Archive for the ‘History’ Category
April 25, 2016
Brilliant At The Basics
Our new Mayor has come out with his proposed 2017 City budget. I have not had a chance to study it closely yet but I will in the next few weeks. However a recent open records request confirmed what I suspected was happening.
Read the CA article of April 7, 2015. In a CA article (April 7, 2015) our present Mayor Strickland questioned the possibility of Sammons doubling his City pension. In my recent open records request to the City of Memphis I asked for current pension payments to retired City of Memphis employees. I wanted to compare the current pensions to past pensions. Sure enough there was Jack Sammons receiving an annual pension of $68,457.36, up from his previous pension of $34,960.56. Doubled!!!
How has this happened? Apparently there is a provision in the City of Memphis pension ordinance that allows the pension to be recalculated based on the highest 12 month salary overturning any fiscally responsible actuarial calculations. This is a public employee scam that needs to be corrected. Here is what is done at the County government. Plan A and Plan C both compute pensions based on the employee’s highest 36 consecutive months of earnings. The new Plan D computes pensions based on the highest 60 consecutive months of earnings. Plan D was effective July 1, 2011 and has proven to be a less costly plan because of the earnings calculation plus the lower years of service multiplier and the retirement age requirement.
Then there is he abuse of the City of Memphis pension board of LINE OF DUTY DISABILITY. This is costing the City up to $14 million per year. The rate of line of duty disability approval at the City is ten time higher per active employee than the MLGW and Shelby County Government. These built in actuarially unsound pension provisions need to be changed as part of the Brilliant Basics.
April 13, 2016
Further Info On The Memphis HEHFB Controversy
I recently reported on the two Health Education & Housing Facility Boards, one from the City of Memphis and one from Shelby County. One is apparently well run and the other has had its’ authority temporarily suspended by the Tennessee Housing and Development Agency because of problem with properties run by Global Ministries.
I have attended two meeting of the Memphis board. The first one was not a regular monthly board meeting, but a reading of a proposed bond issue by Charles Carpenter, the board attorney. After the formal reading, I asked a few questions concerning transparency and open records and did not get a lot of information.
The second meeting, which was a regular monthly meeting, was attended by Channel 3, the Commercial Appeal, several business interests and myself. The only person, other than the business interests, to ask questions was myself. Before the start of the meeting, I asked the secretary for an agenda and she refused to give me one until the actual meeting started. At the end of the meeting I asked why the agendas and all attachments were not published at least two days before the meetings and I received no answer. I asked about the difference between the County ordinance that limits the amount that the Board Counsel can make. Mr. Carpenter said that he was not aware of the County ordinance. I pointed out that for just five Memphis bonds, the overpayment for the Memphis board Counsel was $59,000. Then I asked about a possible conflict of interest on the bonds for the Uptown Manor Senior Project by a board member and they said that they would have to consult the minutes of that meeting to see if the member recused herself. I asked for the minutes but received no reply. After the regular public meeting, they had an executive meeting and I asked if I could attend. They said that it was a closed meeting and the public was not able to attend.
Then several days later I, in fact, received the minutes from the two past board meetings concerning possible conflict of interests. I have attached those minutes and they are interesting.
Lee Patton and Monice Moore-Hagler recused themselves from the Inducement Resolution for the Uptown Manor Senior motion. Under Discussion Items, John Baker brought to the Board’s attention for further consideration a revised short term bond fee structure. Under New Business, Nancy Willis brought to attention a request for an annual ethics statement to be signed by members of the board and provided an example copy for the Council’s review.
Under action items, Dan Reid recused himself from consideration of inducement bond resolution for Global Ministries Foundation Bent Tree Apartments. Renasant Bank was to provide a private placement loan for the property.
Then Dan Reid re-entered the meeting and Monice Moore-Hagler and Lee Patton recused themselves before consideration of final bond resolution for Uptown Manor Senior Development LLC. Mr. Carpenter recommended approval.
Finally, Paige Walkup asked for an update regarding GMF Warren-Tulane property. Mr. Carpenter reported on his positive contact with Chris Lamberson and the ongoing response to correct issues and bring it up to standard.
This just goes to show that all these boards need to publish their agendas in advance along with all accompanied data and the public should see the same information that the board members get. I will look forward to your comments as you get ready to pay your federal taxes that funds all these projects.
