Archive for February, 2016

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?