Archive for the ‘History’ Category
November 24, 2015
Oh No, A Water Rate Increase
As a former MLGW board member, I have a history of praising and criticizing the Division. I follow and read the Division’s annual financial reports. The latest report is for the calendar year 2014 which ended December 31, 2014. The 2015 year report will not be out until well into 2016. However I am sure the Division knows what will be in the report.
Division President Jerry Collins went before the City Council to ask for a 22% water rate increase. He said that the rate increase is necessary to keep the water division from recording its second straight year of negative net income at the end of 2016. A state board is required by state law to step in and set rates after two straight years of negative net income. He said the board has consistently favored higher rates, including a 42 percent increase in Bartlett’s rates.
I have looked at the past financial reports and the Water Division has had a very slim margin (changes to net assets) in 2013 and 2014. Apparently they know that 2015 they are going to show a decrease in net assets (a loss) and without an increase they will lose more in 2016 due to losing a large customer, Cargill Corn Mill. Two years of losses would bring in the state board to dictate an increase in water rates according to state law.
The usual suspects on the City Council refuse to study the facts as they demonize the Division as heartless and cruel. Facts do not make any difference to them as they play to their voting base. Another fact is that the Water Division has been paying $2.5 million dollars per year due to the City Council agreement to finance the FedEx arena. The agreement is effective through the year 2028. During 2014 the Water Division was authorized and directed by City Council, per City resolutions, to make an additional annual $1.9 million transfer payment each year through fiscal year 2017. Transfer payments to the City for 2013 as compared to 2012 increased due to a City resolution authorizing and directing an additional payment of $1.8 million in exchange for the release of any rights the City may have had to receive water from the Water Division free of charge during 2013 under the MLGW Charter.
The MLGW has a history of being fiscally responsible and being run mostly by professional management. Their employees are well trained and do a tough job. However the City Council would be well advised to look in to areas such as MLGW’s OPEB program. They should bring their rules concerning the cost and availability of retirees and their spouces health care to match the same rules as Shelby County Government retirees. Shelby County has these rules in effect since 2007. The MLGW pension and OPEB funds are in good shape due to funds paid for by MLGW’s customers’ utility rates. Compare their pension and OPEB funds to those at the City paid for by property, sales and other taxes.
As a final note I have been informed by President Collins concerning Sewer Rate Fees. “Sewer fees are governed by Public Works. To the best of my knowledge Public Works is not planning a sewer fee increase.” MLGW is just used as a collection agency for 1) Sewer Charge, 2)Solid Waste Fee, 3)Mosquito/Rodent Control Fee and 4) Storm Water Fee.
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.
August 17, 2015
Pilot Promises! Are They True?
There was an editorial in the CA August 16th about Pilots and attached tax breaks. This is a subject that is up for discussion and debate. On one side is EDGE (economic development growth engine) led by Reid Dulberger. On the other side is many of the local unions and other groups who wonder where is the promised benefits of EDGE’s website.
If you look at EDGE’s website you will see $711 million dollars in projected new tax revenue. WOW!! Boy do we need that. No future pension and retiree health care problems. We are on easy street.
But looking back on City and County revenues for many years I don’t see any such massive flow. Revenue just seems flat but with some inflation increases.
What we have here is a lack of facts. Here are some problems and suggestions that I would suggest could shine some light on the PILOT discussion.
If you look at Shelby County Trustee website (currently under David Lenoir) you will see a list of annual County Pilot reports. In those reports is a section entitled Contracts Aged by Expiration Date. This section shows how much the property should pay in Shelby County property taxes and how much they are in fact paying under the Pilot reduction.
In order for the public to have some basis for confidence in the pilot program, some entity should look back at the expiration date of each pilot and determine if after the pilot expired, did the property pay the full amount in the future or did they get an extension, a reduction, or did they leave town or whatever. This does not sound too hard but it is beyond my resources.
Another problem is that the City Treasurer (the City equivalent of the County Trustee) does not publish a similar report. We are talking millions and millions of dollars in abated taxes. Once the pilot expires, are we getting the full amount or not? I say Prove it.
