Archive for the ‘Riverfront Development’ Category

Sleepless Or Desperate In Memphis

Monday, April 24th, 2017

Sleepless Or Desperate In Memphis

April 24, 2017

 

I must admit that I have been sleepless since reading about the Airport expansion and the Pop-Up Park project reported recently in the CA.

As a taxpayer, the Airport Authority and the Riverfront Development  Corporation are two of my least favorite organizations.

First the Airport Authority. This is a big time operation in terms of expenditures but look at the results.

In the year 2000 we had 10.6 million total passengers. In 2007 we had about the same numbers of total passengers. In 2013 we had 5.5 million passengers. Yet in 2001 they were planning the three story parking garage addition. In 2007 they stated in the CAFR that the new garage would proceed at a cost of $70 million dollars. Forward to 2009 and read the Memphis Business Journal article about the new $150 million dollar parking garage. Where did the money come from? $20 million from the Federal Aviation Administration, $50 million from the Tennessee Department of Transportation with the remainder in airport authority bonds. Get the picture. The Federal and State money is free money (it really is taxpayer money) and must be spent regardless of the benefits of the investment.

Then in 2014 here is what was reported.

Memphis International Airport lashed back Thursday at last year’s de-hubbing by

Delta Air Lines with a $114 million plan to shrink the facility but improve the

experience for airlines and passengers.

Airport managers presented plans to spend $3 million tearing down a fourth of the

gates and $111 million upgrading much of what remains. They propose to consolidate activity into a refurbished and expanded B Concourse, mothball remaining gates in the other two terminals and leave ticket lobbies and the front of the airport unchanged.

Now we read the following.

Airport unveils $214 million plan

Memphis International Airport proposes to spend $214 million over five years on a transformative project that will build all-new passenger facilities in the airport’s oldest concourse.

Airport officials on Thursday unveiled a redesign of a three-year-old preliminary concept for B Concourse modernization and said the price tag is up about $100 million from what was previously estimated.

Airport president Scott Brockman said the new number is “all-in,” including non-construction costs and improvements that will help minimize impact on passengers when the B Concourse is shut down for reconstruction in 2018.

The modernization, which should begin in early 2018, will focus on expanding a majority of the B Concourse’s gates, leaving one section the same size but updated. It will literally raise the roof and blow out the exterior walls on the reconstructed sections, increasing ceiling height to 14 to 19 feet from nine feet and widening the concourse by about 30 to 40 feet.

If anyone can make sense of all these expenditures and where we are heading, please let me know.

It seems to me what we need is lower fares combines with direct flights from Memphis to desirable locations. Recently some of my family went to Mexico for spring break. They drove to Nashville to get lower fares and direct flights. Go figure.

Considering the size of the Airport expenditures the Pop-Up Park project seems insignificant by the Riverfront Development Corporation. They want to keep their jobs at RDC and they have to come up with ideas to keep themselves relevant. Put down some basketball courts and a skating rink and then take it back up when Memphis in May is over.

What are your thoughts about these projects? I would love to hear from you.

Where Does The Increased Downtown Tax Revenue Come From?

Tuesday, March 22nd, 2016

March 22, 2016

Where Does The Increased Downtown Tax Revenue Come From?

I read with interest the March 20th Sunday article in the Commercial Appeal entitled Bass Pro sales near $45M in nine months. This would be from May 2015 thru January 2016. This is indeed good news for cash strapped Memphis but the question still remains in my mind, what downtown sales tax businesses are responsible for an increase of over $7 million in Tourist Development Zone sales taxes returned to Memphis in the fiscal year from July 1, 2014 to June 30, 2015. Read the article at http://www.memphisshelbyinform.com/2016/02/16/tdz-tourist-development-zone-revenue-review/

 

Now the CA article claimed that the Bass Pro Pyramid sales for June 2015 were $7.1 million. So let us assume that May 2015 (the opening month) was $6 million or a total for the first two months of $13 million. This would account for about $1.17 million in additional sales tax returns to the downtown TDZ. But there was over $7 million extra TDZ returns in the year ending June 30, 2015.  This is the question I asked the Downtown Memphis Commission? They said they would investigate and let me know. To date I have heard nothing from them.

In any event, considering that Memphis is in such desperate need of additional income, it is good news to hear that the incremental sales taxes for 2015 over and above 2014 are up over $7 million. Let us hope that this trend continues.

Can any of you readers tell me what downtown businesses in the downtown TDZ zone, other than Bass Pro, could be responsible for the big increase in TDZ incremental sales taxes? Let me know at memphisshelbyinform@gmail.com.