March 29, 2016
This is a story of our two Health Education and Housing Facility Boards, one is a Shelby County HEHFB and one is a City of Memphis, HEHFB. I have asked for copies of bond information including Bond Counsel fees and other bond Issuance and Professional fees. As usual, it was fairly easy to get the information from the County Board and impossible to get it from the City board. I finally got some information about 5 bond issues (MemphisHEHFB) from the State of Tennessee Comptroller after no response from the City of Memphis board. I am still waiting for additional information from the State of Tennessee that generally has been very forthcoming. I have previously published the information about the 5 bonds issued by the Memphis board and here is a recap of the information from the Shelby County Board followed by the City of Memphis Board’s 5 bond issues that we have. Please note that the Shelby County HEHFB has a written policy limiting the Board Counsel fee. There is no such policy for the Memphis HEHFB and therefore they paid $59,000 more on just 5 bond issues on which we have information.
|Name of Project from the Shelby County HEHFB||Bond Amount||Bond Counsel Fee||Board Counsel Fee||Maximum Board Counsel Fee Allowed per County Policy||Total of All Fees for Bond Issue|
|Southern College of Optometry||$9.8M||$25,000 for Bond Counsel, Purchaser and Trustee Counsel||$12,500||$19,800||$29,000|
|Eastwood Apts 2012||$1.1M||$36,000||$3,400||$3,300||$114,528.37
|St. Agnes, 2012||$5.5M||$30,733||$13,155||$14,000||$50,388|
|Grace St. Luke’s Episcopal School 2012||$5.875M||$30,000||$14,970||$14,750||$70,533|
|The Village of Germantown 2012||$39.96M||$160,000||$48,160||$49,960||$1,418,414|
|Trezevant Manor 2013||$66.475M||$120,000||$49,805||$76,475||$1,578,135.50|
|St Benedict 2013||$10M||$15,000||$7,500||$20,000||$33,000|
|Countryside North Apartment 2013||$5M||$42,000||$18,122.50||$13,000||$191,446.45|
|Name of Project from the Shelby County HEHFB||Bond Amount||Bond Counsel Fee||Board Counsel Fee||Maximum Board Counsel Fee Allowed per County Policy||Total of All Fees for Bond Issue|
|Southern College of Optometry 2014||$9.8M||$25,000||$12,500||$12,500||$43,500|
|Presbyterian Day School 2014||$10M||$10,000||$5,000||$5,000||$15,000|
|The Village of Germantown 2014||$21.94M||$142,000||$30,140||$71,000||$1,020,587|
|St. George Independent School 2015||$32.585M||$40,000||$20,000||$50,585||$106,936|
|Rhodes College 2015||$21.35M||$55,000||$27,500||$27,500||$294,646|
|Name of Project from the Memphis HEHFB||Bond Amount||Bond Counsel Fee||Board Counsel Fee||Maximum Board Counsel Fee Allowed per County Policy||Total of All Fees for Bond Issue|
|Uptown Senior Housing Project 2006||$4M||$40,000||$25,000||$11,000||$222,550|
|Arbors of Hickory Ridge||$11.45M||$26,000||$30,500||$21,450||$235,767|
|John Madison Exum Towers||$19M||$85,000||$40,000||$29,000||$159,600|
|Uptown Manor Senior Project 2015||$2,825M||$21,000||$21,350||$8,475||$278,687|
|Total of actual Board Counsel Fee versus fee per County limitation fee||$140,350||$81,047
The savings here would have been $59,303 if county policy applied
As you will see most of the above County bond issues were for educational, medical and retirement facilities. Only two (Countryside and Eastwood) were similar to what has been financed by bonds from the Memphis HEHFB.
My investigation of these two boards was instigated by the Global Ministry story and the bond downgrade. There is a real question of transparency and adequate ethics rules, conflict of interest rules and rules concerning competition for front end bond expenses. I have not yet, in response to my open records request, received past bond information from the Memphis HEHFB. I have received past bond information from the State of Tennessee (Steve Osborne, Senior Analyst, Comptroller of the Treasury ǀ State and Local Finance). Here is some of the information that he sent showing past bond expenses and who participated.
Here is a list of past bond work done by Charles Carpenter (board counsel for the Memphis board). While Mr. Carpenter is a competent bond counsel lawyer, there needs to be more transparency in the issuance of these bonds, written conflict of interest rules, limitation of front end bond costs and competition for the various issuance costs. There is also a need for a public discussion of the best and most cost efficient method to provide adequate housing for those unable to work and provide needed housing for themselves.
March 15, 2016
The Hidden Cost of Health Education and Housing Board Bonds
The Commercial Appeal recently published a story about a downgrade of a local bond issue as follows. “On Feb. 12, the Bank of New York Mellon Trust Company, which oversees the$11.8 million bond, sent a notice of default to bondholders notifying them the U.S. Department of Housing and Urban Development had ended its contract with the borrower, Global Ministries Foundation.”