Joe Saino 901-7540699
Let’s Take a Look At OPEB, Retiree Health Care Costs!
July 28, 2015
Yesterday there was an article in the Wall Street Journal entitled “Relief for Cities’ Budget-Busting Health-Care Costs”. It talked about new accounting rules for retiree health care plans. Nationwide the total unfunded liability is close to $1 trillion dollars.
For the first time the Government Accounting Standards Board (GASB) will require local government to report their obligations to retirees as liabilities on their balance sheet. (Side Note: The Federal Government wants cities to report this but the federal government continues to ignore their multiple front unfunded liability.)
So I decided to take a look at Memphis, Shelby County, Shelby County Schools and Nashville.
Unfunded Liability for OPEB, 7/1/2014
Memphis $716 million
Shelby County $243 million
Shelby County Schools $1.43 billion
Nashville Metro $2.03 billion (including metro schools)
The striking thing about this is that the only adult in the above group is the Shelby County government. There was a warning back in 2007 from the GASB about unfunded OPEB liability and Shelby County took action and forced retirees over 65 who were eligible (or their spouse was eligible) to use Medicare as the primary payer with a County supplementary plan as the backup. They required those retirees under the age of 65 without a Medicare eligible spouse to pay a higher health care premium based on years of service. The City and apparently Nashville did nothing. This led to the above huge numbers.
The City of Memphis finally took action which has led to the current turmoil among the retirees and the unions. The school system and Nashville are finally facing their fate and will be required to make hard choices. I call on the City of Memphis to not go back on their late hard choices on retiree health care costs and go forward with their adopted but late difficult decision.
July 20, 2015
FEW (family/education/work) IS THE SOLUTION
There have been lots of articles last week, both locally and nationally, about income inequality, middle class wages, poverty percentages and solutions. It must be the upcoming elections, locally this year and nationally next year, that has politicians spouting out their solutions.
One local article cited a study that pegged Memphis as a national leader in both income gap and economic distress. The four local leading candidates for mayor were asked the question “How do we fix that?”
Here is a recap of what the four said.
Collins, a City Council member, said the city needs better-paying jobs before it can reverse poverty trends and close the income gap, and took incumbent A C Wharton to task for not doing more to get those jobs. Collins said he also plans to “force” the Greater Memphis Chamber to recruit businesses in technology, engineering, finance and other industries with higher average salaries. For instance, he said, the city should be targeting companies fleeing California because of the drought there.
Strickland, also a council member, said wage gap and poverty issues “run hand-in-hand” with population loss. Keeping people and jobs in Memphis is the best way, he said, and the city needs a mayor who “has the strength to fix things.”
Getting into the specifics of his plan, Strickland said he would focus on the “basics of government,” which he said are “not being done.” That includes “drastically” reducing crime and cleaning up the city, he said. “We must have a city government that is run effectively to create a safe and clean community where businesses and people want to be,” he said.
A C WHARTON
Wharton, the incumbent, said his administration has worked on reducing unemployment and income inequality in a number of ways as part of his Blueprint for Prosperity plan and with the recently announced Jobs Plus grant.
“If we are successful in getting Choice Neighborhood Implementation grants, this will provide significant support for my strategic priority of prosperity and economic opportunity for all citizens,” he said.
Wharton said the city already has some of the best workforce-readiness programs in the country at the Workforce Investment Network and through the Greater Memphis Alliance for a Competitive Workforce, which equip people with the skills needed for current and future jobs so they can “become more marketable and command higher salaries as businesses compete for top talent.”
“The Choice Neighborhood grant funds would help us leverage and maximize all of these efforts to address poverty, unemployment, income inequality and depressed neighborhoods,” he said.
Williams, the president of the Memphis Police Association, said the key was to invest in quality of life and public services instead of giving property-tax breaks to businesses.
