CA article published October 24th of this year points out the problem of piling on debt without proper planning for debt retirement and a sound financial base.

 

As the plan for the Brooks museum rolls forward by the City of Memphis, let us look back on available information on the two institutions. The only available source of public hard financial information on the Memphis College of Art and the Brooks Museum is the 990 forms (Return of Organization Exempt From Income Tax) provided by Guidestar.

Therefore, I pulled up these forms and here is a brief report on the three last available years.

Memphis College of Art, form 990 for years ending June 30, 2014, 2015 and 2016. The figure shown are the net assets or fund balances (total assets less total liabilities).

June 30, 2014                         $14.8 million

June 30, 2015                         $18.1 million

June 30, 2016                         $16.6 million

 

Memphis Brooks Museum of Art Inc

June 30, 2014                         $6.2 million

June 30, 2015                         $5.8 million

June 30, 2016                         $5.0 million

 

I have attached the complete relevant 990 forms which gives additional information of the Memphis College of Art and The Brooks museum. However, these 990 forms may not reveal the complete story. Apparently, the College of Art made some bad decisions about opening additional facilities downtown.

 

What is needed before embarking on the expensive downtown move by Brooks is a complete most recent financial audit of the Brooks so that all information about expenses, income and debt is fully known by the Memphis taxpayers. The 990 forms do not give enough information to make a informed decision.

 

MLGW Rate Increases

Wednesday, December 13th, 2017

MLGW Rate Increases

 

MLGW has proposed rate increases in gas, electric and water rates over the next few years. MLGW management says that part of the need for increases are related to decreasing sales in product. Well I decided to review the latest annual report available (the year ending December 31st, 2016).

 

The City Charter designates the disposition of revenue from MLGW three divisions, light, gas and water. MLGW is not a profit-making organization but it is required to breakeven and pay it debts and keep a reserve to cover its debts and emergencies with a proper margin. It also pays to the City of Memphis a payment like a for profit business would pay.

 

I have looked at the statements of the three divisions for the year ended 12/31/16 and the electric division lost $12 million dollars after paying $40 million to the City of Memphis. The Gas Division lost $14 million after paying $17.5 million to the City of Memphis. The water division made $9.8 million after paying $4.4 million to the City of Memphis. It is not clear if this includes the 2 million payment for the FedEx arena.

 

It seems clear to me that the MLGW needs a price increase to keep its financial situation secure. It is a well-run organization with well trained employees and with advanced technical knowledge.

 

Now I want to point out that MLGW employees have a much richer health care benefits then the City of Memphis and Shelby County employees. I am gathering current information of these benefits and will be publishing information as soon as I obtain the data.

 

People are becoming energy savers and the combination of advanced energy saving appliances like light bulbs and AC/heating units and smart meters are saving energy and this is a good thing for the ecology. Again this is a well run organization with competitive rates and I hope that whomever replaces Jerry Collins will be as able as he has been.

This and That About The Bicentennial Gateway Project

Monday, November 27th, 2017

This and That About The Bicentennial Gateway Project

 

I recently published the details about this huge proposed project but there were several unanswered questions that needed answers.

 

Here are the points that needed clarification and I pursued and got the answers.

 

On the list for original amounts spent for the presentation of this project was $518,270.97 paid to Stephen Schreiner & Renee Barrett. It turns out that that this amount was for the purchase of two pieces of property close to Bass Pro at 369 and 371 North Main.

Another question concerned the funding for this project which showed Annual Revenues from Land Leases of $297,000 the first year and a total of $3.7 million through 2031. The answer from the City of Memphis was the underlying assumption from the RKG report that the City might lease City-owned land to private entities, the specific land under consideration would be Mud Island. This is only an assumption, as no deal or structure has been developed for a project at this location.

Another question concerned the Brooks Museum of Art and the amount of support that the City of Memphis gives to the Brooks yearly. The City responded that in the FY 2016 net expenditures from the City to the Brooks was $571,448.00. I have attached the latest 990 form detailing the finances of the Brooks Museum. It basically depends on contributions from the City of Memphis and outside donors.