I have been researching the whole issue of City and County boards and commissions and particularly the Memphis Health Education and Housing Facility Board. I asked that board for a list of bonds issued by the Board for the last five years with cost data and information of the parties receiving payment upon the issuance of the bonds. The board has failed to respond to that request for open records. Therefore I went to the State of Tennessee and received five reports on local bond issues from Steve Osborne, Senior Analyst, Comptroller of the Treasury, State and Local Finance. Here are the five issues I received.
The five reports are very revealing but first I have to tell you about my request to the Shelby County Health, Education and Housing Facility Board (same name as the similar City HEHFB) but a completely different board. I asked for their documents on ethics and conflict of interest policy and I received it as shown. I particularly call your interest to page 6 wherein is shown a maximum fee calculation for the legal fee of Bond Counsel.
I have shown below the fee paid to the bond counsel of the Memphis HEHFB board on the five recent bond issues versus what would be the fee from the Shelby County Board HEHFB.
|Name of Project||Bond Amount||Actual Bond Counsel Fee City of Memphis HEHFB||Maximum Bond Counsel Fee of County HEHFB|
|Arbors of Hickory Ridge Project||$11,450.000||$26,000||$21,450|
|Housing and Social Services||$4,061,000||$25,255.08||$11,122|
|John Madison Exum Towers and Apartment I and II||$19,000.000||$85,000||$29,000|
|Uptown Housing Senior Project 2006||$4,000,000||$40,000||$11,000|
|Uptown Manor Senior Project||$2,825,000||$21,000||$13,062.50|
|Total Bond Counsel Fee||$197,255.08||$85,634.50|
On these five bond issues, this is $111,621 more than the County maximum amount in their ordinance. But this is just the beginning of the cost of the bond issuance. The total for these five bond issues just for the Memphis HEHFB is $967,304.03.
Then there is the question of a possible conflict of interest although apparently there is no provision that I have been able to obtain concerning a City of Memphis conflict of interest policy although I have been told that the Strickland Administration is working on such a policy.
I think that it is high time that we get a discussion going on this high cost of bond issuance and is this approach to adequate housing for low income citizens the best and most efficient method. Also there needs to be a clear and open policy on bond issuance fees, conflict of interest and ethics.
March 3, 2016
Boards and Commissions in Memphis and Shelby County
Recently I became interested in Memphis and Shelby County Boards and Commissions. My interest was piqued by all the news concerning Serenity Towers and Global Ministries. Here is a news article on the bond issue for this property.
The Health, Educational and Housing Facility Board of Memphis, Tennessee facilitated the GMF acquisition through the issuance of tax exempt 501(c)3 housing revenue bonds on behalf of the purchaser. Merchant Capital served as the bond underwriter in the placement of the bonds with investors, as the bonds were rated investment grade by Standard and Poor’s rating agency. Jones Walker served as Bond Counsel. Kristin Neun, Esquire, served as FHA counsel. Charles Carpenter, Esquire, served as counsel to the Issuer. The Bank of New York Mellon serves as Trustee. Glanker Brown serves as GMF’s corporate and owner counsel within its expanding national affordable multifamily housing portfolio.
A recent article in the Commercial Appeal stated the following.
About a third of all the units inside Serenity Towers have bedbugs, according to a Memphis Code Enforcement report released Friday.
The report says 134 units have bedbugs inside the senior high rise apartment complex. Other code enforcement violations included cockroaches, broken or damaged windows, leaks in the ceiling, broken thermostats, damaged toilet and faucets among other things.
City code enforcement officers inspected the 396 units in the property on Feb. 11, 2015. The inspection came after several tenants complained of bedbugs and other problems.
Rev. Richard Hamlet, founder of Global Ministries Foundation, said in a statement he was aware of the bedbug problem since his nonprofit bought the property. His staff is working to eradicate the infestation. GMF bought the senior property in 2014 using a $14.5 million bond issued by the Health, Educational and Housing Facilities board of Memphis.
With that background, I started investigating the various boards and commissions. What I found was 46 City Boards and Commissions and 36 County ones. Some are joint boards but many are stand alone ones. It was interesting that the City Health, Education and Housing Facility Board and the County Health, Education and Housing Facility Board have the same names but are completely different and separate
The City HEHF Board states its purpose as follows.
Function & Authority:
The Health, Education and Housing Facility Board a public nonprofit corporation issues tax exempt revenue bonds for the development or rehabilitation of multi-family housing facilities to be occupied, according to the state statute ?by persons of low and/or moderated income, and/or elderly and/or handicapped persons.
The County HEHF Board states its purpose as follows.