“The profits are not being shared,” he said. “That’s why you have the (Greater Memphis Chamber) raping the city coffers. And that has to stop. Until it stops, we’re going to continue to generate poverty in this city.”
Drawing a distinction between himself and Wharton, Williams said he is opposed to “putting a clamp on excessive spending” — which, under Wharton, has translated into health care and pension changes that resulted in city retirees protesting at City Hall.
Instead, Williams said, the government should increase spending on services to make Memphis more attractive to both employers and employees.
So here is what I get out of these answers.
Collins-Get high tech companies from California but we do not have a skilled high tech workforce.
Strickland- Reduce crime, clean the city and reduce taxes.
Wharton– Get federal grant money for short term training programs and neighborhood programs.
Williams– Stop Pilots, stop cutting expenses and employee benefits which translates into higher taxes and more people leaving Memphis.
The truth is that there is no immediate solution to the problems in Memphis. The only answer is FEW, (FAMILY, EDUCATION, WORK) and it is a long term solution. Since the end of the Second World War we have been digging this hole (family breakdown, poor education and welfare dependency). Look at Detroit, Baltimore and unfortunately Memphis. Raising the minimum wage, income redistribution, unsustainable pensions and health care benefits will not solve the problem. Politicians will tell you otherwise but there is no one year or even four year solution. Restore your family, educate your children and take any job to start up the hard economic ladder. Any other solution is a lie. What is your opinion of the candidates and their solutions?
June 22, 2015
Why OPEN RECORDS Is SO Important
You may have read a front page article last Saturday in the Commercial Appeal by education reporter Jane Roberts. The article announced the creation of an open records reading room (Room 121) in the SCS Coe building at 160 S. Hollywood St. here in Memphis.
I have been working to open local public records since 2004 and have been greatly aided by many local citizens, particularly John Malmo, Eddie and Eve Settles (backinrivercity.com) and Ken Welch. I want to thank these people and many others who have contributed to this effort.
As Ken Welch has said many times, all public records are technically open to the public unless specifically named and restricted by state law. Then why can’t we get all this information easily? The answer is that public bodies and the leaders (Presidents, appointees, Governors, Mayors, Superintendents, etc) can make life difficult and expensive if they want to. The Tennessee open records law clearly states the following. However the particular public organization can drag their feet, threaten big charges paid in advance, refuse you entrances to offices without an appointment and then refuse to make an appointment. What has happened at the SCS system offices is different and significant.
Therefore this is why our agreement with Supt. Hopson and Chris Caldwell is so important. They have shown that they are open to making all legally open records actually open to the public. After all, we (the taxpayers) paid for all this bureaucracy and we are the employers. We recognize that we need good education, good fire and police services, good roads, efficient water, gas and electric services and many other public facilities. However we paid for them and we expect answers to all our reasonable and legally available questions.
Open Records is so important because without transparency there is often corruption, favoritism, waste and inefficiency. The sunshine of OPEN RECORDS and vigilant citizen can prevent this. There are many details to work out and our open records group is willing to work with the Shelby County System to make access easy and convenient. If we can make this work efficiently, we would look forward to using this as a template for other public bodies. Any suggestions from the you, the public, would be welcomed. We need to join together for full open records access.
May 26, 2015
The Great OPEB Dump
OPEB (other post employment benefits), basically retirement health care benefits, are much in the news. Retirees are acting like it is a great surprise that their health care plans are being cut and possibly it is a surprise. They made the mistake of believing political promises.
But look at the facts. Funding for the school systems (the old Memphis City Schools and the old Shelby County Schools) was always the responsibility of the Shelby County Government. The City of Memphis kicked in some money over the years and then when things got tight at the City, they cut that funding and the Courts said NO, they had to continue the funding on the basis of the principle of MAINTENANCE OF EFFORT.
For years the old City of Memphis Board of Education had a free hand and they loaded up the budget and the teachers and other unions participated in the loading. In particular look at the OPEB provisions of the old City School Board versus the old Shelby County School Board.