 

The other big factor is the type of bonds that are proposed to finance this and other similar projects like the Fairgrounds project. I am told they will be revenue bonds which generally mean that the City of Memphis, Shelby County and other governmental organizations with tax powers will not be on the hook if the project does not pay for itself on sales tax and property tax increasing revenues. Here is typical revenue bond language.

THE SERIES XXXX BONDS AND THE INTEREST THEREON DO NOT NOW AND SHALL NEVER CONSTITUTE A CHARGE AGAINST THE GENERAL CREDIT OR TAXING POWERS OF THE CITY, THE STATE OF TENNESSEE (THE “STATE”) OR ANY POLITICAL SUBDIVISION THEREOF WITHOUT LIMITATION, THE CITY, SHELBY COUNTY, TENNESSEE (THE “COUNTY”) and so on and so on.

So what this means, if it is revenue bond financing, that the bond buyer is at risk and will take the haircut if the income projections do not meet the projections. Hopefully they will and if so fine. If not, the bond holders suffer. However the reputation of the City will also suffer as it now happening in Puerto Rico and the City of Chicago and the state of Illinois and the City of Detroit in the past.

 

This downtown project and the Fairgrounds proposal needs a lot more discussion and disclosure. What are the risks and what are the rewards?

 

 

 

 

 

 

$281M Downtown Cultural Center And Now $160 M For The Fairgrounds

Wednesday, November 8th, 2017

$281M Downtown Cultural Center And Now $160 M For The Fairgrounds

 

I have to give the administration credit for thinking big. And it all will be paid, we hope, with money generated by tax incremental financing due to increased tourism sales taxes and state economic development funds.

The presentation on the downtown cultural center by the administration was well done and presented. I looked at the plan and wondered what had been spent so far for the well done concept work. So I asked the City to tell me what has been spent so far for this work. Here is their answer.

 

Original amounts for the Bicentennial Gateway development project.

# Vendor Original Amount

 33400 RKG Associates $40,000 and another $40,000 for Amendment #1

 33401 SR Consulting $250,000 and another $150,000 for Amendment #1

 33413 Bass, Berry and Sims $250,000

 33885 CH Johnson Consulting $20,000 and another $18,000 for Amendment #1

 34548 Glankler Brown $25,000

 34607 Archimania $128,325

 34619 Stephen Schreiner & Renee Barrett $518,270.97

That is a total so far that they have admitted to of $1.439 million.

I will pursue this further as we need to know what has been spent in addition to the above plus what has been spent on the fairgrounds planning so far. If you have additional questions and want further information let me know.

$281 Million For A Freshwater Aquarium And Downtown Cultural Center!!

Tuesday, October 24th, 2017

$281 Million For A Freshwater Aquarium And Downtown Cultural Center!!

 

Talk about an ambitious plan, this one takes the cake. Here are the details in a well presented and concise exhibit. The major elements of the proposed plan are as shown below.

  • Close Monroe between Front Street and Riverside Drive.
  • Create a new cultural center bounded by Union Avenue on the south, Front Street on the east, Riverside drive on west and the Cossitt Library on the north. This cultural center may become the relocation building for the Brooks Museum.
  • Build a pedestrian bridge going across Wolf River to Mud Island.
  • On Mud Island build a new 250 foot tall fresh water aquarium.
  • Upgrade the mosquito infested Mud Island Amphitheatre to something better suited to the outdoor concert business.

I must say I am impressed with the whole concept and plan. The Mud Island investment has been a failure as it never developed continuing attractions to draw people to come. It should have had bars and restaurants along the west side overlooking the river. I believe this was never done because it was opposed by the Beale Street interests. Also access to the island was limited to the north entrance.

Now as to the Brooks Museum. This is not mentioned in the plan but the CA article of October 18th said that this was a possibility. The Brooks Museum has a fine collection of art and much of it cannot be displayed as they do not have the space. Also there is a possibility this cultural center being the site for the William Eggleston collection, a world famous collection of photographs.

