» Subscribe Today!
More of what you want to know.
The Daily News

Forgot your password?
Skip Navigation LinksHome >
VOL. 128 | NO. 200 | Monday, October 14, 2013

County Leaders Blast Fairgrounds Tourism Development Zone Financing Plan

By Bill Dries

Print | Front Page | Email this story | Email reporter | Comments ()

Shelby County government leaders say a city plan to use incremental sales tax revenue within a tourism development zone to revitalize the Fairgrounds will take the share of that revenue that goes to Shelby County Schools.

The city’s proposal of a tourism development zone to finance a Fairgrounds revitalization is taking fire from county government leaders who worry about schools losing money.

(Daily News File/Lance Murphey)

Shelby County Commissioner Steve Basar says his “conservative” estimate is the TDZ would siphon off $1 million a year from local public education for 30 years.

“That’s not an insignificant amount of money,” Basar said.

The local funding of Shelby County Schools is the sole responsibility of Shelby County government.

Basar took his concern to city Housing and Community Development Director Robert Lipscomb last week as Lipscomb talked over the Fairgrounds plan with the Cooper-Young Community Association.

“None of that’s true,” Lipscomb said to Basar several times, as he repeatedly said the Fairgrounds zone, which is three square miles that takes in the Cooper-Young Historic District and Overton Square, would only recoup sales tax revenue that would otherwise go to state government in Nashville for distribution possibly to other parts of the state.

“Otherwise it goes where?” Lipscomb asked the group of 60 several times during his presentation, answering, “the state.”

But by week’s end, the different views of where the sales tax revenue comes from persisted between city and county leaders.

“In the existing TDZ today, it covers both the state sales tax and the local option sales tax,” county finance director Mike Swift told county commissioners Wednesday, Oct. 9, in their committee sessions, emphasizing that he has not examined the Fairgrounds proposal in detail. “Half of that, off the top, goes to schools. Therefore there would be a reduction in what goes to schools.”

Shelby County Attorney Kelly Rayne is preparing a legal opinion on the matter for the commission. But she told commissioners there is no “carve out” or exemption for the portion of the local sales tax option that otherwise goes to schools when a zone finances public use projects.

The term “carve out” means it is revenue that cannot be used for the project in the zone but must instead go to local schools as originally intended.

“Under the statute, a couple allow the local option part of the tax and requires the school part of the tax to be carved out,” Rayne said. “But those are private developments.”

The incremental sales tax revenue within the Tourism Development Zone the city has applied for would be used to finance public recreation facilities on the Fairgrounds property. The property itself would also include a mix of retail and housing.

The Fairgrounds site is in the southeast corner of the zone.

“The geographic area is also suspect,” Basar said, describing the boundaries and areas taken in as “gerrymandered.” “They are using public funds to compete against Overton Square … and Cooper-Young and other areas.”

The criticism of the zone and its size and where it draws revenue from is similar to the criticism last year from different quarters when Lipscomb and the administration of Memphis Mayor A C Wharton Jr. rolled out a “tax increment financing” district to pay for the Heritage Trails development area south of FedExForum that stretches into South Memphis.

Such a district, which is known as a TIF, differs from a Tourism Development Zone in that it uses property tax revenue.

The size of the TIF zone proposed for Heritage Trails strayed far beyond the two public housing projects whose mixed use-mixed income redevelopment it was supposed to aid. It was so large that it drew concern from developers and public agencies that committed tax revenue within smaller geographic areas within the Heritage Trails TIF zone to other projects. They feared the Heritage Trails TIF would mean less incremental revenue to complete projects not part of the Heritage Trails plan that they had already committed to in terms of financing.

Luttrell’s administration also voiced concern and opposition to the TIF and Wharton later withdrew the proposal for review.

County commissioner Mike Ritz noted the differences between the two kinds of incremental public financing, saying TIFs can go on indefinitely. Both kinds of financing, he added, divert already scarce resources for county government.

“We’ve got to fund the schools and health care and the jails and the (Criminal) Justice Center,” Ritz said. “That’s about what we do here. The rest of it is not much. Every time we suck off future tax revenues and dedicate them to something else, they are not available for that.”

Sign-Up For Our Free Email Edition
Get the news first with our daily email

Blog News, Training & Events
PROPERTY SALES 87 87 7,836
MORTGAGES 108 108 9,307
BUILDING PERMITS 130 130 16,737
BANKRUPTCIES 55 55 5,461

Weekly Edition

Issues | About

The Memphis News: Business, politics, and the public interest.