Here is a statement from the 2010 Shelby County audited financial document. Their unfunded OPEB liability went from $787 million in 2008 to $242 million in 2009. Look at the reason.
“The Board began recognition of OPEB on July 1, 2007. Limited trend information may be discerned from the three valuations made to date. The change in AAL for OPEB from the June 30, 2008 to the June 30, 2009 valuation date was due to actuarial assumption changes related to reduction in claim costs for post-65 retirees. Effective January 1, 2011, post-65 retirees formerly covered under the self-insured plan will be covered under an insured Medicare Supplement plan which is estimated to reduce claim cost by 63% to 72% depending on age. Additional reductions are anticipated due to census changes, changes in retiree contributions, and any retirements or terminations that did not occur as expected in the prior valuation.”
Then look at the old City of Memphis School Board OPEB condition and lack of action from their 2010 CAFR (Comprehensive Annual Financial Report).
AS OF JUNE 30, 2010, THE ACTUARIAL ACCURED LIABILITY FOR BENEFITS WAS $1,534,912,045 (that is $1.5 billion), ALL OF WHICH WAS UNFUNDED.
They failed to take the actions that the old Shelby County School Board took. They eventually dumped this unfunded liability on the new Shelby County School Board and the County and City taxpayers.
Again this is the result of failure of the old City School Board to recognize the huge unfunded promise and like the City of Memphis they will be forced to make the retirees pay for their past poor decisions.
May 12, 2015
More Money Sources For Government
The question on my mind during these budget days for the City, County and the School System is where can we go to find more money other than just cutting expenses and raising property taxes on homeowners and businesses that are already paying their full mandated share. I am not against cutting unnecessary public expenses and there are plenty examples I could point out. (Excessive sick days and vacations, line of duty disability approval at the City, dumb capital projects, etc). But let me point out two major questions that I have concerning pilots (payment in lieu of taxes).
???? When a Pilot expires does the named property actually pay the full tax load that was abated (reduced) for the following years after the expiration date ????
???? Why are pilots given for abated personalty taxes for some companies but not others? What is the policy on personalty taxes ????
I have attached a pilot file from 2007 when Bob Patterson was trustee. Part of that file shows pilots with expiration dates (pages 71 to 109). I have been asking Reid Dulberger (EDGE-Economic Development Growth Engine) for some time to show a report on those pilots that have expired and to show the pre-expiration abated tax and the post expiration tax actually paid. He has done nothing. This is not easy to do and remember that this report by the Trustee is only for County taxes and if the property is in the City, there is a similar but somewhat lesser amount owed the City. As an example I checked just recently on Hershey at 975 Kansas St. I found that their abated real estate tax was $294,065.74 and was due to expire on 12/19/2009. I looked at what they paid in 2011 and it was about $72,000. But then I looked at their personalty tax and they paid a very large tax even during the period of their real estate tax abatement. Then I look at other abated taxes in the 2014 Lenoir report and there are companies listed with personalty tax abatements. What are personalty taxes? Personalty taxes are levied on business furnishings and equipment that you report to the Shelby County Assessor each year. My question is what is the policy concerning real estate tax abatements and personalty tax abatements? Why do some get an abatement and some do not? What is the policy difference concerning real estate taxes and personalty tax abatement?
The public needs to know if when a pilot expires does the property pay the full abatement tax or do they get some kind of reduction or get a further extension of the deadline or do they just leave town? There needs to be an audit of the before and after numbers of the Pilot expiration subject and let the public see the numbers.
April 28, 2015
Memphis Urban Development In Action
Memphis Bass Pro is set to open tomorrow and I for one hope that it is successful and pays off the millions that the City of Memphis has put into it. But I would like to point out a past example of big government and their programs for downtown. Take a look at the Peabody Place Project.
Peabody Place was a 300,000-square-foot shopping and entertainment mall intended to aid Downtown’s revival. The mall opened with a Muvico cinema complex, retail and restaurants in June 2001 but started to empty as the recession deepened in 2008. When the theater closed in July 2008, the Belzes announced plans to renovate part of the mall into a suites hotel, but lack of financing kept the project from going forward. Now look at the funding sources and amounts that financed the original project. UDAG, CDBG, Section 108 and City CIP to the tune of $41.8 million. What are UDAG, CDBG, Section108 and City CIP?