Now as to paying for this plan! The exhibit shows the cost and how it would be financed. Excluding the Pinch District Development and the Convention Center Renovation, the document projects a cost of $282 million.

  • Aquarium Museum $121 Million
  • River Park & Pedestrian Bridge $35 million
  • Cultural Center and Monroe Terrace $84 million
  • Fourth Bluff and Civic Commons $21 million
  • Riverfront Improvement $20 Million

For a total of about $282 million.

Basically they claim that it would be financed with the following items.

  • $100 million paid for by increases every year in incremental sales tax revenues in the expanded TDZ zone.
  • $74 million in net new sales taxes from sales of consumer goods.
  • $30 million in new aquarium sales taxes.
  • $7.3 million in sales taxes from the cultural center attendance and purchases.

 

  • $2.3 million from hospitality contribution (convention center hotels)
  • $3.7 million from land leases

The questionable items appear to be the projected growth of TDZ sales tax revenue and the amount of private equity and philanthropy that will be pledged to the project. The other item that occurs to me is the question of philanthropy. What will Bass Pro contribute to this project as Bass Pro seems to have a great upside when we are talking about a fresh water aquarium. After all they are in the business of fishing and hunting and if you look at what they spent on their Big Cedar Lodge near Branson Missouri, they certainly have a great upside in seeing this downtown Memphis project succeed.

The real big question is what has plagued past public projects. PROJECT PRICE CREEP!! As with other public projects (think Beale Street Landing) and with the difficulty of construction on the unstable riverfront and the necessity of building in an earthquake zone) can it be done at the projected cost?

What do you think about this big idea for downtown and Mud Island?

Liberty Bowl Finances

Wednesday, September 27th, 2017

Liberty Bowl Finances

 

There has been a lot of discussion about the Liberty Bowl operation and the finances of that facility. A good friend with a lot of background about the Liberty Bowl and park operations asked me about the Liberty Bowl finances.

So I started asking for the figures. Here is what I learned.

A recent newspaper article said that the stadium had a $500,000 annual operating deficit. I asked for an annual stadium financial statement and here it is. The stadium lost $1.25 million last year. The total revenue was $1.7 million. The expenses were almost $3 million ($2,918,434) with the highest expenses being $2.16 million for telephone/communications and $523,000 for miscellaneous professional services.

The major revenue items were rental fees ($967,000), concessions ($215,000) and parking ($73,000). Miscellaneous income was $371,000 and corporate sponsorship $75,000. In looking at the contract I come up with the following.

Suite license for 38 suites for $7,800 per game

Advertising rights fee for $25,000 per game

Parking for $50,000 per game

Base rent per game $39,200 per game

Total $122,000 per game times 6 games = $732,000 per year. The difference was concessions at $215,000.

So the $1.25 million loss was a calculated figure that the taxpayers pay. It seems to me that at least the sports fans and those that attend the events at the Liberty Bowl should pay enough to make the operation at least a breakeven figure. Your thoughts would be appreciated.

Non Profits In Memphis

Wednesday, July 26th, 2017

Non Profits In Memphis

 

July 25, 2017

 

Not many people know the extent of nonprofit organizations in Memphis and the surrounding area. A recent count put the number of local non profits at over 3000 with an annual expenditure of over $6 billion and total assets of over $12 billion.

A nonprofit organization is an organization that has been formed by a group of people in order “to pursue a common not-for-profit goal”, that is, to pursue a stated goal without the intention of distributing excess revenue to members or leaders. A nonprofit organization is often dedicated to furthering a particular social cause or advocating for a particular point of view. In economic terms, a nonprofit organization uses its surplus revenues to further achieve its purpose or mission, rather than distributing its surplus income to the organization’s shareholders (or equivalents) as profit or dividends.  Nonprofit legal structure is one that will often have taxation implications, particularly where the nonprofit seeks income tax exemption or charitable status.