Functions & Authority
The function of the Health, Education, and Housing Facility Board is to assist in the financing of health facilities, educational facilities, and housing facilities for low and moderate income families, disabled individuals and the elderly. The financings are accomplished through the issuance of revenue bonds payable solely from the revenues of the project. The taxpayers and the County of Shelby are never liable for the repayment of the bonds.
I asked both boards for their ethics documents and conflict of interest policies. From the County Board I received a prompt answer with the statement of policies and procedures revised 11/4/15 and By-Laws revised 2007.
I attended a meeting of the Memphis HEHF on February 29th for a required hearing concerning a request that the board issue its Multifamily Housing Revenue Bonds (Patterson Flats Project), Series 2016 in an aggregate amount not to exceed $12 million dollars. After the required reading I asked some questions concerning fees related to recent bond issues. Mr. Carpenter did not know but referred me to the State of Tennessee for this information. I asked him who was paid the $110,000 in legal and professional fees shown in the 2014 financial statement and he said that he was paid those fees. I asked about the details of the recent resignation of John L. Baker, 17 years as director of the Memphis HEHF board, and was told that that could be discussed only at a regular monthly meeting of the board and that the March meeting on the first Wednesday was cancelled as there was no business to discuss.
This whole matter of this housing for low and moderate income individuals and families, the cost and effectiveness of this approach needs a public discussion and possible alternatives to this expensive program. What do you think?
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?
February 8, 2016
ROI (Return On Investment)
Recently I asked for the following information from the Riverfront Development Corporation.
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?
January 25, 2016
Tennessee State Shared Revenue Review
In this world nothing can be said to be certain, except death and taxes.
I have been investigating the state of Tennessee taxes collected in Memphis and Shelby County and then the portion returned to us by the state. Then I decided to compare the results with Metro Nashville. In the 2016 upcoming national election one of the big questions is a large versus small central government. Should we send our money to Washington and let them decide how much and for what purpose some of it should be returned to us (less their cut) or should the Federal government stick to the original intent of the constitution such as defend the Country, establish a system of currency, deliver the mail and protect individual rights.
Therefore I decided to look at our local taxes which are sent to Nashville and then a portion is returned to Memphis and Shelby County. Here is the latest state returned revenue comparison sheet showing Memphis, Shelby County and a comparison with Metro Nashville.
You will see the big ones below.
The local option sales tax (the 2-1/4% tax) over and above the 7% Tennessee sales tax. $299 million.
The next big one is the use tax (stuff you buy out of state and ship in). $48 million.
Then down the list: gasoline and motor fuel tax ($17 million), tva in lieu of tax ($14 million) and tourist development zone ($12 million).
The alcoholic and beer tax only amounts to $1.4 million so drink up.
Overall we got $456 million back from the state whereas Nashville got $505 million.
What does it all mean in the big picture? For all its’ problems I trust my local and state government a hell of a lot more than my federal government. What do you think? Let me know.
January 11, 2016
Who Is Responsible For The OPEB Debacle?
The City of Memphis, The State of Tennessee and the active and retired employees of the OLD (no longer existing) Memphis City Schools woke up recently as there was a noise rattling around in the closet. When they opened the closet door out jumped the ghost of over $1 billion dollars of unfunded OPEB (other post employment benefits). (OPEB is the promise of furnishing retirees health care and life insurance at a highly subsidized rate without putting the money aside to pay for it).
Now everyone is saying the ghost doesn’t belong to me. Well here is the story which I have been pointing out for years.
Every politician has been ignoring the OPEB ghost for years. However some have been more responsible than others.
The most responsible people again have been Shelby County people, the old Shelby County School Board and the Shelby County Government. They recognized the problem after the 2007 GASB-45 (Government Accounting Standards Board) regulation. See the attached page showing the 2010 actions of the Board in reducing the unfunded OPEB liability from $548 million in 2007 to $242 million in 2009. They reduced the retiree benefit rules.
Now look at the old Memphis Board of Education report from 2010. They did nothing and the unfunded OPEB liability was $1.5 billion dollars. This is 6.3 times higher than the county but the active payroll of the city schools was only 2.5 times higher than the county school payroll.
Clearly the irresponsible parties are the Old Memphis City School Board, the Old Memphis School Administration and any politicians (City and County) who ignored the growing OPEB problem.
Now, how do we solve the unfunded promise? Unfortunately we have to do to the school system retirees what we had to do to the City of Memphis retirees and to a much lesser extent what the Old County School system had to do to their retirees in 2010. We have to cut their retiree health care benefits. Promises were made by elected people who should have known better or made regardless of knowing better and the chickens are coming home to roost.