UDAG (Urban Development Action Grant)
The Secretary is authorized to make urban development action grants to cities and urban counties which are experiencing severe economic distress to help stimulate economic development activity needed to aid in economic recovery.
CDBG (Community Development Block Grants)
The Community Development Block Grant (CDBG) program was enacted in 1974 by president Gerald Ford through the Housing and Community Development Act of 1974 and took effect in January 1975. It had the goal of extinguishing poverty and urban blight.
Section 108 is a loan guarantee program administered by the Department of Housing and Urban Development (HUD), which, since 1978, has committed more than $6 billion to almost 1,500 capital projects aimed at ameliorating housing conditions and creating economic opportunities, particularly for the benefit of low- and moderate-income persons.
City CIP (City of Memphis Capital Improvement Program)
This is City of Memphis capital money.
Now I ask the question, does any of this investment of our federal tax money or our City of Memphis tax money fit these definitions or objectives?
Then more recently there was this information in a Commercial Appeal article from 2014. The Belz family plans to refinance Peabody Place in a move that Downtown officials say is unrelated to talk of converting the vacant complex into a convention-related facility.
The Center City Revenue Finance Corp. on Tuesday approved a refinancing request from Hotel Peabody L.P., the Belz unit that owns The Peabody hotel and adjoining retail and entertainment site.
Refinancing required the board’s approval as a condition of a 25-year property tax abatement that was granted to the project in 1997.
This and other projects and questionable financing and use of federal tax money need a public discussion and open record information on how this money is to be repaid and who benefits.
April 16, 2015
Happy Tax Day!!!
Yesterday was April 15th and your taxes hopefully were paid or your check was in the mail. Most working people and retirees are tax payers and pay more in taxes than they receive in government benefits.
One huge item most of us do not understand is nonprofits. One definition of non profits is “A business entity that is granted tax-exempt status by the Internal Revenue Service. Donations to a nonprofit organization are often tax deductible to the individuals and businesses making the contributions.” Donations to non profits also come from Federal, State and local governments from taxpayer funds.
Information about nonprofits is available from Guidestar. Guidestar is a 501(c)(3) public charity that collects, organizes, and presents the information you want in an easy-to-understand format while remaining neutral. Guidestar provides nonprofit information to a broad audience at no cost to the users.
Why Should You Care about Nonprofit Information?
Because the nonprofit sector is incredibly powerful. According to the Center for Civil Society Studies at Johns Hopkins University, more than 70 million people work and volunteer in the nonprofit sector. Nonprofit employees make up the third-largest workforce among U.S. industries, behind only retail and manufacturing, and nonprofits create total revenue of more than 1.9 trillion annually, exceeding the total GDP of Canada, Australia, Russia, or India
Locally, according to Guidestar, we have 3705 non profit organizations just in the City of Memphis. I am in the process of trying to gather information of Memphis nonprofits. It is not easy. I have attached a spreadsheet on just 413 local nonprofits and I am up to $3.5 billion dollars of income. At the top of the list are well known and respected medical organizations like St. Jude and Baptist Hospital and charitable organizations like Autozone.
But then you get organizations like Global Ministries Foundation and take a look at their Form 990. You probably read the recent CA article about Global and the Rev Richard Hamlet who is paid a salary $485,000. Read the article and make your own decision as to the benefits of such a nonprofit. I am reaching out to the public to send me information on local non profits, where their money comes from, where their money goes and the cost of administration. Many people have called for better coordination of local non profits so that those that work on housing for the homeless (for example) could work together and reduce the cost of administration and get more of the money to those in need. The real question about any non profit is this. What is the percentage of benefits out versus money in? Hopefully the cost does not get above 15% with the benefits at 85%. Is that reasonable?