Archive for the ‘Property’ Category

Happy Tax Day!!!

Thursday, April 16th, 2015

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?

Subsidized Housing, MHA, HCD, HUD, HEHF, Say What?

Tuesday, April 14th, 2015

April 14, 2015

Subsidized Housing, MHA, HCD, HUD, HEHF, Say What?

Recently I attended a MHA board meeting and at the end of the session I asked the board in the future to post all recent financial statements. Until recently they had not posted 2013 and 2014 statements. I also asked that in the future that they post the board agenda and all supporting documents at least two days in advance of the monthly board meetings. We will see in the future whether they do this.

They did in fact post the financial statements for 2013 and 2014 so that now we have posted 2009 through 2014 posted online.

At this point I do not pretend to understand this organization which is headed by Robert Lipscomb as well as the City of Memphis department of Housing and Community Development which is also headed by the same Robert Lipscomb. Then you add in HUD (Housing and Urban Development), HEHF (Health, Education and Housing Facilities Board) and then all the non profits like Global Ministries Foundation which was recently written about in the Commercial Appeal and you have a real witches brew brought on by big government spending in an attempt to solve social problems and garner votes. The real question is what is the most efficient way to help those truly in need? Is big government the answer or should rent money be given to those truly in need and let them make their own housing decisions? What do you think?

In order to get a better understanding of the financial structure and purpose of the MHA and HCD a friend asked for a meeting with MHA accounting (Ms. Vickie Aldridge) and here is the answer he got.

“I am not available to meet however if you submit your questions in writing, I will respond at my earliest convenience.” My friend will no doubt respond but here are my thoughts on these posted financial statements.”

I have attached one page out of each of the last six financial reports (2009 thru 2014). These pages list the notes, loans and mortgages receivable for various local housing projects. If you read on through the following pages of the reports you will see the following statement for each of the projects.

No payments were received on this note during 2014, 2013, 2012, 2011, 2010 and 2009.

My request to the MHA would be that I want to see these financial documents on the loans and mortgages to understand the terms and conditions and who is benefiting from these finances. You will note that the long term notes receivable has gone from $92 million in 2009 to $155 million in 2014. The public should be made aware of these finances, the cost to the taxpayers and the benefits to the tenants of this housing.

What’s another $13.5 million among friends or taxpayers?

Wednesday, March 4th, 2015

March 4, 2015

 

In a recent CA article, it was pointed out that the cash strapped City of Memphis will have to come up with another $13.5 million to cover the underestimated cost of City of Memphis retirees OPEB cost. This is because of the City’s liberal policy differences versus the County concerning what health care policies are available to retirees.

I have attached a resolution dated June 18, 2007 entitled “RESOLUTION TO PROVIDE FOR OPEB BENEFITS AND APPROVE CHANGES TO HEALTH INSURANCE BENEFITS PROVIDED TO EMPLOYEES AND RETIREES”

It is signed by none other than A C Wharton, then County Mayor.

The main difference is that County retirees over age 65 that are eligible for Medicare (either the retiree or spouse) will only be eligible for a Medicare supplemental plan, not the regular county plan. Also the retiree’s share of the premium will be based on years of service. This saved the county millions of dollars since 2007.

Meanwhile the City of Memphis did none of this even after County Mayor Wharton became City Mayor Wharton. It took a city pension and OPEB financial crisis to get the City to change and then they got the numbers wrong to the tune of $13.5 million. Then add to that the millions they could have saved between 2007 and 2015 had they followed the County example, but they did nothing.

More Scoop And Toss

Tuesday, February 24th, 2015

Last Tuesday I braved the ice (black and otherwise) and went to the City Council committee meetings at City Hall. There were two particular subjects in which I had an interest and they were the Pension Funding Policy chaired by Jim Strickland and the Executive session on Debt Restructuring chaired by Myron Lowery.

These two subjects are related because due to the 2010 scoop and toss bond refinancing and the State of Tennessee demanding that the City of Memphis increases its pension ARC (annual required contribution). It turns out that the 2010 refinancing created a bubble starting in 2016 making it difficult to pay both the increased ARC and the bond payments at the same time. The answer, scoop and toss again. The City (Brian Collins) claims that this is reasonable due to low interest rates. Jim Strickland, Harold Collins, Wanda Halbert and Shea Flinn raised questions as did the Commercial Appeal. Here is the presentation given at the meeting.

I decided to investigate some past bond financing so I asked the City of Memphis for some bond information on recent bonds such as the stadium project and the Pyramid and Pinch District redevelopment. All I got from them was a computerized reply with answers to follow SOME DAY. So I went online and got the following Moodys financial analysis report.

https://www.moodys.com/research/Moodys-assigns-Aa3-to-Memphis-Center-City-Revenue-Finance-Corporation–PR_288005

Here are some of the things that the report says about Memphis.

  • The current issue is ultimately secured by all non-tax revenue that is legally available other than ad valorem revenues in the city’s general fund.
  • The Series 2011B and 2011 C subordinate are secured by a second lien on TDZ revenues with a pledge from the city to replenish the debt service reserve in the event of a draw on non-ad valorem tax revenues.

