Taxpayer funds not used to move Memphis forward
Joe. B. Kent
Memphis is not moving forward due to a lack of government oversight.
As one example among many, over 25 years, local legislatures have limited about $ 138 million in city and county funds to downtown public parking lots.
The Memphis City Council and Shelby County Commission authorize the restriction of funding through the Memphis Downtown Commission, known as DMC, using a little-known fund called the PILOT Extension Fund, PEF , for local economic development.
The financial information in this article was obtained through public documents and / or public information requests. Minus the current liabilities of the PILOT Expansion Fund, in a predominantly black community in need, over 25 years, $ 138 million of public funds could instead be used for the following:
- 1,300 students, per year, served with enveloping post-secondary services
- 130 small businesses, per year, served with $ 10,000 each in forgivable loans
- 1,000 poor, per year, served by affordable housing
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However, the first is real economic development, in that it contributes to increasing the wages and the quality of life of a community in need. But, unfortunately, such compromise analyzes are never conducted by Memphis City Council or the Shelby County Commission.
And they are certainly not listening to taxpayers. But they schedule regularly and regularly hear the DMC and the growth engine of economic development.
Typically, proposals made by these organizations are approved without much questioning or due diligence by local legislative bodies.
In view of the first, on December 21, 2020, the county commission, after reconsideration, scandalously denied due diligence as requested by the chief financial officer, appraiser and county administrator on a parking credit $ 62 million audience downtown, using DMC’s PILOT extension. Funds.
In testimony, as the meetings were closed to the public, the county commission recognized former DMC chairwoman Jennifer Oswalt, who now lives in Knoxville.
Oswalt made a material misrepresentation, on the public record, underestimating DMC’s parking garage debt by about $ 12 million in connection with the $ 62 million claim. As a result, the odious $ 62 million credit was approved by a county rubber stamping commission.
If due diligence had taken place, it would have exposed a DMC organization called the Downtown Mobility Authority (DMA), which oversees public parking, generating $ 2 million in public parking revenue and losing $ 1 million in 2019.
The loss signals a lack of adequate parking demand to support a $ 62 million taxpayer investment in downtown public garages.
Public parking should normally be self-financing from the revenue from parking fees. But, for a moment, consider the alternative, that public parking needs a public subsidy.
What is the absolute maximum that a $ 2 million public parking operation should be subsidized? Maybe $ 1 million at most?
But without analysis, legislative approval bodies are expected to subsidize downtown public parking lots to the tune of $ 5.5 million per year over 25 years.
Further due diligence would also have revealed a DMC that provides taxpayer-funded loans, while extending commercially unavailable terms, for the development of private, non-public garages. These loans are extended to real estate partnerships involving local names such as Hyde, Orgel and Carlisle.
In fact, $ 21 million in loans were granted to these three partnerships, with interest rates of 2% to 3% for a period of between 45 and 60 years, while being added to the loans, 20-year property tax reductions have been granted to the developments.
To make matters worse, on March 22, 2020, as meetings were once again closed to the public, the DMC and an Oswalt residing in Knoxville were back before the county ommission.
This time the request was for an additional $ 15.5 million in public funds, using the PEF, to purchase the dilapidated 100 N. Main for $ 12 million and $ 3.5 million for another private garage loan. for Billy Orgel. The request was approved and a total of $ 77.5 million has been allocated for unnecessary downtown public parking.
Additionally, on the agenda for March 22, 2020 were the DMC’s audited financial statements that the county commission previously refused to review through due diligence. No discussion of DMC’s financial data has ever taken place, while the commission approved DMC’s financial data which involves a tight fund that will generate $ 138 million over 25 years.
The DMC PILOT Extension Fund appears to be nothing more than a slush fund, the lack of legislative oversight, due diligence and compromise analysis is the reason Memphis is not moving forward.
Defining what economic development is and is not will go a long way in helping Memphis move forward, knowing that lending public money for private development, which includes downsizing properties and investing in unnecessary public parking is just not that.
Joe B. Kent is a taxpayer advocate and lives in Memphis.