 

Donations for non profits comes from either public tax money, from private donations or from their nonprofits’ investment income. How can donors evaluate whether or not a charity will ultimately deliver on their promise or mission? In the nonprofit world, however, there is no common, easily understood measure of success. There are three types of data that might be used to measure a nonprofit’s success, input, output and results. Input can be measured by reading the 990 (Return of Organizations Exempt From Income Tax) form available through Guidestar or others. Output and results are more difficult to evaluate.

What I am looking for when looking at a local non profit is the mission statement, revenue and sources of revenue, expenses, net assets and fund balances and compensation of officers, directors, trustees, key employees, highest compensated employees and independent contractors. Also I want to know about family relationships amongst these people if any.

I have attached a partial list of non profits in the Memphis area. I have listed them from the highest in gross receipts to the lowest. (St. Jude would be second in gross receipts at $1.029 billion). Look over the list and let me know of others not listed about which you would like further information such as their 990 form. I can provide this to you or you can go to guidestar to get it yourself. Many of these organizations do a great job and provide needed services. There are no doubt some that are questionable. We need to expose the bad ones and support the good ones.

The Local Charter School Fight

Wednesday, July 5th, 2017

Our Shelby County School Board has an aggressive legal bent. They seem ready to sue at any hint of competition from the charter school community or push back from taxpayers. Already they have spent over $340,000 on a lawsuit against the state of Tennessee claiming that education in Tennessee is underfunded and not adequate as required by the Tennessee Constitution. They want the school boards in Tennessee to set an adequate tax rate for education separate from the elected local politicians.

 

Now they are proposing a resolution from general counsel Rodney Moore to “research and pursue any and all appropriate legal and judicial remedies including but not limited to legal action” to stop the Achievement School District from operating grades it wasn’t authorized to operate.

 

The problem here is that the majority of the Shelby County School Board does not want competition from any charter schools or any state imposed Achievement School District schools. They think that they know best and they should not have any competition from other education ideas or other means or educating our children.

 

The old Memphis School Board and the successor Shelby County School Board has a record of failure and cannot point to much success. The old centrally controlled model does not work. Competition schools that are measured against the centrally controlled schools are the answer. Let the best results win.

 

The real prize is the tax money spent on education. Now we have a central bureaucracy which last year spent $11,231 per student. The 45 charter schools got only 70% of that piece of the pie at $7826 per student. A large part of the difference is the bureaucracy and the teachers union. Here is a current copy of the teachers/helpers contract. When you read the contract you will see that the salary schedule Appendix A was left blank. I have asked again for this information but have received no answer yet. Here is the salary schedule from a previous contract. Also here is a comparison article on management salaries between the old Memphis City School administration and the old better run Shelby County School System. The new Shelby County School System needs competition and needs to be leaner and learn to do with less.

 

The charter and alternate schools make their own deals with teachers but the teachers have to meet state teacher licensing requirements. They have more freedom to experiment with new ideas for education. Each year all schools should be tested in a rigorous method that can be checked for cheating and let the results speak for themselves. Stop the lawsuits and let us have education competition so that parents can have a choice.

What Is The Cost of Minority Purchasing Policies?

Monday, June 12th, 2017

What Is The Cost of Minority Purchasing Policies?

June 12, 2017

 

 

What Is The Cost of Minority Purchasing Policies?

 

There has recently been a lot of discussion in the City and the County governments about the amount of minority purchasing and LOSB (locally owned small business).

Both governments have spent a lot of time on studies about how to expand the opportunity of minorities and LOSBs to get a bigger share of the public purchasing pie.

It is difficult to pull together the total cost of these efforts but the 2017 City of Memphis adopted budget shows $895,000 dollars under the title “EQUAL BUSINESS OPPORTUNITY AND DEVELOPMENT PROGRAM”.

Shelby County Commissioners voted to rehire consultants Mason Tillman Associates at a cost of $80,000 to help rewrite the county’s procurement procedures.

The 8-4 vote followed a debate on whether a consultant was needed, whether it could be done locally and whether the contract included litigation support.