 

TDZ (Tourist Development Zone) Revenue Review

Tuesday, February 16th, 2016

February 16, 2016

TDZ (Tourist Development Zone) Revenue Review

I have been investigating the revenue flowing to the City of Memphis for the downtown TDZ zone which includes Bass Pro. This has been quite interesting and informative.

First I went to the State of Tennessee and got on their website that shows sales tax revenue sent to the City of Memphis for various items like state sales tax (the 7% sales tax), mixed drink tax and particularly the TDZ tax for the downtown tourist development zone. Here is the result of my investigation for the fiscal years ending June 30 of the years shown.

TDZ Zone, 7% state sales tax receipts TDZ Zone, 2-1/4% sales tax receipts Total sales tax receipts for year
2012 $12.1 million $1.1 million $13.2 million
2013 $12.7 million $1.6 million $14.3 million
2014 $12 million $1 million $13.1 million
2015 $16.8 million $3.6 million $20.5 million

 

Therefore 2015 shows an increase of over $7 million from 2014. This is indeed good news but where does it come from in the downtown TDZ? Bass Pro did not open its doors until May 2015 so it is not likely to account for the increase in sales taxes in 2 months of operation.

I asked the state of Tennessee about what businesses the sales taxes come from in the TDZ. They replied that state law does not allow them to give out that information as that would allow competitors to know the amount of sales from the various tax collecting businesses This restriction is reasonable.  Does the City of Memphis know or have a right to audit the sales figures? I do not know but I am sure the State of Tennessee has that right.  I called the Downtown Memphis Commission office and asked them where they thought the extra sales tax revenue was coming from. I have yet to receive their answer.

It will be interesting to see what happens in the future. There is a question about the Bass Pro contract concerning the rent which is based on 2% of sales. However there are questions about the 2% rent formula that will possibly not apply to leased facilities in Bass Pro. Also questions about the income from the elevator ride to the top being reduced by costs of employees and other restaurant and elevator expenses. This would reduce the 2% rent payment amount.

In any event, the news of the increase in TDZ revenue in the year ending June 30, 2015 is good news if correct. What are your thoughts?

ROI (Return On Investment)

Monday, February 8th, 2016

February 8, 2016

 

ROI (Return On Investment)

 

Recently I asked for the following information from the Riverfront Development Corporation.

 

I would like to know the final cost for the Beale Street Landing

 

I would like to have the most recent financial statement concerning the income and expense of the Landing operation showing income and expenses.

 

I would like to have the most recent annual financial statement for the RDC.

 

I received a prompt answer to these questions (with some delay due to my fault). You can look at the attached results.

 

They say the cost was $43.5 million with the Feds and State kicking $11.8 million, Housing and Community $1 million and the City $30.6 million. All of this is taxpayer money. Now we all recognize that parks, playgrounds, running and biking trails and other civic amenities do not pay a return on investment in a true business sense. However this restaurant/souvenir shop and boat landing should pay a better return than is shown by the landing operation income and expense sheet shown above. Except for the Foundation Corporate Grant of $75,000, it is losing money each month. Maybe the additional income generated by river boat tourists landings make up for some of this but could the landings have been done without this $43 million dollar project? Virginia McLean certainly thinks so. Here is what she told me recently.

 

Our new $43M taxpayer funded boat dock probably might make it easier (at the right water-levels) for passengers to board and has probably led to more business for our local daily excursion boat company, but I’m not absolutely certain about either of those points, and I can’t imagine that Beale Street Landing has had a serious impact on multi-state-city riverboat cruises.  The boat companies appear to be promoting Southern history, food, and music as draws for cruises on the Mississippi River. They dock at Natchez, Vicksburg, Helena, Paducah, to name a few, and those cities/towns don’t have expensive new boat docks. The boats appear to just tie up at the shore (like they still do here at Greenbelt Park when water levels are low ) or dock at historic landings like in St. Louis on the old landing which is adjacent & beneath the plaza the Arch sits on or at basic, simple open-air ticket-sale type places like in New Orleans’s Woldenberg Park. Personally I think Mud Island River Park’s landing would probably beat out anything, including Beale Street Landing. When the boats docked over there and if it was being run properly visitors would have had access to restaurants, a music, pretty park, amphitheater, and via monorail or skywalk downtown city by foot. 

 

I’ll stick with the idea that we didn’t really need it, couldn’t afford it, and now what do we do about running and maintaining it?  