 

The negative outlook on the Series 2013A&B and 2011B&C reflects Moody’s expectation that the city’s financial position will remain challenged as fixed costs, including debt service, pension and other post-employment benefits represents 42% of operating expenditures in fiscal 2012.

In spite of all this the City continues to spend on questionable projects like the Raleigh Springs Mall renovation and to talk about the fairgrounds project as if these will all be paid for by tax incremental financing and fairy dust.

Cost of pensions/ City Versus County

Wednesday, February 18th, 2015

February 18, 2015

Cost of pensions/ City Versus County

I recently asked for and promptly got a copy of the Shelby County Pension Actuarial Report dated June 30, 2014. I also asked for the City of Memphis report and have yet to get it. However I have the June 30, 2013 report from the City of Memphis.

I first read the Shelby County report and it was like reading a financial report from, your favorite profitable well run private sector firm. Not exciting but very comforting. Not racy but secure.

Then to add spice to my day I took up the City of Memphis pension report. Talk about “A Tale of Two Cities”. Here are some comparisons.

Active Employees, City of Memphis- 6280; Shelby County 5302

Retirees, City of Memphis- 4782; Shelby County 3469

Unfunded Liability, City of Memphis- $709 million; Shelby County $243 million

Retirees on disability, City of Memphis- 635; Shelby County 80. Most  of the County  disability retirees are regular, not line of duty. Most of the disability retirees from the City are line of duty. They get 60% of their highest average salary tax free for life. The problem is the composition the approving pension board at the City made up of their fellow employees. Shelby County gives approval to a disability insurance company. This is costing the City $14 million per year.

Total annual pension payments, City of Memphis $155 million; Shelby County $66 million

Average pension per retiree, City of Memphis- $32,518; Shelby County $19,273

Do I need to say more?

Insure Tennessee! Let Us Have A Discussion

Wednesday, February 11th, 2015

February 11, 2015

Insure Tennessee! Let Us Have A Discussion

 

Recently I heard a talk given by Dr. Scott Morris, founder of the Church Health Center. He talked about the Sears Tower planned renovation and it was fascinating. If it comes off successfully, it could lead to great benefits for midtown and for Shelby County.

 

Before he got into the Sears Tower presentation, he talked about the recently defeated proposal for Insure Tennessee. This is Governor Bill Haslan’s proposal to take federal money from the government to expand Medicaid coverage under the Affordable Care Act to people who do not qualify either for existing Medicaid programs or to buy coverage on an exchange.

 

Haslam unveiled Insure Tennessee in December after nearly two years of negotiating with the federal government because Insure Tennessee was not a straight expansion of Medicaid. It required a waiver approval by the U.S. Department of Health and Human Services because Haslam opted to craft a state-specific program that modeled many aspects of commercial health insurance using funds from a tax that Tennesseans are already paying under the ACA.

 

Dr. Morris stated that this was a no brainer as the money was sitting there and there were people who needed the medical services and after all it was our Tennessee tax money and additionally tax money from other states.

 

(more…)

Fancy Expensive Jobs And Titles

Tuesday, February 3rd, 2015

February 3, 2015

Fancy Expensive Jobs And Titles

Recently Mayor Wharton gave a State of the City address. In that speech he cited the case of Willie Woods, owner of Woods Painting Co, who turned to the City of Memphis when the recession knocked down his revenue by 30 to 40 percent. Mr. Woods wanted help finding jobs and financial support. He, no doubt, had a lot of company during the recent severe downturn.

The Mayor’s answer was typical for most politicians, local and national. The Mayor proposed creating a new “cabinet level” department, the Division of Minority Business Services.

Well let us look at the current 2015 City of Memphis budget. In this budget we find the Office of Talent & Human Capital. The mission of this office is “to secure the City of Memphis competitive position in the knowledge economy by supporting innovative strategies, tactics and initiatives that focus on retaining, recruiting, and developing the nations’ most talented workforce.”

Now look at eight budget pages from the 2015 City of Memphis budget. You will see that we propose to spend $1,251,805 and give employment to 6 people. That is a cheap price if Dr. Scarboro,  Executive Director, achieves this objective. Cities across the nation are spending billions to achieve this goal and the national government is spending trillions.

Let us be realistic about these made up positions and jobs. They are what politicians at all levels do to make the public think they are addressing the problems with real solutions. This is nothing against Dr. Scarboro. I am sure he is a great guy who has done significant good work. However creating another division with another Executive Director is not the solution to solving Mr. Wood’s problem or the human talent problem. It will take years of education reform and family social services to attack the poverty, family dissolution, crime and local low educational levels that are at the base of low human talent levels. Another fancy title and another cabinet level division and another million plus spending will not help Mr. Woods get more work. Being the best painting contractor offering fair prices and great work is the answer to his problem.

 

Term Limits

Thursday, January 8th, 2015

January 8, 2015

There was a recent editorial in the CA about the upcoming 2015 city elections and term limits. This is a subject that is close to my heart. Let me be clear. I am for reasonable term limits for all elected public offices from the President on down.