Mason Tillman conducted the county’s $310,000 disparity study, which analyzed purchasing data from Jan. 1 2012 to Dec. 31, 2014. They found that contracts went overwhelmingly to non-minority males and that 55 percent of the contracts were awarded to firms outside of the county.

I share their desire to expand their share of the pie and allow qualified vendors to get experience and expertise in this area. My concern is the cost to the taxpayers for this expanded sharing.

The ordinance allows a bidding preference as follows. 5% for contracts up to $500,000 and under, 3% for contracts greater than $500,000 and under $1 million and 2% for contracts greater than $1 million. For construction contracts over $2 million a 2% preference will be given to the general contractor when they include LOSB who collectively have 50% of the total prime contract.

This all sounds very complicated and could involve some serious money.

Again let me say that the ability to help LOSBs to grow and gain experience is a good thing as long as it is limited in cost and time in the future. These businesses should use the public money preference and experience to grow their capabilities so that the major part of their future business will be private sector business.

Now my main concern is seeing these LOSB and minority contracts online with final contract amount and competitive bids clearly shown and the amount of preference, if any, shown online.

For example if the City or the County puts out a bid for cleaning supplies. The taxpayers should be able to see the request for proposals (RFPs).  When the bids are opened, the public should be able to see the bids of all bidders on line. Then when the contract is awarded, the public should be able to see the winning low bidder and the contract amount and all other higher bids. If the winning bidder is not the low bidder, then an explanation should be given publically on line for the choice of the successful bidder selection and the cost preference calculation.  Unless I have missed something online, that is not the current procedure.

In July of 2016 I asked the City and the County for their procedures and here is what they replied.

05/26/2016

Joe Saino

Memphis TN

RE: PUBLIC RECORDS REQUEST of 5/26/2016, Reference # W003337-052616

Dear Saino,

The City received a public records request from you on 5/26/2016. Your request mentioned “When sealed bids are received on a project or item, are the various bids put on line for the public to see and is the low bidder selected and if not are the reasons available for the public to see for the reason that the low bidder is not selected?”

 

Per the custodian:

Once sealed bids are opened and a project is awarded, the losing bids are not placed online—but can be requested via Open Records.  The winning bid is attached to the resulting contract.    If the lowest bid is not chosen, the Division must supply a letter justifying the reasons for recommending that the award be made to a different bidder. (see Section 10.3.1 of the Purchasing Policies and Procedures Manual)

10.3.1 Bid Award. If the purchase was procured via competitive sealed bidding or multi-step sealed bidding, the City will award the purchase order or contract to the lowest and best bidder. The B&C must be accompanied by a copy of the bid tabulation sheet. The bid tabulation sheet must list all bids submitted in response to the solicitation and be signed by the personnel who completed the bid tabulation sheet. If the division recommends that the purchase order or contract be awarded to one other than the lowest bidder, a full and complete statement of the reasons must accompany the recommendation, for review and approval by the Purchasing Agent.

 

This completes your public records request with the City of Memphis.

Sincerely,

Public Records Office

City of Memphis

 

THE FOLLOWING IS AN EMAIL RESPONSE TO A QUESTION TO HARVEY KENNEDY AT THE COUNTY ABOUT RESULTS OF SELAED BIDS.

 

Mr. Saino,

 

In response to your questions:

 

  1. If it is a sealed bid, each vendor can review the results online in Mercury Commerce. If it is an RFP, vendors will have to make a public records request and all of the information can be viewed.
  2. There are other criteria for RFP’s and all bids must meet specifications.  Cost is always an important factor but not the only basis for award.  I could provide you with an evaluation sheet for one of our bids if you would like to see one.

 

 

Harvey Kennedy

Chief Administrative Officer

Shelby County Government

 

As you see it is possible to get this information but it is not easy. Why not put this information online so that the public can look and see the all the bids and the reasons for the selection if not the low bid.

I would like anyone reading this posting that has experience in this public purchasing area to let me know what is really happening. Also I will be asking public officials why the taxpayers cannot know this information and the cost of these policies without having to put in a public records request.

What do you think?