 

The Mississippi River is our greatest asset but it is huge and powerful and maintaining anything on the river always ends up costing more than expected. The Beale Street Landing will continue to cost us in the future to maintain it. We do not need the Riverfront Development Corporation to guide and lead changes to Mud Island River Park considering their past history. What do you think?

Bass Pro Fudge Sales

Saturday, December 26th, 2015

December 21, 2015

There was an interesting article in the CA on December 18, reporting on a large number of visitors to the Bass Pro Shops at the Pyramid. According to the article there were 2 million customers in the first 7-1/2 months. I am hopeful that this report will translate into enough sales taxes that will pay off the millions of dollars that we borrowed to pay for this development. Bass Pro officials didn’t say how the store is performing financially, but an official said the general store has sold 27 tons of fudge. “That’s a lot of fudge,” he said. Let us hope all that fudge will translate into revenue and not a bellyache.

$197 million in taxable and tax exempt bonds were issued for this project. These TDZ revenues to pay off these bonds are received in one lump sum payments from the state in September of each year based on incremental state and local sales tax collections in the TDZ zone by the state as of June 30 of that same year. The TDZ revenues in 2011 shows $12 million none of which came from Bass Pro.

The initial projected TDZ revenue for June 2015 was $20.2 million, an increase of about $8 million due to the Bass Pro Pyramid project. Obviously the delay in the construction of the project will probably cut that figure but I would like to know what the actual figure is for the year ending June 2015. I have asked for this information from the City of Memphis but to date I have not received an answer. Let us hope that that the fudge and moon pie sales and hopefully more expensive items will indicate that we have a bright future for this huge project. Believe me, I want it to succeed.

Bass Pro Pyramid Review

Saturday, November 14th, 2015

November 13, 2015

Bass Pro Pyramid Review

Local ABC 24 called and asked me to comment on Bass Pro after 6 months from opening. http://www.localmemphis.com/news/local-news/final-hurdle-remains-for-bass-pro-and-pinch-district

It so happened that I had just spent all day several days previously touring Rhodes College, St Jude and Bass Pro so naturally I am an expert. It was a Wednesday when my wife and I and several out of town visitors did this tour. I must say that Rhodes was outstanding and beautiful. My visitor was a retired orthopedic surgeon and his wife a retired nurse. (He is on the board of Westminster College in Missouri (the site of the famous Winston Churchill speech on the iron curtain). This was before the disastrous University of Missouri incident.)

After visiting Rhodes we went to St. Jude and it was wonderful. Very heartwarming to see the work that they do. Then we went to Bass Pro. As I said it was on a Wednesday at about 2 PM, not exactly prime time.

We toured the ground floor and I was very impressed with the multiple selections of Moon Pies. Also I shopped for camouflaged underwear and pajamas. My wife told me that there was a good selection of women’s clothing (groan). We paid $10 each to ride the elevator to the top and had a good view of the river. We had already had lunch earlier elsewhere but we looked over the menu and it was the typical selection of sandwiches and salads that you could get at dozens of places all over Memphis. The food selection definitely did not match the view.

Now to the financial details. The City of Memphis, through the Memphis Center City Revenue Finance Corporation  issued bonds to the tune of $192 million dollars for Warm Lit Shell ($20M) Seismic Retrofit ($25M), Landlord Contribution ($33M), Convention Center Acquisition ($67 M) Pyramid Acquisition ($3.2 M), Lonestar Acquisition ($15 M) and debt reserve and transaction cost of $$28.8 M).

This is to be paid back by increased sales tax revenue over and above a base which will be paid from the State of Tennessee’s sales tax collections for principal and interest. See a distribution report that I obtained from the state of Tennessee on past TDZ zones. Then look at the RKG Associates financial analysis and you will see that they are projectioning an increase in the first full year of $8.1 million more over and above the current level. Keep in mind that each year a new base is set. Also note that ½% of the sales tax goes to the School system.

I sincerely hope that the projections are correct or even underestimated but it will be several years before we know for sure. In the meantime Mayor elect Jim Strickland should publish information on existing City of Memphis financial obligations to the bonds issued by the Memphis Center City Revenue Finance Corporation showing the amount of the outstanding loans and the payment history of each of the obligations. The public has a right to transparency on this financial obligation. The taxpayers are on the hook for these debts even if ad valoren taxes are not. All other taxes collected by the City are obligated.

Property Developer With Other People’s Money

Monday, August 18th, 2014

August 18, 2014

Property Developer With Other People’s Money

A recent CA article stated the following “After a delay of several months, Robert Lipscomb said recently that his team is ready to move forward with a long-standing plan to redevelop the Mid-South Fairgrounds into a sports complex and retail center.”