At the Federal level, thank goodness that the office of President is limited to two four year terms. Now it is time for the senate and the house to institute at least a twelve year limit (two six years terms and six two year terms). The argument that our politicians need long experience in government to make good decisions is greatly overrated by actual performance.

Now as to the new term limits for the City of Memphis. I would like you to remember how this came about.

Without going in to a long history lesson, it came about by the actions of Mr. John Lunt, a Germantown resident but a great Memphis businessman. He was incensed by the foolish January 2001 pension resolution allowing elected and appointed people to receive a pension after twelve years regardless of age. This has cost the City of Memphis millions. Mr. Lunt instituted a charter commission election with the help of thousands of voters which the politicians fought tooth and nail. The citizens got behind the proposal and it passed.

The one good result of that effort was term limits for the Mayor and City Council. Myron Lowery was the sometimes chairman of that Commission and thank you Myron for your support of the citizens. Shelby County already had term limits in their charter which certain members of the County Commission fought in court but lost.

Public spirited citizens should come forward and offer their services in elected positions but after four or eight years, they should go back to the private sector and earn their living.

As a retiree I ran for City Council in 2007 and I thank the over 16,000 voters who voted for me. My wife and children thank the voters who gave Shea Flinn and Kemp Conrad more votes. They both have done good work for the City of Memphis. I encourage young new people to come forward and put their ideas for good government before the voters. I encourage retirees to get involved in the issues and lend their experience in letters, calls, blogs and unpaid public service positions. Good government needs input from the citizens and tax payers. Do your part and get involved.

The Cargill Pilot

Monday, January 5th, 2015

January 6, 2015

The Cargill Pilot

Recently a reader of my blog asked me the following question.

“When a company pulls out before the end of their PILOT agreement, do they pay a penalty for not having delivered as promised?  I am thinking of Cargill.”

I responded “Good Question. I will check. I emailed EDGE (Economic Development Growth Engine) and asked for a copy of the Cargill Pilot agreement. They promptly responded as follows.

theath@growth-engine.org “The Cargill Lease, along with most documents, are online. See http://growth-engine.org/archive/?g=/Data%20By%20Company/Cargill

I went there online and found a number of documents about Cargill but the one that was most interesting was the following one entitled “Application Of Cargill Incorporated For Payment In Lieu Of Taxes” dated in 2010. Look at page 48 which is a letter signed by Mayor Wharton with promises of tax reductions close to $12 million and a $3 million dollar funding to assist in rail enhancements.

Then look at page 42 where Cargill would possibly provide a $500,000 funding for a school bus project in order to delay installation of equipment at Cargill to reduce their air pollution. I am not sure if they ever provided this $500,000. Does anyone out there know? Here is an article about the proposal.

Cargill is a big company and they do what is best for Cargill. They are a big employer and any city would be proud to have them as a local employer. It is best that all citizens know what is going on in the tax deals and EDGE is to be complimented for posting this information on line. However they still have not provided the critical information about properties that finish their Pilot contracts and the important information about whether they are paying the full tax amount that they were abated during the Pilot or whether they somehow left town, got an extension of the Pilot or are somehow paying less than their full share. Post that information on line PLEASE!

The Fairgrounds TDZ

Tuesday, December 16th, 2014

December 16, 2014

There has been a lot of discussion back and forth about approving this project and its impact on our economy and education funding. I have been doing some research on this matter and it is quite confusing. I would like to point out the most important points.

  • The use of a TDZ is proposed because it is supposed to be risk free. The proponents claim that the tax payers are not at risk and the risk is all on the bond purchasers. That is not true because if the incremental sales tax increases are not sufficient to cover the principle and interest, then the taxpayers are the backup less the ad valorem (property tax) tax base. My point here is that if these bonds issued for the Fairgrounds TDZ are the same as those for the downtown TDZ zone and if the incremental tax revenue is not sufficient to cover the required bond payments, then all city revenue other than the Ad Valorem Tax (basically property taxes) will be called on to make up the difference. It is not risk free. If you look at the City of Memphis 2013 general fund budget you will see that ad valorem taxes are about 40% of the revenue. The rest presumably would be subject to the bond insurance.
  • There is a question about the effect on education funding of a TDZ zone. According to the Tennessee Department of Education, half of the 2.25% portion local option sales tax must be appropriated to education.
  • Another important point is that each year a new base will be set for the TDZ zone at the level it grew or declined to the year before. The increase in sales taxes will be measured from this new last year level. Only this increase less the education portion will be available to pay the bonds.
  • There is a lot of push back in the proposed size of the proposed fairgrounds TDZ zone. The proponents of the fairgrounds project want to include Cooper Young and Overton Square because these areas are successful areas and the proponents of Fairgrounds want to take advantage of their success to finance the Fairgrounds. They are afraid that it cannot stand on its own merits. See the attached map of the proposed zone area.
  • Finally there is a possible increase in the 7% portion of the sales tax in the TDZ. This portion will go first to pay off the bonds. If there is any left over after paying off the debt, it will go to the local government for education and other purposes. The problem with including Cooper/Young and Overton Square is that their success will be used to finance the Fairgrounds risky venture.

This is another real estate venture done by the government rather than development professionals with taxpayers taking the risk rather than private investors.