What a remarkable statement. Most professional property developers risk their own money or gather together other investors based on their good track record. However Mr. Lipscomb uses government programs such as TDZs (Tourist Development Zones), TIFs (Tax Incremental Financing) and various State and Federal programs paid for by the general taxpayers. Bonds are issued with the promise of payment from a fund of incremental taxes over and above a predevelopment base tax rate. If the incremental taxes are there to pay off the bonds then everything works out fine. If they are not there, then the local taxpayers pick up the load.

My question is who appointed Robert Lipscomb as chief Memphis property developer? If the City of Memphis is his property development company, then we need to study the financial records of his company. The State of Tennessee through the office of (more…)

Holy Pot Hole Batman

Thursday, June 5th, 2014

June 5, 2014

More Talk, Delays And No Answers

The clock is ticking and all we get is more delays and can kicking down the road from the city Council. Positions seem to have hardened. Janice Fullilove and Joe Brown are in the “over my dead body” camp. Bill Boyd has ruled out any retiree OPEB reductions for health care. Jim Strickland and Shea Flinn want to pay up in 2 years instead of 5 but don’t come up with where the money is coming from.

The most clear eyed vision seems to come from the PFM January 2014 City of Memphis Fiscal and Management Plan. For instance on page 46 while employees were supposed to pay 30% of the cost of health insurance, the City only collected 24.2%, leaving the taxpayers to pick up nearly $4 million in cost left on the table. This under billing has been going on for a number of years.  Then on page 43, we see that we pay employees (Fire and Police Services) college incentive pay amounting to $6 million per year.

NEWS FLASH FROM THE BAT CAVE. IT IS REPORTED IN THE MORNING PAPER THAT THE CITY HAS A NEW POT HOLE BAT TRUCK REPORTED TO FILL HOLES FASTER AND CHEAPER. THE MAYOR ASKS ALL CITIZENS TO REPORT ALL HOLES DEEPER THAN KNEE HIGH.

Then on page 130 we see that one of the biggest problems we have in Memphis (potholes) is reported. According to the Division, the number of lane miles pavedl has dropped from 236 in 2007 to 105 in 2011, a decline of 56%. “WATCH OUT, HOLY POT HOLE BATMAN”.

As to the proposed health care cost reductions, this is where the real money is. According to the Affordable Care Act, costs will be reduced by $2500 dollars per family, you can keep your doctor and you can keep your plan. PERIOD. Let us take them up on this promise.

The Handling of Appointed Positions

Tuesday, May 13th, 2014

May 13, 2014

The Handling of Appointed Positions

 

As the Memphis City Council discusses the problem of unfunded liability and possible solutions I hope they do not forget the handling of appointed positions and their action in January 2001 and their action in 2004. But more on that later.

 

What are appointed positions? I recently asked Shelby County Government for their list of appointed positions. As you will see this goes from the Assessor’s office all the way to the Trustee’s office for a total annual salary of $36.6 million. The latest list that I have from the City of Memphis shows a total annual salary of $21.7 million for appointed positions.

 

The difference here is that in January 2001 the City Council proposed and passed a resolution that allowed elected and appointed people to retire after 12 years regardless of age. This disastrous decision by the City Council and the mayor has added millions of dollars to our unfunded pension liability. After a city council member stated that this resolution would help keep and retain good (more…)

What Memphis Must Do

Monday, April 7th, 2014

April 7, 2014

What Memphis Must Do

We are coming down to crunch time at the City of Memphis concerning the 2015 budget. I have researched and written on the City finances ad nauseum. Now is decision time. Do we kick the can down the road (the past favorite for many years) or step up to the plate?

Shelby County is the model for what should have been done in past years. However the leadership from the past and present city mayors and city councils has been abysmal. Too many people on the pension rolls (remember the January 2001 pension resolution which gave pensions to elected and appointed people with just 12 years of service regardless of age), too many people on retiree health care, too many people with line of duty disabilities, too many people on the payroll, too many days not working due to excessive sick days, vacations and paid days off. The county and the city have much the same governmental formats (except in the case of line of duty disability) but in the past, the county just made the hard unpopular decisions and had a clear vision of what future costs would be. The City’s vision was the next election, not future cost control.

Here is what must be done at The City. Health care reform for active and retired employees by lowering the city’s costs dramatically. Pension reform by going to a defined contribution plan for all unvested employees. Turn line of duty disability (more…)